Andrew Webber, President and CEO of the National Business Coaltion on Health (NBCH), and Karen Davis, President of the Commonwealth Fund, on the impact of health reform and what to expect next.

PHP: How are employers feeling in the wake of the Supreme Court's ruling to uphold the Affordable Care Act (ACA)?

AW: I think most employers were waiting for certainty and the court's ruling does remove a level of uncertainty. The ACA isn't going away. But there are still a lot of unanswered questions with respect to implementation. What benefits are employers going to be required to provide, and how much will they cost? How will the Cadillac tax on high-cost health plans work? How will a full-time employee be defined for purposes of the "pay-or-play" mandate, and things like the PCORI (Patient-Centered Outcomes Research Institute) fee? What will the federal fallback exchange look like? How will the affordability test work? There are a host of these questions that still need answers. Remember, a lot of employers were actually supporters of the ACA because of its promise to reorganize the delivery system and contain costs. There are lots of things in motion on those fronts, but nothing's been realized yet. I think the general sense is: let's get going. Hopefully the administration is feeling a lot of pressure in advance of the election to provide answers.

PHP: We're just 17 months away from the launch of the state health exchanges. Do you think they'll have an impact on the large-group market? If so, how?

AW: I think the employer community will be watching the exchanges closely. Everyone will. There are all kinds of questions about whether more transparent competition might effectively hold costs in check, whether consumers will have an easy time navigating the exchanges, if there will be any adverse selection, and so on. One thing we won't see is a lot of large employers dropping coverage altogether and forcing their employees into the exchanges. The employer community right now is pretty strongly committed to offering benefits to stay competitive in the marketplace. I think the really exciting development in terms of exchanges may be in the private sector. There is a fair amount of energy around private exchanges right now (see related article: Is There a Place in the Market for Private Exchanges?) that may be evolving in parallel or even in front of the public exchanges that launch in 2014. If they catch on, it's a real sea change for the industry. But the bottom line is that employers will be watching carefully to see if exchanges are successful, and if they are, what their competitor companies are doing in terms of rethinking how benefits are offered to employees.

KD: States are likely to expand eligibility for exchanges up to 100-employee firms in 2016, and larger firms in 2017 and beyond. If the exchanges are successful in increasing value for the premium dollar, more firms may find it attractive to buy their employees' coverage through the exchange.

In one Commonwealth Fund–supported article, based on interviews with large employers, benefits consultants, and policy experts on their potential use of the exchanges in the short term (2014–16) and over the longer term (2017 and beyond), William Kramer of the Pacific Business Group on Health found that many large employers are considering using the exchanges for pre-Medicare retirees and part-time workers. Factors that will continue to affect employers' decisions include the viability of the exchanges as marketplaces, the future of the Affordable Care Act, and the strength of the economy.

PHP: The Commonwealth Fund and the Kaiser Family Foundation estimate that health plans this year will pay roughly $1.3 billion in rebates to consumers based on the medical loss ratio rule, which requires plans to spend at least 80 percent to 85 percent of premium dollars on medical care. Will employees or employers get those rebate dollars?

KD: The medical loss ratio rule is designed to put downward pressure on health plan administrative costs and profits. Previous Commonwealth Fund research has found that administration accounts for between 20 percent and 40 percent of premiums in the individual and small-group markets.

Insurers who do not meet the medical loss ratio requirement must either send rebate checks to enrollees to compensate for the administrative overspend, or reduce next year's premiums by an equivalent amount. Businesses who receive rebates on behalf of their workers can choose to pass rebates directly on to employees, reduce the following year's premium costs, or use the rebate in another way that benefits enrollees.

In 2012, insurers who did not meet the medical loss ratio requirement paid out $1.1 billion in rebates to 12.8 million Americans. In the individual market, 38 percent of consumers (4.1 million enrollees) were covered by plans that did not meet the requirement; they received $394 million in rebates, an average per family of $152. In the small-group market, 17 percent of consumers (3.3 million enrollees) were covered by plans that did not meet the requirement; they received $321 million in rebates, an average of $174 per family. Rebates were slightly lower in the large-group market. Only 11 percent of consumers were covered by plans that did not meet the requirement; they received a total of $386.4 million in rebates, an average of $135 per family.

In 2014, administrative costs should decline further. New ACA insurance market rules will take hold: individual and small-group market insurers will not be permitted to vary premiums based on health or gender, a process that greatly increases administrative costs. In addition, structured competition among equivalent plans will reward plans with lower administrative overhead and lower premiums.

PHP: U.S. health care spending grew slowly (just 3.9%) in the first year after the ACA was implemented. Do you think the slowdown is attributable to ACA reforms?

AW: The ACA probably had a little to do with the slowdown in spending growth, but the recession probably accounts for more of the dip. Health care utilization is down across the board. Unemployment is still relatively high and, as people lose health benefits, health care use goes down. Things get delayed. People have to pay more out of pocket so they just don't go to the doctor as often. It's interesting that as use has dropped, we've seen an across-the-board increase in prices for a lot of medical services. I think what we're seeing is the provider community making up the difference. I think that's wrong and it's just one more argument for price transparency. People need to know how much they're paying for health care or else the message to the provider community is "charge whatever you want."

KD: While the recession and tepid recovery are likely having an effect on current spending, I've also written that the tectonic plates underlying the health system seem to be shifting in anticipation of new incentives under health reform and in response to health care leaders' efforts to transform care over the past decade.

In the Medicare program, savings under several ACA initiatives are already being realized. Specific examples include changes in payment rates for Medicare Advantage plans, home health agencies, and other providers; fraud and abuse provisions; as well as requirements for prescription drug rebates for Medicare managed care plans. Looking out several years, Medicare spending in 2020 is now estimated to be $922 billion, which is $150 billion lower than the $1.07 trillion projected by CMS pre-reform. Over the next decade, total Medicare savings could reach $800 billion, while improving benefits and financial protection for beneficiaries.

