Tag Archives: health care delivery

SOTU: What Obama Didn’t Say

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Posted By Errol Pierre

President Obama filled up close to 90 minutes of TV airtime giving his 3rd State of the Union Address last week. With 6,953 words (about 12 pages) to choose from political pundits filled the airwaves all across the country with animated reactions commenting on everything from the details of his plans to his tone, his demeanor, and overall performance. But all too often we forget that with great orators, it is more important to focus on the words that were not said than the ones that were….

Here are the facts:

- “Health” was used only 7 times during his speech (roughly 0.001% which takes up less than 1 line on a page).

- His comments regarding Healthcare made up only 332 words. That represented 4.7% of his speech (about a page and half). A little better but still severely lacking in substance.

How can that be?

- Health expenditures in this country represent more than 16% of our GDP while the average percentage among high income nations is roughly 10%.

- 13.1 million Americans lack a job but more than 50 million Americans in this country lack health insurance. Doesn’t healthcare deserve more attention?

- Since inauguration, he has spent 60% of his time in office getting what he called his #1 domestic policy agenda, healthcare reform, passed through Congress. If you recall, he entered office on January 20, 2010 and healthcare reform was passed on March 23, 2011. So 15 out of his now 25 months were dedicated to the pursuit of universal healthcare.

- Lastly, most of the popular provisions of the law have already been instituted. Millions of young adults in their twenties have been able to get insurance through their parents. And even more promising, no child under 18 can be denied coverage for pre-existing conditions.

So why were there so few words on healthcare? Discussing income inequality yet avoiding healthcare is not having an honest discussion about the problem. America spends more money on healthcare than any country on the planet. What is not widely known are the percentages spent by the government versus the private sector and how that impacts the American pocketbook. This country is actually on par with other high income nations spending 7.4% of their GDP on government health expenditures like Medicare, Medicaid, and Veteran healthcare. For a comparison, countries like France (8.7%) and Germany (8.1%) are at higher levels with government run universal healthcare. However, when it comes to expenditures from the private sector, America spends an additional 8.5% of its GDP representing almost half (52.2%) of total health costs for the entire country. That is 4 times higher than most like nations. In fact those private sector figures put us in 50th place between Rwanda (49th) and Gambia (51st) according to the World Health Organization.

WHY IT MATTERS

Most Americans get health insurance through their employer leaving American businesses on the hook for large portions of the country’s private health expenditures. It’s been the catalyst for corporations moving jobs overseas. It’s why the United States Postal Service is teetering on the edge of insolvency. It’s why America bailed out General Motors and restructured their Union contracts to be the #1 car company in the world again.

Most Americans work for businesses with 200 or more employees. According to the Kaiser Family Foundation, 99% of the time these businesses are offering health insurance to those employees. The foundation goes on to highlight that the cost of these employer health plans have gone up by 113% over the past 10 years with employers paying close to 73% of those costs on behalf of their employee population. As a result they have shielded much of the exorbitant healthcare increases from their employees. This has had grave repercussions to the average American salary. You cannot talk about income inequality and ignore non-salaried benefits like health insurance. These increases have poked huge holes in the bucket of funds that corporations use to payout employee compensation. You also cannot blame health insurance companies for these increases either. Their profit margins barely surpass 4% compared to pharmaceutical companies that enjoy 15% margins. The blame really goes to the actual cost of providing healthcare.

The U.S Social Security Administration has tracked the national average wages in this country since 1951. In 2001 it was $32,921. In 2010 it is $41,673. So despite the increases in health insurance costs, wages have still gone up 27% in the past 10 years. American employees however have seen 131% growth in the amount of money they must contribute to their health plan. It has gone from $1,787 in 2001 to $4,129 in 2010. So Americans have literally went from paying 5% of their salary on health insurance to 10% in 10 years not even accounting for the increase in co-payments, deductibles, and out of pocket costs.

