Health Care 2013

Here are some of the top health care trends in 2013:

  • Medicare / Medicaid  expansion and managed care
  • Health insurance exchanges
  • Medicare cost reduction
  • Comparative effectiveness
  • Focus on reducing fraud and waste
  • Provider consolidation
  • Employer activism
  • Health plan transformation
  • Value-based pricing
  • Information driven health decision-making

By all accounts, 2013 will be a big year in the health care industry.  It’s already a highly regulated industry and that environment expands with continued implementation of health reform as mandated in the Affordable Care Act.

As a review, health reform includes the following key steps:

  • Expand Medicaid to allow more people at the lowest income levels to qualify for coverage.
  • Encourage employers to offer health insurance.
  • Provide credits to purchase private health insurance coverage to moderate income Americans who do not qualify for Medicaid.
  • Streamline the purchase of health insurance through the establishment of Health Insurance Exchanges.
  • Strengthen consumer protections and require transparency.
  • Impose protections to guard against unreasonable rate increases.
  • Encourage primary and preventive care.
  • Require most Americans to purchase health insurance.

Many of the consumer protections have already been implemented, but perhaps the biggest impact in 2013 will come from the scheduled availability of  health insurance exchanges when open enrollment begins on October 1st.  The earlier Supreme Court decision stipulated that the Medicaid expansion is now an option for states, not a requirement. Much of the conversation will center on Medicaid eligibility and expansion. States currently are determining whether they will accept federal funds for expanding the coverage of their Medicaid programs. Many feel that doing so would create additional budgetary pressures that would be difficult, if not impossible to manage.  If the states choose to operate their own exchanges, will they operate them in competition or in tandem with private exchanges?  Regardless, future Federal & State budget reform in 2013 will target ways to reduce healthcare costs.  Not doing so will create far bigger budget problems down the road.  What this means to the effectiveness of health reform is anyone’s guess, but we know the additional cost constraints will also call for increased provider and health plan accountability and value.

The Obama Administration has made important progress in reducing healthcare fraud and waste.  As testament, the government recovered a record-breaking $4.1 billion in 2011.  Those recovery programs will continue to expand in 2013, placing more pressures on providers to manage compliance.

Employees will be front and center as significant health plan transformation takes place. There will be increased sensitivity to pricing and efforts to learn what drives behavior.  Employers may increase employee cost sharing as a way to decrease the rise in health insurance premiums.  Those that do not offer the required minimum coverage will need to decide whether to drop coverage and pay a penalty or to increase their health insurance benefit levels and costs.

Comparative effectiveness research will grow in importance as recommendations are used to improve care outcomes and drive down the variability in costs.  Health plans will increasingly be competing on value not price.  As the number of shared risk and bundled payment programs proliferate, providers will be trying to figure out where they fit in the new ecosystem.  This will drive new consolidations and relationships.

We will begin to move past the tipping point with regard to using health information technology.  As the implementation of electronic medical records grows and their meaningful utilization improves, more and more data will be available to aid decision-making.  Big data and data analytics will become increasingly important enablers to manage the explosion of administrative and clinical data.  Healthcare will evolve to increasingly being information driven.

By all predictions, 2013 will be an interesting year!

CMS Delays 5010 Enforcement

The Centers for Medicare & Medicaid Services’ Office of E-Health Standards and Services (OESS) is announcing that it will not initiate enforcement action for an additional three (3) months, through June 30, 2012, against any covered entity that is required to comply with the updated transactions standards adopted under the Health Insurance Portability and Accountability Act of 1996 (HIPAA): ASC X12 Version 5010 and NCPDP Versions D.0 and 3.0.

On November 17, 2011, OESS announced that, for a 90-day period, it would not initiate enforcement action against any covered entity that was not compliant with the updated versions of the standards by the January 1, 2012 compliance date. This was referred to as enforcement discretion, and during this period, covered entities were encouraged to complete outstanding implementation activities including software installation, testing and training.

Health plans, clearinghouses, providers and software vendors have been making steady progress: the Medicare Fee-for-Service (FFS) program is currently reporting successful receipt and processing of over 70 percent of all Part A claims and over 90 percent of all Part B claims in the Version 5010 format. Commercial plans are reporting similar numbers. State Medicaid agencies are showing progress as well, and some have made a full transition to Version 5010.

OESS is aware that there are still a number of outstanding issues and challenges impeding full implementation.    OESS believes that these remaining issues warrant an extension of enforcement discretion to ensure that all entities can complete the transition. OESS expects that transition statistics will reach 98 percent industry wide by the end of the enforcement discretion period.

Given that OESS will not initiate enforcement actions through June 30, 2012, industry is urged to collaborate more closely on appropriate strategies to resolve remaining problems. OESS is stepping up its existing outreach to include more technical assistance for covered entities. OESS is also partnering with several industry groups as well as Medicare FFS and Medicaid to expand technical assistance opportunities and eliminate remaining barriers. Details will be provided in a separate communication.
The Medicare FFS program will continue to host separate provider calls to address outstanding issues related to Medicare programs and systems. The Medicare Administrative Contractors (MAC) will continue to work closely with clearinghouses, billing vendors or health care providers requiring assistance in submitting and receiving Version 5010 compliant transactions.