I'm optimistic that we'll continue to build on this early progress and deploy all of the tools in the Affordable Care Act to lower costs and improve quality not only in Medicare, but across the entire U.S. health system. Of particular interest to those in the business community may be the new medical loss ratio requirements and health insurance exchanges. Our research suggests that taken together these initiatives could limit the amount of money health plans spend on administration and greatly improve the value we receive.

Other promising, systemwide changes already under way include new methods of organizing the delivery of health care services, adoption of electronic information systems, and provisions that will test and reward health care organizations that are accountable for achieving better outcomes, higher quality, and lower costs. It's a time of great potential for innovation that will benefit those who purchase, deliver, or receive health care in the United States.

PHP: A year ago there was some concern that employers might opt out of providing health coverage and simply give employees vouchers and direct them to buy coverage through their states' exchanges. Do you think this is a realistic possibility?

KD: I believe employers provide health insurance to workers for several reasons—the most important being that it gives them an advantage in the competition for the best workers. Highly qualified skilled workers expect to receive health benefits through their job. But there are other reasons as well: Good insurance coverage improves employee health, productivity, and morale—numerous studies over the past decade have proven that. It also enhances loyalty to the employer, and therefore employee retention. And it is a tax-preferred benefit for employees which, according to a recent Employee Benefit Research Institute survey, is valued by employees relatively more than a comparable amount in wages. So I wasn't surprised by a study I just saw from Towers Watson (a benefits consulting firm), that said zero of 512 large employers plan to drop coverage in the near future. It just doesn't make good business sense for them to do so.

But some of the benefits of the exchanges are more plan choices for employees, and reduced administrative burden for human resources departments. So, when it becomes possible, I do believe that some large employers may find it attractive to buy coverage for their employees through the exchanges.

PHP: What do you think are the best aspects of health reform for employers?

AW: There's a lot in the ACA that employers have strongly supported right from the outset. If I had to pick a single most significant thing it would probably be the message the ACA sent to the provider community that Medicare will be changing how it reimburses doctors and hospitals. Payment reform has been on the top of most employers' wish lists for years and now we've got a payer that no stakeholder can ignore leading the effort. That's a big deal for us. Payment reform starts us down a path to price transparency, long-term population health, quality-based payments, and eventually to things like bundled payment or global budgets that would hold teams of providers accountable for achieving good outcomes.

KD: As I've mentioned, the new medical loss ratio requirements and the creation of health insurance exchanges may be of particular interest to those in the business community. Several other provisions have the potential to improve the value of coverage employers are able to offer their workers, and to promote innovation, delivery system reform, and higher quality. Several new rules will be of great benefit to employers, including the requirement that qualified health plans in the exchanges report quality information, essential health benefit standards, market rules that limit the amount of money employees are required to spend in the event of a serious illness, and tax credits that reduce the cost of premiums for small businesses that offer health insurance to their employees.

PHP: Do you think the ACA, the health insurance exchanges, and the preexisting condition rules will have a substantial effect on the flexibility and mobility of the U.S. workforce?

AW: I don't think anybody has a good handle on how many Americans are currently in a "job lock" situation—meaning they can't change jobs because they're worried about losing health coverage. But it's certainly true that most people won't need to be worried about this in the near future. That's a good thing, but for large employers it's probably not that relevant. Underwriting rules have never been applied to them anyway because they are governed by Employee Retirement Income Security Act (ERISA) rather than by state regulations. I think a lot of small employers are really going to benefit from this change. They're never going to find themselves in a position where someone can't accept a job offer just because he or she has a preexisting condition. That's a nice burden to have lifted. But remember that the extent to which "job lock" really decreases will be related to how well the exchanges are run. If employees don't have confidence in a given state's exchange, that benefit evaporates. So there's actually a lot of pressure for the federal fallback exchange to shape up, since at least a handful of states look like they're going to defer to the fed in 2014. But as of right now, we don't have much guidance on what the federal exchange is going to look like or how it'll work.

KD: Yes, I think the exchanges and the preexisting condition rules in the ACA will have a very positive effect on the ability of workers to change jobs without having to worry about being able to obtain new health insurance coverage. In 2014, people who don't have insurance coverage through their employers will be able to purchase it in state insurance exchanges, with subsidies available to ensure that coverage is affordable for those with low or moderate incomes. And for the first time, insurers won't be able to deny coverage to anyone due to a health problem or charge them more because of a health condition or exclude a condition from their coverage. Through the exchanges, all Americans will have access to affordable, comprehensive coverage that can't be denied or cancelled because of a health problem.

PHP: There are still a lot of unanswered questions about aspects of the law related to the essential benefit package. What will it include? Who will the Cadillac tax apply to? How large can we make incentives for healthy behaviors? What questions are the most pressing and what can employers do to help push for answers?

KD: To me, one of the biggest challenges is avoiding adverse risk selection in the exchanges. There is a danger that if a large number of employers with generally healthy workers don't participate, the exchanges may attract a less healthy and therefore more expensive population, driving up the cost of premiums in the exchanges. Employers should help try and make the exchanges work by supporting the inclusion of integrated delivery systems like Kaiser Permanente and Geisinger among plan choices. They can also help by educating employees on plan choices, as well as treatment options, and most important, continue to provide workers with the economic support for coverage that is essential for their families' physical and financial health.

PHP: The Supreme Court ruling allows states to opt out of the Medicaid expansion slated for 2014. Do you think it's likely that any states actually will opt out?

KD: The federal government will provide the majority of financing to states for the Medicaid expansion, covering 100 percent of the costs in most states through 2016 before gradually reducing its contribution to 90 percent for all states by 2020. This translates into an infusion of federal dollars into states on the order of $668 billion over 2014–20, and will substantially reduce each state's number of uninsured residents and total uncompensated health care costs.