If you truly want to tackle income inequality, look no further than tackling the increases in healthcare spending. Healthcare reform did not go far enough on this issue. It increased access via health exchanges, protected more patients via insurance regulations like profit ceilings and mandated benefits. But it did nothing to tackle costs. Even worse, our healthcare system will continue to shield costs from the consumer by giving subsidies to lower income Americans so that insurance can be more affordable. But these subsidies are paid for by taxes and fees levied on health insurance companies ($60 billion), on Americans with rich “Cadillac” type health plans ($32 billion), on pharmaceutical companies ($27 billion), and on high income earners use of hospitals ($210 billion). The only problem with these types of revenue streams are the laws of economics. Since individual Americans and large businesses will be required by law to purchase insurance by 2014, they as consumers will be more inelastic than their suppliers. In the end most of these taxes and fees will be passed on to the most vulnerable consumers further eating away at their hard earned income.

President Obama concluded his healthcare remarks conceding that he was “willing to look at other ideas to bring down costs, including one that Republicans suggested last year — medical malpractice reform to rein in frivolous lawsuits.” The only problem is here is the sad reality. According to the Kaiser Family Foundation only 11,000 malpractice claims were paid in 2009 amounting to $3.6 billion. That sounds like a big number but it is only 0.2% of total U.S. health costs. So the only question left is how much medical malpractice reform could help to actually close the income inequality gap. Well, the average malpractice suit is only $11.99 per capita, putting $12 bucks back in everyone’s pocket. I guess the good news is this kind of policy change would help fight the common cold giving every American the extra disposable income to buy a bottle of Robitussin from CVS.

Errol Pierre works at a large insurance company focused on business development, sales, and strategy for employee benefits. He is currently pursuing a degree in Health Policy and Management with a specializing in health finance. He can be reached at errol.pierre@nyu.edu

 


Building an Exchange Strategy Part I – Changing Your Vantage Point

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Posted By Errol Pierre

Health benefit exchanges are set to be fully operational by 2014. As part of the Patient Protection and Affordable Care Act (PPACA), these exchanges seek to be a marketplace for consumers to purchase affordable coverage. Subsidies to reduce both the cost of insurance and the out of pocket expenses from copayments and deductibles will be available to eligible consumers as well. Estimates suggest close to 30 million Americans will find coverage through this avenue lowering the uninsured rate to 3%.

These exchanges will revolutionize the way health insurance companies operate. Most Americans receive insurance through their employer. As such, insurance companies have built their world around marketing to them rather than directly to individual consumers. Over the years, insurance company processes, products, and strategies have all conformed to employer choice and preferences. Even the way customer service is organized and how information is shared caters to an employer-centric business model.  However, by 2014 health insurance companies will need to operate differently to capitalize on the million of new health consumers entering the market.

Consumers purchase products much differently than employers. Consumer motivation is largely based on personal preferences and emotions while companies make rational decisions based on economic value.  So business to consumer (B2C) marketing has been much more demanding and onerous than business to business (B2B) marketing. Health insurance companies as a result have gotten away with minimal efforts in advertising using business publications and newspaper ads that reach CEOs, CFOs, benefit consultants, and decision makers. Marketing campaigns targeting decisions makers has been an easier road to handle than attempting to market the average consumer.  In fact most of the insurance policies sold in the United States are through brokers or independent agents hired by a business that receives compensation from the company whose product gets sold. Consequently, the construct of this industry has kept marketing innovation and ingenuity at bay. For years the basic message segmentation for B2B advertisements has been limited to industry and firm size.

Not all insurance companies suffer from this lack of consumer centric segmentation however. The car insurance industry is a perfect example of what the health insurance industry will aspire to be by 2014. Geckos and cave men, made up stores with humorous sales representatives, over the top actors representing natural disasters and unfortunate accidents, and catchy jingles all represent the car insurance industry’s push for market share catering to consumer preferences. Geico, Progressive, Allstate, and State Farm have all used innovative TV, internet, and other media ads recently to differentiate themselves. One main reason is because car insurance is largely purchased at the consumer level. As such, the industry caters solely to the wants, needs, and desires of the personal shopper. They have developed enhanced customer service levels, easy to use online tools, and a wide array of products and services all with a focus on consumer appeal. The consumer is essentially the center of the strategy. After all, it is the consumer who has the power to terminate the policy at any time; not the consumer’s employer.

