Feb
16
On site clinic
Last Updated: August 18, 2010
There is a new “supply side” business model spreading across American. It can be found in supermarkets, drug stores, and shopping centers. It is the mini or little clinic that serves basic health care needs at very low costs. Typically staffed by Nurse Practitioners, who can make basic diagnoses, prescribe some medicines, give physicals, and provide some minor to moderate treatments, these clinics are open in the evenings and on weekends. Most services are covered by health insurance, and can provide a cost effective solution for the expected overwhelming demand on health providers that will result from the new Patient Protection and Affordable Care Act. They also provide a more convenient and rational service than the typical emergency room where many seek costly treatment for minor ills.
Emergency Room
We have identified websites where, in most cases, the referenced article originally appeared. Often, however, the URL for the article has changed. In this case, you can use the topic or the title of the piece to search the publisher’s site for the specific article. In other cases, you might be required to copy and paste the URL on your browser window to locate the referenced article.
_______________________
Correction in Chapter 6, at page 160: change the footnote 1 in the Vignette concerning Max to read: “The assumption here is that Max would be reasonably satisfied . . .” Delete the name “Tom.”
Clarification in Chapter 6, at page 175: change the 2d last sentence of the 2d full paragraph to read, “For example, the employer may decide that employees will pay about 40% of the total health are costs.” The sentence mistakenly refers to “60%.”
In Chapter 7 (Evolution of Health Care)
Listen to the podcast of a Hewitt official concerning the Patient Protection and Affordable Care Act and the need for employers to start planning possible revisions of their healthcare programs now. Fail to Plan, Plan to Fail
Add at page 188 - Direct contracting revisited?
In this Chapter we briefly describe some early efforts among employers to engage in direct contracting with medical providers. The idea is to offer health care without an insurance company. Several companies, Intel Corp., Toyota Motor Corp., Walt Disney Co., Pitney Bowes Inc., Marriott International, Inc., are developing fully equipped on-site medical centers staffed by physicians and nurses that essentially provide full primary and preventive care. It is offered at low cost to the employees and cuts overall costs for the employers. What are some of the general health, insurance, value, and quality issues here that might be relevant to your consideration of such a plan? See: McQueen, M. (November 16, 2008), Workers Get Health Care at the Office, The Wall Street Journal.
Add at page 193, footnote 24: Inflation adjusted HSA Limits (May 2009), and also at Table 7.3 at page 212.
The annual contribution limit for 2009 is $3,000 (single), and $5950 (family); For 2010, $3050 and $6150. Annual catch ups: $1000 (single), $1000 (family). It will remain the same for 2010. Minimum Deductible for 2009 is $1150 (single), and $2,300 (family). For 2010, $1,200 and $2400. Maximum annual out-of-pocket for 2009 is $5,800 (single) and $11,600 (family); For 2010, $5,900 and $11,600
At page 193: HSAs are growing
Retirement Weekly reports that HSA account assets have grown 63% in 2009, and the number of accounts has grown by 31% since 2007. Most (32%) of the account holders are over 50 and appear to be using their HSA to save for medical expenses after retirement. It is estimated that a person who saves $6,000 per year in his HSA will after 15 years have a balance of $148,000. Fidelity estimates retirees will need about $225,000 to pay for health care expenses. As of August, 2009 11% of the population has an HSA. Do these fact surprise you? It has been assumed that the young and healthy are the best bet for HSAs. How do you explain this? See: Retirement Weekly, “HSAs Work Best for the Healthy and Wealthy?” August 14, 2009, vol. 7, No. 33. (www.marketwatch.com)
Add at end of Exercise Number 6, at page 210: Mental Health and new coverage requirements
Check the newly passed Mental Health Parity and Addiction Act that requires coverages for mental health illnesses to be on a par with other covered illnesses. This means co-pays, co-insurance, and other limits must be equal for both groups of conditions. What impact do you think this law will have on an employer’s health care costs? Do limits become the norm? In other words, if there is a 15 visit outpatient limit, do providers tend to prescribe 15 days? What might be some possible “returns” for the sponsoring employer of this new parity law?