If all states choose to participate in the expansion, the Congressional Budget Office estimates that 17 million people could gain new coverage under the program by 2020.

It does not seem likely that states will turn down this opportunity to help their residents gain coverage and gain new financial support for hospitals and safety-net providers in communities.

Not every state participated in the Medicaid program when it was first enacted in 1965, but eventually all states did join in the program. I would expect that all states will eventually participate in the ACA Medicaid expansion as well.

AW: Karen's answer is right on target, but even so, there are some states that are still threatening not to play. Iowa says it can't afford the Medicaid it has now, so no matter how generous the fed is with respect to paying for the expansion, it still can't afford it. And I know that some other states are balking on principle: they're concerned that a significant expansion of Medicaid may reposition it not as the state's health care program for the poor, but as the state's health care program for pretty much anybody. If that happens, a given state's Medicaid program really could expand to an unsustainable extent rather quickly. There is also a political concern that taking the expansion threatens the existence of the Medicaid program as a state–federal partnership. Governors who accept the money and do the expansion will have to answer to constituents who may think they have just been made pawns of the federal government.

PHP: Whether or not the noncompliance penalty is truly a tax or a penalty, the Supreme Court has made its views clear by calling it a tax. What are the long-term implications of this ruling?

AW: There's something wrong with the political system if the only viable path for establishing a new social welfare program runs through the tax code. But that's the message the court is sending: "you can't penalize, but you can tax." That really raises the stakes for future efforts to shape behavior in ways that would be positive for all of us. Taxes aren't popular and if every new effort to nudge people and corporations in a healthier direction becomes a tax, then there won't be a lot of innovation in an area where we still need lots of innovation. The ruling puts us at risk of losing a really potent lever.

By Brian Schilling

Throughout Maryland, the District of Columbia, and portions of northern Virginia are perhaps a thousand small medical practices—some tucked into office buildings, others in converted houses, a few in standalone red brick buildings—that somehow find themselves on the cutting edge of health care delivery system reform. These are mainly solo or two-physician practices. They're generalists, not specialists. Many don't have electronic health record (EHR) systems. And yet these small, sometimes rural practices all participate in what some see as a tech-centric model for delivering better-coordinated health care to the sickest patients—a medical home. 

"They're our target market for the program," explains Chet Burrell, CEO of CareFirst BlueCross BlueShield, which launched one of the nation's largest medical home programs in the mid-Atlantic region in January 2011. "When we designed this program we made a real effort to make sure it would appeal to solo and two-to-three–physician practices because they represent a substantial part of our network. We knew that asking those small practices to make a huge information technology (IT) investment was a nonstarter."

The huge IT investment Burrell refers to is the investment—typically in an EHR and other software and hardware—traditionally required of practices that opt to participate in one of the dozens of medical home initiatives that have sprung up around the country over the past five years. Practices need EHRs to manage the health of populations (vs. that of individual patients), measure performance, and share clinical information across a team of providers—all cornerstones of the medical home concept. That IT investment, however, may run into the tens or even hundreds of thousands of dollars. This may not be a problem for large, profitable practices, but is a brick wall of an obstacle to the small, one- and two-doctor offices that account for about one-third of all U.S. physicians.

"We've taken it upon ourselves to provide participating physicians with access to all necessary information technology to participate in our patient-centered medical home (PCMH) program," said Burrell, "If they have high-speed internet access, they can participate."

The vast majority of CareFirst physicians do participate. To date, some 85 percent of all primary care providers (i.e., more than 3,600 primary care physicians and nurse practitioners) in CareFirst's network in and around Washington, D.C., have signed on. Those providers care for almost 1 million CareFirst enrollees.

CareFirst's Patient-Centered Medical Home Program

As with any medical home, the central idea behind CareFirst's initiative is for patients—particularly very sick patients with multiple conditions—to get the kind of patient-centered, well-coordinated care they need to speed recovery and better manage their health issues. Providing a medical home for patients is a hands-on, labor-intensive effort. Doctors are expected to talk to each other, compare notes, and share test results. If a patient doesn't show for an important visit, a staff member finds out why and makes an effort to follow up. The responsibility for that coordination and hand-holding falls on a patient's personal physician and often involves a substantial amount of effort of the sort that is not typically compensated under traditional insurance arrangements.

But CareFirst's medical home does compensate that effort, and handsomely. In addition to an across-the-board, 12 percentage point increase in compensation for primary care services, the insurer also pays doctors $200 per patient to develop care plans for high-risk patients and $100 more every time a care plan needs to be updated. Those care plans carefully document a patient's health issues and outline all the tests, therapies, medications, and other care he or she needs, making them a useful resource for other members of the care team. Care plans also specify which team member is responsible for each aspect of a patient's care.

To support physicians in their efforts to better coordinate care, CareFirst developed a user-friendly online care plan tool and other data and online care management capabilities that are freely accessible to participating doctors. Some doctors have complained that loading patient data into the online tool can be burdensome, but once it's there, the system is easy to navigate and helpful.

Paul Grundy, M.D., chairman of the Patient-Centered Primary Care Collaborative (a group that advocates for the broad adoption of the medical home model) and one of the nation's leading medical home advocates, called CareFirst's online PCMH tools a "game changer that will make the medical home applicable to the broader medical community instead of just to the tech-enabled subsection."