Health insurance companies have a tough road ahead if they wish to compete at the same level. Moving from an employer-centric model to a consumer-centric model is more than just a mission and a vision. It really is a shift in corporate culture. It starts from the top down as much as it does from the bottom up. The CEO must believe in the change as well as the customer service representative answering the phone. There must be a commitment to innovation, ease of use, positive public perception, and consumer preference. The products offered must allow for customization and flexibility. The policies for grievances, appeals, and complaints must be customer friendly and aimed at pleasing the client. Such attributes have unfortunately been foreign to the health insurance industry and they have less than 2 years to quickly figure it all out.

Errol Pierre works at a large insurance company focused on business development, sales, and strategy for employee benefits. He is currently pursuing a degree in Health Policy and Management with a specializing in health finance. He can be reached at errol.pierre@nyu.edu


Medicaid Health Homes – The New York Story – Part 1

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Posted by Professor John Billings

New York, like most states, is moving rapidly to implement a new initiative to provide care coordination/management to high risk Medicaid patients.  Stimulated by the 90-10 federal match rate that was established in the Patient Protection and Affordable Care Act, the New York Health Home Initiative is initially targeted at more than 700,000 Medicaid recipients who have at least two chronic conditions or a serious and persistent mental health condition.  In 2009, New York spent more than $8.7 billion for these patients, and the goal of the initiative is to improve health outcomes and reduce costs through improved care management and coordination that lowers rates of hospitalization and emergency department use.

In New York, the Medicaid program will pay a monthly fee to a “Health Home” to manage and coordinate care for each qualifying patient.  The fee is expected to range from about $50-$350 per patient per month depending on the level of risk as determined by the patient’s CRG acuity score and predictive modeling on the risk of a hospital admission in the next 12 months.  As currently envisioned, for patients enrolled in managed care, the fee will paid to the managed care plan where the patient is enrolled, and the plan will determine where the “Health Home” will be located and how the care coordination fee will be distributed.  For fee-for-service patients, the state has asked for submission applications from providers interested in qualifying as a Health Home, and the state will assign patients to a Health Home based on prior outpatient utilization patterns (based on a “loyalty” analysis), or based ED/inpatient use or geographically for patients with no recent outpatient utilization.  The program will be implemented in three phases beginning with 12 counties (including Brooklyn and the Bronx) in January, 2012, with an additional 14 counties expected in April, 2012, and the remaining 35 counties expected in June, 2012.  For further information on New York’s plans, see:  http://www.health.ny.gov/health_care/medicaid/program/medicaid_health_homes/.

From a policy perspective, this initiative and its roll-out are of significance along multiple dimensions.  First the level of interest among providers has been enormous – the State received more than 200 letters of intent for applications to become a Health Home, with more than 90 in New York City alone.  Of course, with new money on the table in a time of Medicaid cutbacks, perhaps that’s not all that surprising.  But of more policy import is the extent to which the letter of intent process generated an unprecedented level of dialogue among medical, behavioral health, and social service providers, many of whom had no prior history of interaction.  Again, perhaps this is not so surprising – these are complex patients, with multiple conditions, often with a history of substance abuse or mental illness, many with housing problems, and many isolated with little or no social support structure.  Some potential applicants went solo or brought and handful of providers and community based organizations together.  But most applicants listed scores of medical provider organizations, behavioral health providers, social service providers, and other community based organizations, with four from New York City listing more than 100 organizations coming together for a potential Health Home application.

On one level, watching this diverse group of providers crawl out of their silos and begin to talk about what would be needed to coordinate the health and social needs was quite exciting.  But it also demonstrates the extent to which the current “system” is fragmented, with little integration within the medical care sector, but also little existing coordination (forget integration) between and among medical care providers, behavioral health providers, and community based organizations interested in the health and welfare of this vulnerable population.