Add at end of top paragraph at page 198: I am really YOUR Doctor
One of the new primary health service models that is beginning to appear is “concierge - or boutique - medicine.” Here the primary care physician requires a annual fee of anywhere from $500 to $15,000 to be paid annually by patients. This physician in return offers same day call-backs and office visits, comprehensive annual physicals, and preventive care. Usually, the physician also reduces the number of patients he or she will treat. The annual fees are not covered by insurance, and the patient or his insurance company is responsible to reimburse the doctor for actual medical services. Another type of “concierge” service involves the doctor dropping out of health insurance, Medicare, and other third party programs. Patients pay an annual fee that covers all primary care services. What are some of the health care, insurance, financial, and risk allocation issues here?
Add to footnote 34, page 200: Some Clarity on HIPAA - higher premiums for sicker people? No! What about Wellness?
The DOL has issued some updates relating to non-discrimination among health care sponsors and TPAs that, for example, outline prohibitions against the denial of coverage based upon certain medical conditions and the charging of higher premiums for persons with certain medical conditions. The updates also describe the discrimination implications of Wellness Programs that offer incentives or special premiums for persons who participate in such programs. See: FAQs About HIPAA Non-Discrimination Regulations, February 20, 2009. (www.dol.gov/ebsa). Also, the EEOC has weighed in and has opined that the Health Risk Assessment that many employers require as a data base for participation in Wellness programs can violate the Americans with Disabilities Act. Watson Wyatt analyzes this development in a June 2009 report.
End of Chapter 7, Chapter Exercises at page 210, add to Number 8: Guaranteed issue of health insurance policy for very small enterprises
It is also possible for very small enterprises, with as few as 2 employees to qualify for the purchase of a group health policy. Unlike an individual policy seeker who can be denied coverage, most state laws require an insurance company to issue a policy to such a “group.” The premium quoted by the insurance company, however, will be determined by the health risks and other factors relevant to the group. See: www.statehealthfacts.org (search for “small group guaranteed issue.”). Wall Street Journal, May 27, 2009, D1
At end of Chapter 7, Add this to Number 9: Suppose also, your older brother is considering buying his own health policy. Develop a brief checklist for him to use as he considers various health policies. See: Mathews, A., (June 24, 2009) Going it alone when buying a health policy, The Wall Street Journal
At page 212, add the following exercise No. 16: To help soften the blow of a health care price hike, small businesses should weigh their potential cost saving strategies today. For companies with a Jan. 1 renewal date, the rest of the year is prime time to start looking for ways to cut costs. Assume you have been invited to meet with a new client seeking advice on how to reduce their costs. At this point, you do not know what type of plans they have and their costs. Prepare a discussion note listing at least 7 possible ways they could bring their health costs down. See: Ransom, D., “Seven Ways to Contain Business Health Care Costs,” Wall Street Journal, August 28, 2009 (http://online.wsj.com/article/)
At end of Chapter 7, at page 212, add a new Exercise No. 17: As we discuss in this Chapter at pages 202-204, many companies are cutting back on retiree health care which covers retirees under the age of 65, and often provides supplemental coverage for retirees over age 65 who participate in Medicare. Brainstorm what you think might be the consequences of both employer cutbacks as well as the total elimination of retiree health care as a benefit. For example, what is the likely behavioral reaction of current workers, the responses of retirees who qualify for Medicare, the financial impact on early and age 65 retirees, as well as the possible impact on the quality of their care? See: Munnell, A., and Monk, C., The Implications of Declining Retiree Health Insurance, Center for Retirement Research, Working Paper 2009-15, August 2009 (http://www.bc.edu/crr.). What does the new Patient Protection and Affordable Care Act say about retiree health care?
