JAMA Study Finds Medical Homes Did Not Work

In a follow up to my blog last Friday on the growth of patient-centered medical homes (PCMH), there was an excellent study in last February’s Journal of the American Medical Association (JAMA) entitled, “Association Between Participation in a Multipayer Medical Home Intervention and Changes in Quality, Utilization, and Costs of Care.” 

The study by Dr. Mark Friedberg et al evaluated a pilot medical home program in Southeastern Pennsylvania for three years.  To quote the article, “medical home initiatives have encouraged primary care practices to invest in patient registries, enhanced access options, and other structural capabilities in exchange for enhanced payments—often as per-patient per-month fees for comprehensive care services.” There were 32 physician practices that became National Committee for Quality Assurance (NCQA) designated medical homes.  These practices cared for about 64,000 patients that were studies.  These practices and patients were compared to a control group of 29 primary care practices that did not become medical homes.  These control practices cared for about 56,000 patients.  Primary care physicians in the PCMH practices received an additional $92,000 for their efforts to create a PCMH.

The Results:

Only 1 out of 11 quality measures was better in the PCMH—diabetic nephropathy screening (83% vs 72% in the control group).  The other 10 quality measures—related to diabetes care, high cholesterol, asthma and cancer screening—were the same in both groups.

Additionally, hospitalizations, ER visits, ambulatory care services and total costs were NO DIFFERENT between the two groups.

The goal of PCMHs is to improve outcomes and lower costs—so in short, in this pilot program—it did not work.

These results fly in the face of my blog last Friday which reported on the 4-fold increase in PCMH programs across the country.

The next question is… WHY?  Why did the PCMH not work?  Why are they expanding if this study found that they don’t work?

The answer may lie in the incentives.  The PCMHs in the study were paid to achieve NCQA designation and that was it.  They were not paid based on outcomes.  They were not paid on improving quality as measured by specific metrics.  They were not paid on lowering costs.  As a result—for example—not a single PCMH in the pilot expanded its hours of operation into the evening or weekend, a step that may help reduce ER visits because the primary care physician is available.

Other PCMH programs specifically pay physicians based on outcomes and/or quality and/or cost reduction.  Maybe these other practices are expanding their hours.  Hence the reason for the expansion of PCMHs by 4X—the overall idea is a good one and the incentives just have to be structured right.

Again, I have to quote Charlie Munger from Berkshire Hathaway… “Incentives are Superpowers.”  You get what you incentivize.  If you incentivize NCQA designation, then you get NCQA designation.

Perhaps, if we want improved quality and lowered costs, we need to specifically create incentive programs that measure and reward these things.

To learn how Compass helps employers lowers costs and improve quality by helping their employees navigate the healthcare system, click on the 5-min video below:

NY Times Reports: Consumers Challenged by OOP Costs

There was a great article from this past Saturday’s New York Times by Abby Goodnough and Robert Pear entitled, “Unable to Meet the Deductible or the Doctor.”

As one would expect, many people who are of modest or moderate incomes who are on a high-deductible insurance plan from an exchange are having a hard time paying for the out-of-pocket costs associated with their plans.  Many people are price-sensitive when it comes to insurance premiums, so in an effort to keep their premiums low, they chose plans with higher deductibles and out-of-pocket costs.  Additionally, people chose plans that have narrower networks—also because these plans tend to have lower premiums.

That’s the trade-off:

Lower Premiums = Higher Out-of-Pocket Costs and/or Narrower Networks

Higher Premiums = Lower Out-of-Pocket Costs and/or Broader Networks

Stats from the article include:

Average individual deductible for a Bronze Plan on an Exchange: $5,081

Average individual deductible for a Silver Plan on an Exchanged: $2,907 (Silver plans were the most popular option)

The limits on Out-of-Pocket Costs for individuals is $6,350 and for a family is $12,700.

The article then has an excellent quote from one of the people interviewed by the reporters:

“Medical care costs too much and health insurance as it stands doesn’t address this.  What have we become?”

Well put.  My opinion on this topic is that medical care will start to cost less when providers begin to compete on price—only then will prices come down.  Providers will only begin to compete on price when healthcare consumers demand that they do.  Healthcare consumers will only demand that providers compete on price when they have to pay some or all of the price themselves.

In the meantime, negotiating for a reduced bill or applying for a provider’s charity care program may provide some options.  The changes in American healthcare have only begun and we have a long way to go.