Participating doctors are grouped together into panels of five to 15 physicians. The physicians in a given group may be all from a single office, or, more commonly, grouped together from several practices. Of the more than 400 panels now participating, the average panel includes eight to nine physicians. How effectively those panels control health care costs among their patients helps determine whether or not they receive a bonus payment, but controlling costs isn't the only factor that's weighed at bonus time. Grouping the physicians into panels allows CareFirst to measure each panel's results on various aspects of quality such as:

• prevention, screening, and control rates for various illnesses: what percentage of diabetics had their blood sugar well controlled? what percentage of patients with cardiovascular disease had their blood pressure under control?
• structure and access: are same-day appointments available? how quickly were after-hours calls returned?
• degree of engagement: was the physician responsive to nurses' inquiries and requests? were care plans filed in a timely manner?
• appropriateness of use: were imaging services and antibiotics used appropriately?
• effectiveness of population management: did the practice track illness rates and health issues across its entire patient population?

CareFirst weighs a panel's quality score and its level of cost-savings to determine whether the group earns an outcome incentive award, which is paid over a 12-month period in the form of an additional percentage point increase on primary care fees. Those scores and some utilization data are available to other participating providers, which supports some very effective self-policing among doctors and hospitals, Grundy says.

"If a doctor or a group does twice as many tests or surgeries as others in the area, then they will quickly be educated about community norms," he says. "In fairly short order, if the situation isn't addressed, they won't get any more business and no one will want them in their panel. It's a very practical and motivating new paradigm: dangerous overutilization means a lower paycheck."

The potential for CareFirst's medical home to promote self-policing among physicians has won the program other supporters, too. Among them is John Miller, executive director of the MidAtlantic Business Group on Health, an association that promotes cost effective health care purchasing for employers responsible for more than half a million lives. "Nothing in the present health care system encourages doctors to consider costs, so it's very easy to order expensive tests that may be of marginal or no value," he says. "Doctors participating in CareFirst's effort will get a clear sense of how much things cost—that in itself is valuable."

How the panels operate is largely up to them, but Burrell explains that the panels that receive bonuses tend to be better at managing the "cycle of breakdown" that sends patients with multiple chronic diseases to the emergency room. In other words, those practices are doing what they're supposed to be doing—coordinating, collaborating, and following up when treatment plans aren't followed to the letter.

A large team of nurses helps ensure that the program runs smoothly. Altogether, CareFirst has dedicated more than 100 full-time nurses, many of whom have backgrounds in caring for people with chronic illnesses, throughout the region to help coordinate care among providers, track incoming patients, identify patients who may need care plans, help ensure smooth discharge transitions, and manage referrals.

"We have nurses in every region who follow up with patients on a daily basis," said Burrell. "The key to a good financial and clinical outcome for a program like this is to make sure as few patients as possible fall through the cracks. The nurses are key to this."

So Far, So Good

During the program's first full year of operation, CareFirst recorded a net 1.5 percentage point drop in medical expenses versus projections. That translates to roughly $40 million in savings overall; roughly $22 million to $23 million will be paid back to providers in the form of additional fees.

That money is nice, say providers, but few peg their participation in the program to the expectations of a larger performance incentive, or even to the 12 percent fee schedule bump they receive by virtue of signing up for the initiative.

"For our group, the draw was that it allows us to practice medicine in a way that we want to practice medicine," said Steven Schwartz, M.D., of Potomac Physician Associates, a 20-doctor practice. The practice received a bonus Schwartz calls substantial, but is of secondary importance relative to other benefits of participating in the program. "Every doctor is familiar with the pressure to see a lot of patients every day. That churn is not why anyone becomes a doctor. This program gives us the opportunity to pause and spend more time with patients that really need and deserve our attention. It lets us make sure we're getting all the right information and finding the course of therapy that's going to work for them."

Despite the program's strong start, not all participating panels will receive bonuses. About 60 percent of panels beat cost estimates by an average of 4.2 percent in 2011. Those panels will earn bonuses of between 1 percent and 50 percent of their total billing. The average award will be about 20 percent.

In another good sign for the program, among doctors that participated in the program's first full year, nearly all will be participating again this year. Only a handful of small practices were terminated from the program for failing to file care plans or coordinate activities with regional nurse care coordinators. While small practices may have been given special consideration during the program's development, large practices have warmed to it as well. Every practice in CareFirst's network with more than a dozen physicians participates.

But Burrell says that it may still be a while before he's ready to pass judgment on the effort. "Years three to five will determine whether this is a big success or a little success. Bending the curve by 1 percent or so for one year is a great start, but if we can do that every year for a few years then we've really got something that will get everyone's attention."

At that point, says Burrell, employers will start to take note. This early in the program though, most employers are merely appreciative and interested in the effort rather than fully engaged. "Our sales staff talk about the effort and most employers appreciate the value in focusing on the sickest patients. But when we can show that we're keeping people healthier and that we can really hold down costs—that's when I think this becomes relevant for marketing purposes."

Next Steps

The early success of CareFirst's medical home has not gone unnoticed in health reform–obsessed Washington, D.C. In June, the Centers for Medicare and Medicaid Services (CMS) awarded CareFirst a $24 million grant that will allow it to expand the organization's medical home to the Medicare market and serve about 25,000 Medicare beneficiaries. The CMS grant money will largely pay for physician incentives.

CMS projects that the money will save about $29 million over the next three years in the form of reduced hospital admissions, readmissions, and emergency room visits. That's an important area in which to cut costs, as Washington has some of the highest inpatient and hospital readmission rates in the United States.

"The award from CMS is a nice vote of confidence in the program," says Burrell. "And I believe it will have an immediate impact on the health of our community."

By Brian Schilling

In a remarkable essay that appeared recently in the Washington Post, an infectious disease specialist from Georgia wrote, "I believe I am guilty of overtesting my patients and overprescribing antibiotics to them." The disturbing part of the essay, however, is not that this particular physician has a tendency to overtreat patients, but that the practice is so very normal. Overtreatment—and the accompanying expense and risk—has become so routine in today's health care system that that it may account for one-third the nation's health care tab.