This response also illustrates some of the challenges facing prospective Medicaid Health Homes (and the rest of health care services for that matter).  What will it take to be successful?  Optimally Health Homes would have the following capabilities and characteristics:

  1. A multidisciplinary approach for individualized needs assessment and care planning for participating patients;
  2. Integrated/organized/coordinated health and social service delivery system;
  3. Some sort of care/service-coordinators/arrangers, with a reasonable caseload size, a clear mission (to improve health and to reduce costs), an ability to engage and build trust with the patient, and a capability of respond to non-medical issues/needs
  4. Core IT and care coordination support capacity to track patient utilization in close to real time and to mine administrative data to help target interventions/outreach, provide feed-back to participating providers, and to examine utilization patterns that will allow continuous improvement and re-design intervention strategies;
  5. Ability to provide real time support at critical junctures, including ED visits (to help prevent “social admissions”, hospital discharge (to help develop effective community support/management planning), and or patient initiated contact for help for an emerging crisis; and
  6. Incentives/reimbursement policies to encourage and reward “effective and cost efficient care”, most notably to reduce hospital admissions and ED visits.

And how much of this currently exists?  How much is achievable in the short run?  Well, items 1 and 3 seem do-able.  The care coordination fee can help support the needs assessment and the costs of care coordinators.  The rest, not so much.  The biggest challenge will be coping with the fragmented medical, behavioral health, and social service delivery non-system.  It’s fine to come together on a letter of intent (talk remains fairly cheap) – it’s another matter to actually function as at least a quasi-organized, coordinated “system”.  The challenges of exchanging data among the non-integrated Health Home participants will be also daunting – just sharing and updating a patient care plan is likely to be difficult for some orgnaizations.  Assuring that the care coordinator knows in real time that a patient is in the ED or about to be discharged from the hospital present much bigger challenges, especially for the 30% or more Health Home patients not currently enrolled in managed care.  Of course, when the Medicaid card is swiped, Albany knows, but getting that information to the Health Home and its care coordinator is not currently including in the planning.

And what about incentives?  Clearly hospitals have the most to lose here, since the goal is to knock out hospital and ED visits.  In a managed care world where the hospital is included in some global capitation arrangement, incentives are somewhat aligned since the hospital can share in the savings.  But that sort of arrangement is relatively rare for most of managed care, and for fee-for-service patients, it is not existent.  Some form of shared savings arrangement for the Health Home Initiative is contemplated by the State, but currently it is just that:  contemplated.  Progress here will be critical to success of the initiative.

And as to success, what do we know about similar initiatives?  Well, another important policy issue related to Health Homes is that once again we are embarking on a major initiative without much evidence that it is likely to work.  It certainly sounds good on paper – care coordination makes sense and there is plenty of evidence that a lot of hospitalizations and ED visits are preventable/avoidable.  But less is known about how to do the preventing and avoiding.  This faith-based approach to policy making is actually pretty typical for Medicaid and most of health care.  Think back over the last 10-15 years for the last great Medicaid initiative:  enrollment of massive numbers of Medicaid patients in managed care.  What did we know about the effectiveness of managed care in improving outcomes and reducing costs then?  About as much as we know now for Health Homes.  And what do we know about how Medicaid managed care has worked so far:  shockingly little on some dimensions.

What is a bit frustrating on Heath Homes is that New York currently has an initiative that looks and smells a lot like Health Homes:  the Chronic Illness Demonstration Project (CIPD).  A monthly fee is paid to six demonstration sites to coordinate and manage care for fee-for-service patients at high risk of future hospitalization.  There is even a shared savings pool for projects that actually reduce costs (after including the costs of the intervention care coordination fee).  Unfortunately, the federal funding for Health Homes came along before we know how well and for whom CIDP is working.  We are going from a demonstration with a couple thousand patients to a ramp-up that ultimately may involve more than 700,000 patients.  Pretty classic.