To learn how Compass helps employers and employees navigate the complex healthcare system, click on the short video below:


Patient-Centered Medical Homes Quadruple in Last 4 Years

There is a very good article in the October 2014 issue of Health Affairs entitled, “Patient-Centered Medical Home Initiatives Expanded in 2009-13: Providers, Patients, And Payment Incentives Increased.” 

“…patient-centered medical homes typically use multidisciplinary teams and advanced tools such as enhanced information technology, chronic disease registries, and online patient portals to proactively manage the full spectrum of patients’ needs. These primary care practices also feature an explicit focus on managing care transitions, often using dedicated care managers, and they frequently integrate behavioral health care into primary care.”

Sounds pretty good.  It gets better.  The authors also state:

“[The patient-centered medical home] is based on the fundamental tenets of primary care, including comprehensive care for the majority of health problems; long-term, person-focused care; serving as the first contact for new issues; and coordinated care.”

Awesome–sign me up!

The authors conducted a survey of patient-centered medical homes nationally and found the following:

  • The number of these programs increased from 26 to 114 from 2009 to 2013.
  • The number of patients cared for by these programs increased from 5M to 21M in the same time period.
  • In a review of the literature, outcomes on cost and quality are mixed—indicating that (as expected) the patient-centered medical home is not a ‘silver bullet’ in healthcare, but still has implications for providing higher-quality, lower-cost care.
  • Payment models for these programs were largely fee-for-service with some additional payments based on (1) pay-for-performance, (2) a fixed per-member-per-month dollar amount (on average $4 PMPM) or (3) a shared-savings model (i.e. if the overall cost of care for a panel of patients was lower than a ‘control group’ of patients, then the doctors would be paid a portion of the cost savings).

My own commentary on this article is that there may be higher-quality and lower-cost care the more the doctor reimbursement is based on pay-for-performance and shared-savings.  The fact that the majority of reimbursement is still in the form of fee-for-service may be ‘getting in the way.’

After all, you get what you pay for.

If you pay for service (i.e. fee-for-service), you get service.

If you pay for performance, you get performance.

If you pay for savings, you get savings.

As Charlie Munger, Vice Chairman of Berkshire Hathaway says, “Incentives are Superpowers.”

However, these comments are supposition on my part, so it will be interesting to see what future studies show.

What does this mean for employee benefits professionals and healthcare consumers?

  • Patient-centered medical homes have mixed results, but regardless they are growing.
  • If you want to incorporate them as part of your employee benefits strategy, they are now more available to steer plan members to.  However, they still are only involved with <10% of the US population—so there may not be one near you and your employees.
  • If I could sum it up in two words, I would write, “It’s early.”

To learn how Compass helps employers and employees with Primary Care Physicians, click on the 5-min video below:

Compass Professional Health Services Named Award Winner of 2014 Dallas 100 Awards

Compass is honored to be recognized again by the SMU Cox School of Business and their Caruth Institute for Entrepreneurship as one of the Top 100 fastest growing private companies in Dallas.

In the spirit of rankings, let me take a moment to reflect on what has allowed Compass to grow so rapidly:

1. Being in the right place at the right time.

Compass started in the ‘Healthcare Consumerism’ space in 2007 and since then, the sector has boomed.  To paraphrase the late Stephen Covey paraphrasing Victor Hugo—There is nothing more powerful than an idea whose time has come.

2.Great people.

To paraphrase Jim Collins in his book Good to Great—You have to get the right people on the bus.

3. Perseverance.

Compass started as a boot-strapped business during the depths of the Great Recessions and we had many challenges, setbacks and just plain mistakes on our part.  However, to paraphrase Winston Churchill—Never, ever, ever, ever, ever give up.  As a result, Compass has created over 260 jobs and our employees are buying homes and starting and growing families.  It’s just awesome to see.

4. Doing the right thing.

Whether you want to call it honesty or integrity or, as Google puts it—Don’t Be Evil—Compass has earned the trust of our 1,800+ employer clients because we work hard every day to be Trustworthy.  And being trustworthy is not just about character.  Again as Stephen Covey said, being trustworthy is Character plus Competence.  You have to know what you are doing in order for people and businesses to trust you.  Through our healthcare provider expertise that has been ingrained in our technology, processes and training we are diligent in creating a ‘Competence Machine.’