In April, nine leading medical societies took this issue head on, launching the highly publicized Choosing Wisely campaign to curb excess care. Led by the American Board of Internal Medicine (ABIM) Foundation, the medical societies identified a list of 45 medical tests and procedures that physicians shouldn't do without good reason. Each participating medical society was charged with identifying five common, potentially harmful tests or procedures for which the risks exceeded the benefits. The resulting "don't do" lists—one from each medical group—are remarkably clear: don't do expensive scans for lower back pain; don't do imaging for uncomplicated headaches; don't prescribe antibiotics for common colds; and so on. The full list of tests and procedures can be found here: http://choosingwisely.org/?page_id=13.

The roots of overtreatment are varied. Doctors often cite being apprehensive about medical malpractice and the need to practice defensive medicine. Others note that they may not even be aware of the issue since they are not routinely given data showing how their practice patterns may be in synch or out of line with their peers or with accepted guidelines. In many cases, it may also be in a physician's self-interest to overtest. About one-third of physicians, according to a 2008 study,¹ have an ownership stake in a clinical lab. Patients play a role too, encouraging physicians to prescribe antibiotics when they are not indicated or pleading to arrange an expensive test, "just to be sure."

As an issue, overtreatment and overtesting may seem relatively innocuous. Consider the Pap test, a screen for cervical cancer. This routine, accurate, and simple test that costs approximately $50 is administered to millions of women every year. What's the harm? Unfortunately, the ranks of women routinely receiving Pap tests include millions of women who have had a hysterectomy and thus have no cervix and no risk for cervical cancer. According to a 2004 study, roughly 10 million women² who had had a hysterectomy had a Pap smear in the previous three years. That's about half of all women who underwent a hysterectomy. Multiply that by hundreds of procedures and millions of patients and the costs add up. The net cost of overtreating and overtesting may be as much as $700³ billion added to the nation's health care tab annually.

To help spread the word on the new recommendations, the ABIM Foundation has enlisted the support of Consumer Reports, AARP, Wikipedia and hundreds of media outlets. NBCH and various business coalitions are also working to develop Choosing Wisely tool kits to help engage employers in the effort as well.

The campaign has generated hundreds of articles in the media; among physicians, it is a hot topic of conversation. Still, no one expects overtreatment to disappear as an issue any time soon. "This is a cultural shift that will take time," says Daniel Wolfson, executive vice president and chief operating officer of ABIM. "The important thing is that the campaign is provoking informed conversations between patients and physicians about unnecessary care and how it can lead to real harm."

References

1. http://www.hschange.com/CONTENT/1172/  
2. http://blogcritics.org/culture/article/unnecessary-pap-smears/  
3. Panel on Measuring Health Care Quality and Value (powerpoint presentation) Carolyn M. Clancy, MD, Director, Agency for Healthcare Research and Quality; Washington, DC – November 10, 2010  

By Brian Schilling

If you don’t recall the peanut-butter-based salmonella outbreak of 2009, thank social media. Without it, you might remember the outbreak as a sad and disturbing failure of the public health system that cost hundreds or even thousands of lives. But instead, a broad social media campaign waged mainly over Facebook and Twitter directed by the Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA) largely blunted the outbreak, sparing countless lives by spreading a crucial message almost instantly to smart phones and other devices all across the country: Put down the PB&J!

This triumph of technology over a very real and potentially daunting health challenge bodes well for our health care future. This happened back in 2009 when Twitter had 29 employees and Facebook had a mere 200 million users, compared with 400 employees and 900 million users this year.^1,2 Social media was still in its toddlerhood and the real potential of using it to improve population health had not yet been explored. Much potential remained untapped. It still does. But that’s changing fast.

Today millions of Americans with thousands of different conditions regularly turn to social media sites to help them research conditions, learn about medical options, trade treatment experiences, keep family and friends updated, or simply seek support. Among the more popular of these sites are: PatientsLikeMe, CarePages, CureTogether, iMedix, DailyStrength, and OrganizedWisdom, all of which make the same fundamental promise—to link people with the collective support and input of a caring community.

If this sounds like it’s perhaps nice, but not medically relevant, think again. Studies like “Perceived Benefits of Sharing Health Data Between People With Epilepsy on an Online Platform,” published in the peer-reviewed journal Epilepsy & Behavior, are cropping up in the established medical literature more and more frequently. Most find that patients can substantially benefit from the support and input social media so readily provide. The study referenced above found that among new members of a PatientsLikeMe epilepsy community, perceived benefits included finding another patient with the same disease to talk to (59%), better understanding of seizures (58%), and learning more about symptoms and treatments (55%). Study authors concluded that “sharing of health data via social media may have the potential to improve disease self-management.”

Leading hospitals and health systems are very much on board. The Mayo Clinic, Boston Children’s Hospital, and the Cleveland Clinic have all moved to integrate social media tools into their patient engagement efforts. Reviews have been almost universally positive and organizers say that the effort has also spawned online communities that independently arrange tweet-ups and in-person meet-ups.

Smart Phones and Apps Galore

Apart from allowing on-the-fly access to social media resources, today’s smart phones—more than 100 million Americans have them³—enable patients to play a much more active role in their own health care. In addition to serving as a mobile phone, a smart phone is a small, Web-enabled computer that, with the right app (i.e., application for mobile devices) and hardware, can be made to mimic a range of diagnostic equipment. Some 18,859 such apps are now available for purchase or download⁴ and they give users an impressively broad menu of options for measuring, monitoring, tracking, and controlling various conditions. For example, there are currently apps or devices that help users to:

• monitor and measure glucose levels;
• perform a basic electrocardiogram (EKG);
• find conveniently located providers or urgent care centers;
• refill prescriptions;
• scan bar codes and retrieve related nutrition information;
• view and store x-rays;
• triage medical conditions based on symptoms;
• check drug information;
• quit smoking; and
• track body mass.