The Medicaid program staff at CMS will continue to work with individual States regarding their program readiness. Issues related to implementation problems with the States may be sent to Medicaid5010@cms.hhs.gov. OESS strongly encourages industry to come together in a collaborative, unified way to identify and resolve all outstanding issues that are impacting full compliance, and looks forward to seeing extensive engagement in the technical assistance initiative to be launched over the next few weeks.

Kiss Employer-Sponsored Health Benefits Goodbye?

The McKinsey Quarterly, the business journal of McKinsey & Company, a highly respected global management consulting company, has just published research it conducted regarding the impact of US health care reform on employer-sponsored health benefits.  Since many of the law’s relevant provisions take effect in 2014, Mckinsey predicts that many companies will make radical changes to their health benefit plans once they fully understand the embedded economic and social provisions of the 2020 Patient Protection and Affordable Care Act.  Here are some predictions:

  • 30 percent of employers will definitely or probably stop offering employer-sponsored insurance (ESI) in the years after 2014
  • Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.
  • At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries.
  • Contrary to what many employers assume, more than 85 percent of employees would remain at their jobs even if their employer stopped offering ESI, although about 60 percent would expect increased compensation.

Here’s the link to the full article here:

http://www.mckinseyquarterly.com/How_US_health_care_reform_will_affect_employee_benefits_2813

The associated flight to subsidized exchange policies represents a far bigger impact than levels predicted by the Congressional Budget Office.  And while initially, employers may feel compelled to offer comparable valued alternative employee benefits (such as increased salary), over time this need to make employees whole will probably decrease and some employers may benefit economically.  Moreover, because of the subsidies offered in the insurance exchanges for the lower income workers, companies may focus their benefit redesign on the higher income group.  Even so, much will depend on the additional individual income amounts and payroll taxes levied on increased compensation, and the $2,000 government penalty for not providing insurance.

This was a very interesting article and you should read the entire article, but my big takeaway was this.  There are probably some very large unintended consequences of the coming health care reform.  Most companies do not yet fully understand how it may impact them at a micro level, and it is not too early to begin considering the possibilities.  For companies, it will affect both your bottom line and your ability to attract and retain talent.  For workers, you may see a dramatic shift in the benefits being offered to you and you probably don’t see it coming today.

Accountable Care Organizations – will they work?

Recently, the proposed 429 page proposed rule for Accountable Care Organizations (ACO) were released by the Centers for Medicare and Medicaid Services (CMS).  Donald M. Berwick, M.D., M.P.P.    Dr. Berwick is the administrator of the Centers for Medicare and Medicaid Services, Baltimore and he does a good job summarizing ACO’s in this perspective offered in the New England Journal of Medicine.

http://www.nejm.org/doi/full/10.1056/NEJMp1103602

The first two paragraphs read as follows:

“A common criticism of U.S. health care is the fragmented nature of its payment and delivery systems. Because in many settings, no single group of participants — physicians, hospitals, public or private payers, or employers — takes full responsibility for guiding the health of a patient or community, care is distributed across many sites, and integration among them may be deficient. Fragmentation leads to waste and duplication — and unnecessarily high costs.

Section 3022 of the Affordable Care Act (ACA) establishes the Medicare Shared Savings Program for accountable care organizations (ACOs) as a potential solution.  The creation of ACOs is one of the first delivery-reform initiatives that will be implemented under the ACA. Its purpose is to foster change in patient care so as to accelerate progress toward a three-part aim: better care for individuals, better health for populations, and slower growth in costs through improvements in care. Under the law, an ACO will assume responsibility for the care of a clearly defined population of Medicare beneficiaries attributed to it on the basis of their patterns of use of primary care. If an ACO succeeds in both delivering high-quality care and reducing the cost of that care to a level below what would otherwise have been expected, it will share in the Medicare savings it achieves.”

Sounds good doesn’t it?  I’m not so sure.  While I’m confident that there is going to be a flurry of activity to establish these organizations and all will have best intentions of making them work, as in most undertakings, the 80 / 20 rule will apply.  Some ACO’s will do it well and many will not… at least not initially.  There will be many tough lessons learned.  Keep in mind that the demonstration projects that have been conducted were only mildly successful and the government’s primary objective is to pay less money than what is typical under the existing Medicare and Medicaid Programs.  The inherent financial risk sharing will, in the short run, potentially impair the providers that participate, creating some level of disgruntlement.  I expect the smaller providers to get hurt the most (i.e. – individual and small practice physicians, nursing homes,etc.), causing them to bail.

And what about consumers?  One thing is certain.. You will be expected to be more involved in your care decisions.  But, will you be given the same choices that you have now?  The ACO’s prime objectives will be to reduce cost without sacrificing outcomes or quality.  That doesn’t sound bad overall, but how will the individual know they are being treated effectively.   In theory, the participating physicians will be trained to practice evidenced-based medicine, but in an era where there are so many geographical differences to how care is practiced and where physicians routinely practice defensive medicine, how will this translate to the care provided through the ACO?  Perhaps care rationing has begun, but under another name.

Don’t misunderstand…I do believe that care quality delivered overall through ACOs will be monitored closely, but any significant process and behavioral change carries a certain risk, especially at the micro level.  Should be interesting!  My advice…don’t join one of the early ACO adopters unless you plan on taking an active roll in co-managing your care.