Add in Chapter 7, a new Exercise No. 18, at page 212:
18. According to a recent health study, participants in consumer driven plans with high deductibles and Health Savings Accounts are growing in popularity. Additionally, when compared to others, they are more cost conscious about their health spending, more engaged in maintaining their own wellness, are less likely to be obese and to smoke, are overall more healthy, and respond more to financial incentives relating to participation in wellness programs, selection of providers, and the use of health information technology. See: Fronstin, P., Findings from the 2009 EBRI/MGA Consumer Engagement in Health Care Survey, Employee Benefit Research Institute, Issue Brief No. 337 (December 2009) (www.ebri.org). Review the article and be prepared to discuss how you, as an employer sponsor, might design your health care plan to fully leverage employee engagement in good health practices. Also, what is the future of HSAs and HDHCPs under the Patient Protection and Affordable Care Act of 2010?
Add in Chapter 7, a new Exercise No. 19, at page 212: At page 188 et.seq. we discuss direct contracting and capitation. There is a new version of this concept that can be found in some health care markets. They are called “Accountable Care Organizations,” (ACOs). The idea is to use an integrated care group comprising primary care physicians, specialists, and a hospital to provide full health care service to a given sponsor who pays a per capita annual fee. There is no billing beyond this fee for medical services. National Public Radio (NPR) (www.npr.org/) reported on this development on January 5, 2010. The broadcast was titled “Health Reform, Encouraging ACOs.” Do some research and be prepared to discuss how ACOs work, their basic design, how financial risks are allocated, and what is it about their design that purports to encourage more efficient health care services without compromising quality. See, for example, a brief article on the topic by the New America Foundation, Health Policy Program. How do such plans fit into the PP & ACA of 2010?
Clarification in Chapter 8, page 214.
See 2d paragraph, second last line in the text. It should read: “was $81 per month (single) and $312 per month (family).
Correction in Chapter 8, page 218, footnote 6: the middle sentence should read: “Since out-of-pocket maximums (that are based upon coinsurance paid by the employee in a year . . .) Note: the out-of-pocket maximum does not include deductibles.
For Chapter 8, at page 220, 2d full paragraph: Add a footnote to the first complete sentence: We should note that not only are there cultural differences among various countries with respect to behaviors that might lead to different infant mortality rates there are significant differences in the way in which countries report infant mortality. Some do not include still born babies in their statistics, some do. Others do not include infants born at certain pre-mature intervals and weights, some do. For a review of the different reporting of infant mortality statistics, see: MacDonald,E., Health Care Myths, Fox Business News, June 23, 2009.
For Chapter 8, add at page 225, the following to footnote 52: The problem of obesity continues to worsen in the U.S. and is particularly prevalent among adults over the age of 55 many of whom are in the new “Baby Boomer” generation. Their obesity and the accompanying chronic diseases will weigh heavily on the future costs of Medicare. See: “Mississippi Tops Obesity Rankings,” Wall Street Journal, July 1, 2009.
For Chapter 8 at page 241: “Encouraging Integrated Health Care Practices” This can be an effective means to significantly reduce health care costs and expand coverage. The New England Journal of Medicine has just published an article by what are described as “thought leaders” on health care reform: “Achieving Health Care Reform - How Physicians Can Help,” May 25, 2009 at www.nejm.org/. The authors, E. Fisher, D. Berwick, and K. Davis, argue that physicians can lead by developing true integrated health systems that will provide better care and lower per capita costs. In fact, the authors conclude that compounding these cost savings through quality health care improvements can finance an expansion of coverage among the uninsured. They point out that the savings can be accomplished without penalizing providers by imposing lower reimbursements.
Add at page 251: The Congressional Budget Office weighs in on alternatives to reducing health care costs and also estimates the cost of the Obama Plan. While the ObamaCare has become law, it is interesting to see the cost impact of some of the alternatives not considered.