This is not to say moving ahead with the Health Home Initiative is a bad idea.  The State has moved forward in a refreshingly open and transparent way, trying to keep the health community well-informed and trying to respond where possible to concerns of those likely affected as it rolls out the initiative.  And new federal money is new federal money.  And more coordination can’t be a bad thing.  And getting a broad range of medical, behavioral health, and community based social services providers to work together is fabulous, and it may stimulate more lasting and broader integration or at least coordination among these providers.  Perhaps even the first baby steps toward something that feels like an Accountable Care Organization?  One can only hope.  But what is fairly certain is that things are likely to get a bit messy along the way.  With the magnitude of change required to make Health Homes work, no one will get it all right the first time.  The goal should be to learn as much as possible along the way.  And it is important the State remain flexible and make necessary adjustments as the initiative is rolled out – the speed at which the initiative is being implemented should not be allowed to foreclose opportunities to encourage more lasting and fundamental change.  But stay tuned, it will be an interesting ride.

John Billings is an Associate Professor of Health Policy and Public Service, and the director of Wagner’s Health Policy and Management Program.  His research focuses on understanding  the nature and extent of barriers to optimal health for vulnerable populations.  He can be reached at john.billings@nyu.edu.


Who I Am and What I Hope to Achieve

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Posted by Jacob Victory

While inaugural game-day outings, presidential swear-ins, or grand openings of the local laundromat tend to have a lot of noise, glamour and “a 15 percent discount on your first five pounds of laundry,” my premier blog post comes with a large dose of humility, a little about who I am and what I hope to achieve with this blog.

 About Me: As a kid, I was the one who batted a home-run but couldn’t catch the ball (the mitt was too tight remains my excuse). As an artist, I paint my portraits to zoom-in on what I think is going on behind the mask of someone’s face. As a person, I believe in merit and in understanding that the ego doesn’t matter. As a professional, I seek to make an impact in serving those who are vulnerable—in other words, those who are rich, poor or like spicy foods, anyone who needs health care, healthy or otherwise, is always in a vulnerable spot. Why am I sharing my thoughts? Well, I want to give you my angle and I remember what is was like to be a student or what it was like early in my career and I’d like to share my thoughts because I’ve learned a thing or two from my experiences that others could benefit from. I also want to open up a discussion so we all can learn more, too.

My Blogging Roadmap: My blog will primarily focus on two areas. First, I write as an NYU-Wagner alum whose goal is to encourage current students and fellow alums to focus on what is relevant, what I consider smart things to do and not do, and how to work with others to chip away at making an impact. I’d like to address the need for mentorship, for reflection, and for relationship building. Also, I think students and alums always need strategies for job hunting or an understanding of how to network and find who may seem to be an elusive mentor.

Second, as a quiet observer of, but an active participant in, the theatrics of health care delivery, outcomes and, these days, reform, I wish to offer the practical viewpoint of what matters, what gets in the way, and what, in my self-exalted viewpoint, we should focus on. I’ll zero in on the need to maintain the viewpoint that “patient care is the only reason we are here” and what is needed to support this view; the need for collaboration between clinicians and “those business folks;” how performance improvement and succession planning must be priorities; as well as what I think the federal, state and local levels need to tackle in order to help health care organizations, clinicians, and administrators make this health care reform work..

Perhaps most importantly, I’m looking for a dialogue with you. If I can stretch your thinking (or make you chuckle), I’ll consider this blog successful. I’m flattered to write and excited to share.

Jacob Victory, an NYU-Wagner alum, is the Vice President of Performance Management Projects at the Visiting Nurse Service of New York. Jacob spends his days getting excited about initiatives that aim to reform and restructure health care.  He’s held strategic planning, clinical operations and performance improvement roles at academic medical centers, in home health care and at medical schools. Jacob also exercises the right side of his brain. Besides drawing flow charts and crunching numbers all day, he makes a mean pot of stew and does abstract paintings, often interpreting faces he finds intriguing.