Well there is more to it than those 4 things, but I’ll stop there for the sake of brevity.  Thank you for reading our Compass Blog.  Just reading the blog alone has contributed to the growth of Compass and the growth of consumerism—more clicks, more links, more tweets, more LinkedIn and FB posts and more conversations.  So THANK YOU for your contribution.  You are appreciated.  We couldn’t have done it without you.

To see a 5-min video by me on how employers us Compass as part of their employee benefits strategy, click on the link below:

340B Programs for Specialty Pharmacy: Do You Know What They Are?

There is a fantastic article in the October 2014 issue of Health Affairs entitled, “The Impact of Specialty Pharmaceuticals As Drivers of Health Care Costs.”

Health Affairs requires a paid subscription to read the full article, but for this read alone, in my opinion, it is worth it (disclaimer, I have no financial connection to Health Affairs).

The article by healthcare services researchers from Duke University describes the specialty pharmacy world in general, but more specifically describes a federal loophole that hospital systems have used to ratchet up their reimbursement from private insurers and employers off ‘higher margins’ for specialty medications.

I will do my best to summarize what is going on with 340B Programs:

In section 340B of the Veterans Health Care Act of 1992, the federal government created a way for hospitals (that provided a large percentage of care to poor and uninsured patients) to purchase specialty pharmacy medications (like those used to treat cancer, rheumatoid arthritis, Crohn’s Disease, etc) at a discount.   The discount is about 30% to 50% below the market rate.  The original program was intended to be used by about 90 hospitals.

Well… it has grown.

As of 2011, the number of hospitals enrolled in the 340B Program is 1,673—33% of all hospitals in America.

The 340B Program does not require hospitals to pass on the 30% to 50% discounts to patients, insurers or employer, so they don’t.  Instead, hospitals buy physician practices that prescribe large quantities of specialty medications like oncology practices and then use the 340B Program to obtain the medications at a lower price.  The article reports that the New York Times has reported that a single oncologist could generate $1,000,000 in profit for a hospital as the result of the 340B Program pricing for specialty medication.

Additionally, this perverse incentive then drives greater administration of specialty medications at hospitals over private physician clinics.  Hospital-based administration is more expensive for private insurers—189% more expensive compared to physician-office based administration per the article.  Accordingly, the article reports that physician-office based chemotherapy administration has decreased from 90% to 66% from 2005 to 2011.  So the hospitals get to buy the specialty medications for less and then in turn, get to charge more for them.

The cost of these shenanigans in 2010 was $6,000,000,000 and is projected to increase by $12,000,000,000 in 2016.

What does this mean for employee benefits professionals and healthcare consumers?

  • Do what you can to encourage the physician-office based administration of specialty pharmacy over hospital-based administration

To learn more about how Compass helps employers and employees navigate the nuances of the healthcare system, including those described above, click on the 5-min video below.

7 Wastes and the Father of ‘Systems Engineering’

My Friday blog post from last week addressed the topic of ‘Systems Engineering’ and how it has been used in healthcare to improve quality and lower costs.  Click HERE to read that blog post.

My previous blog post defined Systems Engineering as structure and process improvement.  An often times cited Father of Systems Engineering is a Japanese gentleman by the name of Taiichi Ohno.  Taiichi Ohno developed the Toyota Production System in conjuction with the founders of Toyota.  This system has been copied by car manufacturers around the world and has been adopted by many other industries as well and is often called in the United States ‘Lean Manufacturing.’

Of note, the often mentioned John Torinus, CEO of Serigraph—the company that has kept it healthcare cost trend flat for the last 10 years—used Lean Manufacturing as the basis for designing his company health plan.  Serigraph is in the auto parts industry and is very familiar with the Toyota Production System—so it is not a coincidence that he applied Taiichi Ohno’s work to healthcare.

Part of Taiichi Ohno’s Toyota Production System involved identifying and eliminating the ‘7 Wastes.’  Below are the 7 Wastes and healthcare examples of them

1. Delay, waiting or time spent in a queue with no value being added

Healthcare Example: Waiting for a doctor’s appointment, test or procedure with your condition worsening with nothing being done.

2. Producing more than you need

Healthcare Example:  The overabundance of hospital beds and expensive diagnostic equipment in America compared to the rest of the world.

3. Over processing or undertaking non-value added activity

Healthcare Example:  Performing MRIs for people with uncomplicated low back pain where the evidence has shown that MRIs do not help in the diagnosis, treatment or recovery (see Choose Wisely Campaign).