A very comprehensive report analyzing the alternatives to achieve the accessibility of health care in the U.S. can be found in ”Key Issues in Analyzing Major Health Insurance Proposals,” Congressional Budget Office, December 2008 (www.cbo.gov.) Among other issues, the Report discusses whether national health care or a single payer system would reduce health care costs. It concludes that expanding health care coverage through government programs will increase, not decrease total health care costs - either with higher taxes or premiums. Read the report, review the alternative “reform” approaches, and analyze the alternatives and the CBOs rationale for its various conclusions.
Add at page 233: Electronic Medical Records - A panacea or something less?
The Bush administration worked on the idea of creating a nationwide electronic medical record (EMR) system for every U.S. patient. President Obama proposes to continue and improve on this effort. As we point out in Chapter 8, this could serve to enhance the quality of health care by reducing medical errors and inappropriate care. Some estimate that the savings for such as system could equal 25% of the current medical costs in the U.S. One major problem: most records are designed to process insurance reimbursements not provide a medical record base for the patient. Some that do include Kaiser Permanente a California TPA that provides patient access to their own records with an explanation of the data. It is called “My Health Manager.” Others are responding. Here are some websites which represent private efforts to create electronic personal health records. Wal-Mart, for example is digitizing its employee medical histories. Google, Microsoft, and Intel are getting into this business. See: www.healthvault.com, www.google.com/health, and www.dossia.org/. Milliman, in a recent report called for a convergence of quality and efficiency, which could be facilitated by introducing quality clinical practice standards and electronic health records. Together, they could significantly reduce inappropriate care which costs the U.s. $600 billion per years. See: Blumen, H. and Nemiccolo, L (Milliman, June 2009), “The Convergence of Quality and Efficiency and the Role of Information Technology in Healthcare Reform.”
There are some recent reviews of this issue, however, that contradict the idea that huge savings will result from electronic medical records (EMR). Drs. Groopman and Hartzband of Beth Israel Medical Center in Boston, writing in the Wall Street Journal on March 12, 2009, “Obama’s $80 billion Exaggeration,” at A15) indicate the famous Rand 2005 study predicting such potential savings from EMR is not supported. Recent studies, they point out, showed that the use of EMR resulted in little improvement of outcomes as compared to those cases where traditional paper records were used. An April 15, 2009 report in the New England Journal of Medicine, by Ashish, K., et al, “Use of Electronic Health Records in U.S. Hospitals,” indicates that only 1.5% of U.S. hospitals have comprehensive electronic-medical records systems. NEJM 360-16. Another recent Canadian study of patients in 7 countries showed no benefits or drawbacks arising from the use of EMR. There is some indication that EMR could provide government health care sponsors with the opportunity to mine data and draw medical conclusions concerning the efficacy of certain treatments or therapies. This could be helpful in improving treatments, but it is not the stated purpose of EMR. Do some research and determine whether a major change in the format of medical records (both traditional and electronic), which are currently done to trigger provider reimbursements, might provide a better basis to improve medical outcomes, prevent medical errors, and enhance treatments.
Add to Footnote 54 at page 225: TPA Administrative costs include more than processing claims
One of the underlying rationales for health reform, relates to dealing with the high cost of insurance company administration. In fact, the PP&ACA of 2010, places restrictions on the percentage of premiums that go to pay for such costs. Some argue, however, that comparing the administrative costs of public to private programs should consider that the private TPAs do more than just pay claims. They build networks of providers, negotiate reimbursement rates, combat fraudulent claims, and pay marketing costs. These extra services that can mitigate overall utilization costs are investments in the better management of care. See: Weems, K. and Sasse, B. (April 14, 2009) Is Government Health Care Cheap?, Wall Street Journal, A15.
Add at Tax Changes, page 239: a little history - the Republican reform plan -using tax policy to change behavior.