The more sophisticated of these apps can automatically upload data to a patient’s electronic health record (EHR), as well.

Regulatory issues abound. To date, very few of the apps on the market have earned FDA approval. Little wonder: app makers tend to be small, fast-moving, regulation-averse entities that prize being first to market even to the exclusion of having a viable business model. The FDA is only now working to define which apps might eventually require FDA approval. For its part, the Senate seems unsure that regulation is called for at all, having recently voted to delay an oversight effort over concerns that it might stifle innovation and cost jobs.

Hello Health

The rapid embrace of smart phone technology to communicate, research, buy, play, and otherwise live begs an interesting question for the standard physician practice. How much longer will the “let’s-do-everything-in-person” business model stay viable? While there are no signs of an impending collapse, a number of vendors are eager to help practices offer patients a wide range of communications options and interactive tools.

There may be a very large market. According to a 2012 Accenture survey⁵ (which, notably, was conducted online), 90 percent of patients want to self-manage their health care by using technology. That means that they would like to have the option of viewing records, seeing physician notes, making appointments, and receiving test results, among other functions, via their computers or phones.

Most physician practices can’t yet accommodate that desire. Barriers to establishing secure systems for communicating sensitive medical information include cost and Health Insurance Portability and Accountability Act (HIPAA)–related privacy concerns. Even so, many physicians are at least considering their options. And some systems have already taken the plunge. Kaiser Permanente members enjoy all of the interactivity in the paragraph above and as a result, the insurer estimates that it avoids more than a million office visits a year.

Small practices without Kaiser’s infrastructure can turn to one of dozens of vendors vying for space in this market. One such vendor is Hello Health, a four-year-old New York–based firm that markets interactive EHR technology to practices in 26 states. The firm is small. Its clients number in the hundreds rather than the thousands, but its software offers a robust, fully HIPA-compliant platform for online scheduling, prescription renewals, medical record access, instant messaging, lab result review, and even video visits.

Patients and physicians seem happy with the decision to move some care and administrative activities online. One patient, John Dias, a retired IT professional from Universal City, Texas, noted that his doctor’s switch to Hello Health had saved him at least one very awkward trip to the doctor’s office. “I had a nasty bruise on one leg that was related to a chronic condition and was supposed to go back for a follow-up visit. At the time I couldn’t easily get to his office, so we arranged a video chat instead. My doctor looked at the bruise, saw that it was healing nicely, and that was that.”

Overall, about 90 percent of patients opt to continue using Hello Health year after year despite the fact that it may cost them a small monthly fee. Few, if any, physicians have dropped the platform. For many practices, the switch to Hello Health’s software has meant a bump in revenue.

“It has meant a little extra income that has added up over time,” said Gary Leeds, M.D., a New York City–area family practice physician and an early adopter of the technology. But, he says, that’s not the real benefit. “A lot of our patients have mentioned that they like the online aspects of Hello Health,” he noted. “It’s a huge time saver for our tech-savvy patients and they appreciate knowing that we’re only a click away.”

The target market for Hello Health’s software and the price are both somewhat surprising. “We target solo practitioners or practices with just two or three doctors,” said company vice president Stephen Armstrong. “And the price is zero.” Hello Health’s revenue comes from a percentage of the annual fee practices charge patients for access to the platform. Those fees are typically $60 a year.

Potential Cost Savings?

Whether more practices will elect to offer online interactive tools in the future remains to be seen, but the high level of interest and the broad penetration of technology seem to suggest a Web-enabled future for health care. Many believe this will bring savings. In 2011, there were nearly 1 billion doctor’s office visits in the United States.⁶ Each one presumably generated some sort of bill. Employers pick up the bulk of the tab for those bills. But what if 3 or 4 or 5 percent of those visits became unnecessary? How many lost hours of work might be recaptured if, instead of going to the doctor’s office, an employee could snap a picture, e-mail it, and dash off a note to his doctor?

“I think the potential for savings is underestimated by a wide margin,” said Armstrong of Hello Health. “How much does the average practice spend on administrative costs? We have Hello Health practices that have been able to redirect administrative staff to other activities because they’re almost entirely paperless.”

A Tech Firm Emphasizes the Human Touch

Tesla Motors, the billionaire-backed maker of sleek, all-electric sports cars, is perhaps ideally suited to highlight social media and technology in its health benefits. The company’s demographic skews heavily in favor of young, well-educated employees. It’s hard to imagine that even a single Tesla employee doesn’t already have a smart phone and can navigate comfortably around the online world. The company is working with its health vendors to ensure that employees will soon have at-work access to a full range of options that allow them to chat with their doctors, renew their prescriptions, and download lab results.

Nevertheless, Tesla is purposefully not leveraging technology as a substitute for the kind of one-to-one interactions that might seem quaint in a tech-enabled era. Benefits manager Nate Randall eschews blast e-mail as a communications medium, having sent, he estimates, only three in the past 18 months. “Ninety percent of those e-mails get deleted,” explains Randall. “We prefer to communicate about benefits face-to-face; there’s just no good substitute.”

Randall still meets with every new Tesla employee either individually or in a small group during orientation or in days-long open enrollment sessions to go over benefits and make sure they fully understand their options and resources. He says it’s well worth it.

“We were recently named one of the top employers in the Bay Area,” says Randall. “Part of that is because we’re a cool technology company, but part of that is also because we know when not to be.” Randall explains that the Tesla human resource department’s quasi-official motto is “do the right thing,” which sometimes means leaving the smart phone out of the loop.