4. Transportation

Healthcare Example:  Transportation of patients within a hospital is very inefficient—patients have to wait in the ER for a bed to be cleaned on the hospital floor.  Hospital beds can’t be cleaned because a patient is waiting for transportation to home or to a nursing facility (I have commonly see patients wait +5hrs for rides).  Etcetera.

5. Unnecessary Movement or Motion

Healthcare Example:  Hospital admissions worker has to call the insurance company to verify benefits and patient out-of-pocket costs.  Insurance worker has to read those benefits from their computer screen to the hospital worker.  Those unnecessary movements could be reduced if the hospital admissions worker had online access to real-time benefits information at the insurance company.

6. Inventory

Healthcare Example:  Operating Rooms and cardiac cath labs carry whatever surgical kits, instruments, tools and medical implants each surgeon and cardiologist wants.  The result—the hospital carries 5 different types of knee implants in inventory, 10 different types of gallbladder removal trays and dozens of different types of catheters.

7. Production Defects

Healthcare Example:  A hospital-acquired infection is a production defect.  An avoidable readmission is a production defect.  A misdiagnosis is a production defect.  A missed screening opportunity is a production defect.  An incorrectly submitted bill by a provider is a production defect.  An incorrectly adjudicated claim by an insurance carrier is a production defect.  An incomprehensible EOB is a production defect.

Healthcare has much to learn from Taiichi Ohno.  Time to roll up our sleeves.

To learn how Compass helps employers and healthcare consumers minimize these wastes through consumerism and better health system navigation, click on the link below:

Healthcare Consumerism: Warren Buffett Says ‘Healthcare is Tapeworm of the American Economy’

On Wednesday, October 16th 2013 Warren Buffett was on CNBC when he said that ‘Healthcare is the Tapeworm of the American Economy.’  Click Here to view the interview on CNBC:

Warren Buffett is famous for boiling down complex subjects into bite-size quotes.  Here are some additional Warren Buffett quotes that apply to healthcare as well:

1) “It takes 20 years to build a reputation and five minutes to ruin it.  If you think about that, you’ll do things differently.”

  • Healthcare Translation: Always do the right thing for the patient/member/employee/healthcare consumer.

2) “Price is what you pay.  Value is what you get.”

  • Healthcare Translation: Price is not necessarily connected to Quality/Value.

3) “Chains of habit are too light to be felt until they are too heavy to be broken.”

  • Healthcare Translation: The effects of Fee-for-Service Third-Party Payment have slowly created habits over time that are very hard to break.

4) “There seems to be some perverse human characteristic that likes to make easy things difficult.”

  • Healthcare Translation: The US Healthcare System has been made much more complicated than it needs to be.

5) “Beware of geeks bearing formulas.”

  • Healthcare Translation: Doctors, Hospitals, Patients, Disease, Insurance Companies and Employers interact in a complex, adaptive system that is not easily modeled by mathematical formulas.

6) “Only when the tide goes out do you discover who’s been swimming naked.”

  • Healthcare Translation:  Rising Costs and Obamacare have started to show who has not ‘kept their own house in order.’

Source: BrainyQuote

Healthcare Translations by Dr. Eric Bricker

JAMA Reports: Fee-for-Service Rewards Inefficiency

There is an interesting editorial in the August 27, 2014 issue of the Journal of the American Medical Association (JAMA) by Drs. Christine Cassel and Robert Saunders from the National Quality Forum entitled, “Engineering a Better Health Care System—A Report From the President’s Council of Advisors on Science and Technology.”

The article describes how structure and process improvement—something they call ‘systems engineering’—in healthcare could result in higher quality, more cost-effective, and more accessible healthcare.  The article cites two examples:

1)     Kaiser Permanente lowered sepsis (severe systemic infection) mortality by 50% via ‘rapid-cycle’ process improvements

2)     Denver Health used process improvements modeled after Toyota to lower costs by $200M, while increasing their amount of care for patients unable to pay by 60%

The article then has a great sentence.  I will quote it here verbatim:

“The primary barrier to greater use of systems engineering is the predominant fee-for-service system, which rewards inefficiency and serves as a disincentive to more efficient care.”

Truer words have never been written.

Famous leadership expert, the now late Stephen Covey, use to write… ‘The main thing is to keep the main thing the main thing.’