On May 20, 2009, the Republican caucus offered an alternative to the Democratic health care reform proposals. The plan basically tracks that proposed by Senator McCain during the recent presidential campaign: (1) eliminate the favorable tax treatment of employer-sponsored health benefits. (See the rationale for tax change treatment at Kaiser Health News, How Congress Might Tax Your Health Benefits. (June 2009). (2) Provide an annual tax credit for the purchase of health care of $2300 (individual) and $5700 family coverage. (3) Facilitate the purchase of health care plans through multi-state insurance exchanges that allow for comparison shopping by individuals. (4) The health plan can be owned by the individual and not linked to his employment. (5) The plans would provide incentives to maximize use of preventive care. (6) If employers wish to continue sponsoring health care benefits, the costs above the tax credit amount would be ordinary income and charged to the employee. In effect, this would encourage employees to find better values either from their employer or on their own.
Chapter Exercises, p. 252 Chapter 8, Add:
Number 3: There have been a number of “supply side” innovations appearing in health care systems that could make health care more affordable. These include the Health Care Mini Clinics, briefly discussed in Chapter 7, as well as new heavily discounted drugs being offered directly to the consumer by large retailers, such as Wal-Mart, Kroger, and Walgreens. Many of the drugs offered under these programs can be obtained by the consumer at a lower price than that available in a prescription drug insurance plan. Aligning the reimbursement of primary care physicians to proper diagnosis and treatment regimens, as opposed to payments for performing services, Six Sigma quality programs among health providers, new health care programs offered directly by hospitals, such as the University of Texas Medical Branch hospital in Galveston to small businesses at very low costs ($60.00 employee premium) per month plus co-pays), and Patient Centered Medical Homes for the comprehensive and coordinated treatment of chronic diseases which currently generate about 70% of our health care costs can all lead to more affordable health care. They focus on the supply side of health care. . Also, with respect to the University of Texas plan, for $60 per month (employee single premium) what benefits and design features comprise the plan? It covers 20 MD visits per year, maternity, visits to ER, MRI and CT imaging, and surgery. It also includes a cap on R/x of $1200 per year and a $250,000 lifetime maximum. Only network MDs and hospitals care is covered. Typically, the employer pays 1/3 ($60 per month), the employee pays the same, and NGOs and Foundations pay the rest. This form of direct contracting between providers and small employers makes possible coverage for a segment of the market - employers with fewer than 25 employees - where only 32% of employers provide health insurance. Do some research on these and other supply side innovations that are developing and prepare a some talking points for a class discussion.
Number 4 (Page 252): At page 225 in the text, we refer to the problem of obesity and its impact on the high cost of health care in the U.S. In a recent study, researchers concluded that over 30% of adults in the U.S. population was obese and 45% suffer from serious chronic diseases which have a significant impact on life expectancy and the utilization of health care resources and costs. With respect to health care reform, what steps could be included that might effectively address this problem. Explain. (See: Thorpe, K., Ogden, L., Galactionova, K. (February 2009) “Weighty Matters - How Obesity Drives Poor Health and Health Spending in the U.S.,” National Business Group on Health
Number 5, (page 252): One reform measure that is frequently raised by physicians is tort reform. (See page 240 of the text.) It is alleged that there are too many malpractice claims filed against doctors that are without merit. With the potential multi-million dollar verdicts, however, physicians and their insurance companies are compelled to settle out of court. This drives up insurance premiums and, moreover results in defensive and costly medical practices that are designed to avoid any chance of liability. There are several approaches to tort reform: cap punitive damages, create specialized medical tribunals to hear such complaints and get the cases away from civil juries, and design a “safe harbor” standard that would exonerate a physician who followed prescribed medical practice. There are others. Read the attached article (the “Role of Medical Liability Reform in Federal Health Care Reform” July 2, 2009) from the New England Journal of Medicine and discuss the approaches. Also, can the federal government even get involved in tort reform? How could it be done? Which approach do you favor? What are some other possibilities that would ameliorate the defensive medicine problem that is not discussed in the article? What are the potential savings that could result from Tort Reform? Explain.