References

1. http://blog.twitter.com/2011/03/numbers.html  
2. http://en.wikipedia.org/wiki/Facebook  
3. http://www.geekwire.com/2012/100-million-americans-smartphone-47-percent-choose-windows-phone/  
4. http://www.washingtonpost.com/business/economy/health-care-apps-for-smartphones-pit-fda-against-tech-industry/2012/06/22/gJQAHCcBvV_story.html  
5. http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Is-Healthcare-Self-Service-Online-Enough-to-Satisfy-Patients.pdf
6. http://www.ahrq.gov/research/pcwork1.htm  

By Brian Schilling

Not long ago, an unlucky vice president of benefits walked into her CFO's office during contracting season fully prepared to go over the usual issues around vendors, benefits, and wellness programs. She expected the discussion to focus, as usual, on costs. Instead, her CFO threw a curveball and steered the conversation toward what they were getting for their investment. The VP stammered a not-very-convincing answer and left the meeting feeling like a nonessential administrative staffer.

For the unprepared, that scenario may become more and more common, says Tom Parry, Ph.D., president of the Integrated Benefits Institute (IBI), a nonprofit dedicated to proving and quantifying the relationship between worker health and company productivity. "CFOs are a lot more dialed in than they used to be when it comes to making health benefits decisions," he says. "They used to operate on the assumption that health benefits were simply an unavoidable cost of doing business. Now they want a quantifiable way to assess the value of that investment. The old answer that we're spending money on health care because we have to won't fly anymore."

Parry's views are supported in a 2011 survey of CFOs conducted by IBI. That survey was designed to answer one principal question: How can benefits managers best convince financial executives that wellness efforts and other health initiatives are an investment? To that end, the survey looked at a range of related questions: Which data are typically available to CFOs? Which data are deemed reliable? Which missing data might be compelling? Do CFOs fully understand the relationship between workforce health and a company's bottom line?

On the last issue, the survey found a range of understanding. "Don't assume that the path from wellness programs to healthier employees to more productive employees to better financial performance is intuitive," said Parry. "It's now part of the benefits VP's job to lead the CFO down that path and provide metrics that will validate related investments."

In fact, only about 29 percent of CFOs participating in the survey had a truly sophisticated understanding of the link between health and productivity and financial performance. "To a fair number of CFOs, worker health is only relatable to direct health care costs," said Parry. "They're less aware or unable to quantify how worker health affects turnover, replacement worker costs, productivity, or even sick leave."

Parry is quick to note that this isn't always the CFO's fault. Often, they're simply not getting the relevant data. The IBI survey found that two-thirds of CFOs don't receive any sort of data about the impact of health on work performance or about the return on investment from various health interventions. "It's not that they don't want this information," clarifies Parry. "They're just not getting it."

Measuring Productivity

The survey included an open-ended question inviting CFOs to offer their opinions on the best way to quantify health-related lost productivity. By far the most common suggestion was to quantify the cost of absence days either in terms of replacement workers, sick pay, lost productivity, or a combination of all three.

IBI subsequently developed a white paper on measuring worker productivity that includes a list of metrics designed specifically to produce data that will be meaningful for CFOs. For example, the paper proposes tracking the percentage of employees who fall into different health risk categories over time. This metric would show CFOs how wellness programs change worker behavior and reduce health risks and medical claims.

Jeff Tetrick, CFO of Pinnacol Assurance, the largest workers' compensation firm in Colorado, is a strong proponent of measuring productivity, and has been for some time. That makes sense—the entity's profitability rises and falls with the health and productivity of the workers it insures. To demonstrate the importance of this concept to its policyholders, Pinnacol periodically measures its own productivity against the progress of its various wellness initiatives. But how, exactly, does one measure productivity at a workers' compensation firm?

"We use self-reported surveys," Tetrick says. "We ask employees, how productive they were and they respond. We've been doing this for three years and have a lot of data that helps us identify trends and understand if what we're doing for our own population in terms of wellness is working."

Tetrick says that the correlation between investments in wellness and improvements in productivity has been strong. "Every year we've seen the productivity numbers go up and the health risk factors go down." Those self-reported productivity surveys are backed up by other metrics. Over the same period, Pinnacol has seen worker obesity rates drop by 2 percent and the incidence of chronic conditions among its workforce drop by 10 percent.

"We're happy with the investment we're making in wellness," Tetrick says. "It shows me that our efforts are making a difference in our employees' health and enhancing their quality of life. For the company, that translates into spending a lot less money now and in the future on claims."

For more on this subject, view the IBI white paper here.

By Brian Schilling

When the Affordable Care Act broadly introduced the concept of a health exchange to the nation two years ago, the intent was to develop a means of extending coverage to millions of individuals and small employers by offering more coverage options in an organized, convenient marketplace that offers comparable information and affordable prices. The health exchange concept has gained real traction in the broader market, too. Insurers, consultants, and employers of all sizes are all now looking into the possibility of establishing their own private exchanges that would operate alongside their public counterparts.

Like the forthcoming public exchanges, private exchanges would organize and repackage information from participating health plans and make it easy for people to compare and buy coverage online. Employers would contract with these exchanges to offer coverage to their employees. But during open enrollment, the employees, not their employers, would take the reins, making all their own coverage decisions autonomously. Employers would still foot much of the bill, presumably, but on a defined basis. Each employee would receive only a set amount per month to be used on the health care plan of their choice. If employees choose a particularly generous plan, they'll make up the difference themselves.

The appeal of private exchanges is based primarily on two things: simplicity and predictability. In terms of simplicity, from an employer's perspective, insuring workers through an exchange would be considerably simpler than doing so through a carefully selected handful of health plans. Gone are the headaches associated with selecting health plans, managing open enrollment processes, educating employees about options, and negotiating with plans about rates, services, and coverage. Instead, the employer's involvement would be limited to selecting an exchange, directing employees to that exchange to select coverage, and paying a portion of the premium. Many employees won't mind; coverage options would probably increase for most participants as exchanges would likely offer a menu of plans broad enough to satisfy any employee.

Private exchanges could also offer employers the sort of cost predictability many crave. Through an exchange, employers would simply pay a set amount per employee per month: a "defined contribution." Coverage bought through an exchange would be fully insured, thus eliminating the worry associated with self-insuring and possibly experiencing higher-than-expected claims down the road. An employer with a stable employee population could, in theory, budget its health care costs almost to the dollar on the first day of every year.

"There is enormous potential for private exchanges to grow very quickly over the next three to five years and become a driving force in the market," said Ken Sperling, National Health Exchange Strategy Leader at Aon Hewitt, a benefits consulting firm that recently launched a private exchange and is now lining up clients for a fall 2013 launch. "Our expectation is that we'll have 100,000 enrollees by the time we launch and continued strong growth thereafter. Employer interest is high."

Insights from the Transition to 401(k) Plans

To the skeptics who point out that interest does not beget growth, it's worth noting that this wouldn't be the first time the benefits world has been upended by an attractive newcomer. Between 1980 and 2005, 401(k) plans leapfrogged the once-dominant pension model and became the new normal in terms of how Americans save for retirement. Among the Fortune 100, the trend is even more stark. In 1985, 89 Fortune 100 firms offered a defined-benefit pension plan; just 13 do so today.¹

"Two of the reasons 401(k)s became so popular so quickly are that 1) they offered employees a lot of choice and control, and 2) they offered employers a way to fix their costs and budget effectively," explains Sperling. "Those same advantages also apply to health exchanges."

Sperling's firm, Aon Hewitt, is not waiting for 2014 to test the private exchange concept. Last year all 20,000 of its U.S. employees used the company's own private exchange to select the coverage that best met their needs. The transition went smoothly, Sperling says, with 93 percent of employees reporting they were very satisfied with the experience and with their choice of plans. Sperling says Aon Hewitt's overall costs didn't increase and because the plans offered through the exchange were fully insured (and thus had a set price), it allowed the firm to do something it couldn't normally do: budget its health care costs accurately.

"For employers I think the ability to budget effectively may be one of the biggest draws of the exchanges," noted Sperling. "That's going to appeal to a lot of CFOs and benefits managers."

Aon Hewitt is not alone in the private exchange space. Last August, a subsidiary of UnitedHealth Group bought Connextions, a technology and consulting firm that specializes in helping public and private clients form health exchanges. The following month, WellPoint and Blue Cross Blue Shield of Michigan bought a stake in Bloom Health, a Minneapolis-based exchange host. Shortly thereafter, they announced plans to launch a national private exchange. Many other such efforts are now taking shape.

Surveys Support Employer and Employee Interest

Two national surveys suggest that private exchanges may have a place in the nation's health care future. Aon Hewitt's Corporate Health Exchange Survey, published in March 2012, found that 72 percent of employers were very or somewhat interested in exploring whether a private exchange could help control health care costs. Nearly 45 percent said they expected to offer benefits to employees through a private exchange within the next three to five years even though only 4 percent do so now.

A second survey attests to similarly high interest among employees. J.D. Power and Associates' 2012 U.S. Member Health Plan Study found that 39 percent of workers who are currently covered under their employer's plan would welcome the opportunity to shop for insurance through a state exchange if they had the opportunity. The same survey found a similarly sized contingent of workers at the opposite end of the spectrum—37 percent—who said they would prefer to keep getting coverage through their employer. That represents a steep decline from 2011, when 50 percent of workers said they would prefer to keep their employer-sponsored plan.

Aon's Sperling notes that survey results aside, health exchanges certainly aren't for every employer. Those that are considering the exchange option must be:

• comfortable stepping away from active management of plan design and vendor management to focus on other things, like wellness, for example;
• confident their relationship with employees is not dependent on plan design; and
• able to commit to a defined-contribution approach to health benefits.

Asked if that typically means smaller employers, Sperling says no. "At this point interest is not confined to employers of a particular size, industry, or geographic location. The appeal of knowing how much you're going to spend on health benefits going into your budget cycle cuts across all borders."

Waiting to Move Forward

Writing late last year about what he views as the near-certain shift to defined-contribution plans, former Congressional Budget Office director Peter Orszag notes that simply putting employees in charge of their benefits and giving them more skin in the game will not substantially help curb overall health care costs.¹ Others have speculated on the possibility that the exchanges, both public and private, may disproportionately attract sicker workers which would ultimately push costs higher, thus undermining the exchanges altogether.² Still others worry that health care quality may suffer should employers relinquish en masse their traditional role of driving the health care quality agenda.³

These and other concerns have left most employers on the sidelines for now, watching and waiting for the early adopters to start talking about results. It's an area where no one seems to want to be first to take the plunge, but many are pondering second or third.

1. http://www.bloomberg.com/news/2011-12-07/defined-contributions-define-health-care-ahead-commentary-by-peter-orszag.html

2. http://capitolweekly.net/article.php?xid=zeebf3gpwal1k3

3. http://www.academyhealth.org/files/nhcpi/meyertillmann.pdf

Survey: Employers Expect Health Care Costs To Grow 7 Percent Next Year 

A new survey by the National Business Group on Health found that employers expect to see a 7 percent bump in health care costs next year, partly due to costs associated with complying with the Affordable Care Act. To help pay for the increase, employers expect to increase workers’share of health care costs by about 5 percent.

More Support for Onsite Health Clinics 

If the message has not yet sunk in that onsite clinics can help employers cut health care costs, consider the experience of employers in and around Green Bay, Wisconsin. There, tiny Bellin Health, a 95-doctor not-for-profit health system, has set up a handful of clinics for employers—ranging from a boat builder to a technical college to a door manufacturer—all of which saw health care costs either drop outright or inch higher at a rate far below projections.

Many States Poised to Defer to Federal Health Exchange

As many as half the states will forgo the opportunity to establish their own customized health exchange and instead defer to the federal exchange now being designed by the Department of Health and Human Services.