Number 6: As we note in Chapter 7, there are a variety of cost sharing design features in a typical health care plan. Total cost sharing, however, is increasing each year, shifting more of the costs of health care onto the consumer. Prior to the passage of the PP&ACA (Health Reform of 2010), many high deductible plans were exempting certain necessary preventive care measures from cost sharing features, such as office co-pays and deductibles. In July, the government agencies responsible for the Act issued an interim final rule limiting the plan sponsor from applying certain cost sharing to preventive care. Check the rule (see some references below) and be prepared to discuss these issues: (1) how is preventive care defined? (See the Rules and also see an article of July 16, 2010 by Ken Terry of BNET titled “How an Obscure Federal Panel Limits Preventive Care.” The article describes the U. S. Preventive Services Task Force which for the past 25 years has graded the clinical value of preventive services. (2) What are the cost-sharing limits? (3) Does the rule apply to “grandfathered plans?” (4) What will be the impact on the cost of a health plan as a result of the rule? (5) What is the policy underlying the rule? See: DOL, IRS, HHS Rule on first dollar coverage and preventive care, July 2010). See also a pre PP&ACA publication on cost sharing in general: ”Hidden Costs of Health Care,” Department of Health and Human Services, July 2009.
Number 7: Professor Michael Porter, an expert on markets and competition believes that the cost of health care could be significantly reduced if competition among providers were based upon quality outcomes. Instead of paying for activities, providers would be rewarded for clinical results. We have talked about this i the text and in My View above. Assume you are working for a Congressperson and she would like to know all the pros and cons of such an approach. Make a list of discussion points for her. See: Porter’s article in the New England Journal of Medicine, A strategy for health care reform - toward a value based system, July 9, 2009
Number 8: Under the PP&ACA of 2010, certain persons and employers who qualify can buy health insurance through “insurance exchanges.” How would the issue of adverse selection relate to the design of such plans and the participation of persons in these exchanges? What might be required in order to avoid the problem of adverse selection? See: http:/industry.bnet.com/healthcare/ (”It’s time to take a closer look at Insurance Exchanges” by Ken Terry, August 23, 2009)
Exercise No. 9: In 2006, Massachusetts instituted mandatory health care coverage for most employers and also required individuals to have health care insurance. It expanded Medicaid eligibility, included a public health insurance plan as an option, and created an insurance exchange for those wishing to acquire private based health coverage. To date, the plan has added 430,000 previously uninsured, and now leads the nation in the lowest percentage of uninsured - 2.9%. Do some research on this plan and see what, if any, implications it might have for a national health care reform approach. For example, what are the implications and effects of the plan on employers? What percentage of persons choose the public option? What steps is Massachusetts taking to reduce health care costs? Who comprise the 2.9%? How does the plan enforce its mandate provisions? How is the plan doing financially? See: Kaiser Family Foundation Commission on Medicaid and the Uninsured, September 2009, “Massachusetts Health Care Reform - 3 years later.” Publication Number: 777702 (www.kff.org). But see also: Dembner, A., “Health Care Costs Dominate Mass. Budget Debate,” The Boston Globe, March 26, 2008; King, S. “Mass. Health Care Reform is Failing Us,” The Boston Globe, March 2, 2009. (http://www.bostonglobe.com/)
Exercise No 10: In this Chapter we discuss using clinical outcomes data to evaluate providers and create a quality and value based health care market. To see such a program in action, check the Pennsylvania Health Care Cost Containment Council. The Council has put providers under the microscope looking at hospital readmission rates, hospital charges, lengths of stay, mortality rates of patients, and in-hospital complication rates. How are measures applied? What are the financial and quality results? How does the process account for severity and differences in patients? How have hospitals and medical staffs responded? Could this be an effective means to “reform health care?” See Burton, T., “Hospitals Find Way to Make Care Cheaper - Make it Better,” The Wall Street Journal, October 6, 2009, A-1. (See the Council’s website and reports on quality improvements at: http://www.phc4.org/
Last Revised: August 18, 2010
Comments
Leave a Reply