It is so easy to get distracted by Health Reform, Network Discounts, Renewals, Wellness, Exchanges, and Outrageous/Erroneous Medical Bills—and certainly all those topics are worth attention.  However, I would humbly posit that reshaping payment from fee-for-service to value-based reimbursement is The Main Thing.

The article cites an example of such a payment redesign.  Virginia Mason Medical Center in Seattle partnered with employers and insurers to apply systems engineering to redesign its spine clinic.  Guess what happened—the number of MRIs went down—so Virginia Mason lost revenue.  Not good for the hospital.  BUT, because the employers and the insurance carriers changed the way they paid Virginia Mason—i.e. NOT fee-for-service—the hospital was able to make the program financial viable.

I will add that Compass’ President David Toomey was an insurance executive in Seattle at the time and was integral to this program.

What does this mean for employee benefits professionals and healthcare consumers:

–Fee-for-service is literally a patient safety and outcomes issue.  Want better outcomes?—do what you can to alter (or demand) a change from fee-for-service.

–Healthcare consumers should understand that their doctors are paid more, the more inefficient they are.  Of course there are many great doctors who do a great job taking care of their patients—unfortunately, those great doctors end up being paid less for their great work.

To see how Compass helps employers and employees navigate this complex healthcare system, click below.

Open Enrollment: Top 2 Things That are NOT Said, That Should Be

As employers enter the hectic time of open enrollment season, below is a list of topics that are traditionally NOT explained during Open Enrollment that should be (in my opinion).  This list is based on my participation in over 200 open enrollment meetings over the last 7 years—imagine that… a doctor presenting at open enrollment meetings.

#1 There is this thing called ‘Medical Policy’ where you have insurance, but

If your doctor does not follow a set of rules outlined in the Medical Policy, their claim will be denied and they will then balance bill you for the amount.  You, as a healthcare consumer, will need to then (1) fight with the doctor’s office to drop the charges or (2) fight with the insurance company to make an exception to their Medical Policy or (3) pay the charges yourself.  It is also important to let employees know that doctors do not know the rules of each insurer’s Medical Policy either.

For example, there are multiple CPT codes billed for pulmonary function tests (PFTs), which is a series of breathing tests performed by a patient into a special machine that measures lung capacity and function.  As a matter of Medical Policy, some insurance carriers do not pay for all of the CPT codes that are billed by a provider—because their medical policy does not feel like those additional CPT codes are warranted.  Of note, Medical Policy varies by insurance carrier.  In the case of the PFT example, there are several major insurance carriers that pay for all the CPT codes and others that do not—so Medical Policy is not necessarily something that is generally agreed on by the insurance community.

Possible language to incorporate in Open Enrollment:

“Insurance policies contain Medical Policy.  Medical Policy is a set of rules regarding what medical services are covered under what circumstances.  Your doctor most likely does not know these rules.  If a test or procedure does not fall within these rules, your insurance company will not pay the healthcare provider and the provider will likely expect you to pay.  You and your doctor can find these rules generally on your insurance carrier’s website or by contacting customer service.  It may be advisable to check the Medical Policy before any major test or procedure.”

#2 There is a high likelihood that the bill from the doctor or hospital contains errors

One medical billing expert from the University of Minnesota estimates that 30%-40% of medical bills contain errors. Click HERE for a story in WSJ.

Possible language to incorporate in Open Enrollment:

“If you as a healthcare consumer receive any bill from a healthcare provider that does not look correct, it may be best to investigate that bill.  Investigating a bill can best be done by examining the bill from the provider itself and the explanation of benefits (EOB) from your insurance carrier regarding the same claim.  The amount on the bill should match the ‘Patient Responsibility’ amount on the EOB.  If they do not match, there is likely an error.  There is no easy way to fix medical billing errors as there are many underlying causes of them.  If you do not have your EOB yet, it may be best to start with the insurance carrier to obtain the EOB.  Many insurance carriers now make EOBs available online through their website.  If you already have your EOB, it may be best to start with the healthcare provider and have them explain to you why you owe more that the patient responsibility amount on the EOB.”

Of course, there are a million other important topics that need to be covered in Open Enrollment, but having seen healthcare consumers ‘get caught in the middle’ regarding these two specific items—it may be helpful to elevate their relative importance.

Click on the link below to see how Compass helps healthcare consumers navigate the healthcare system.

Health Affairs Reports: What Healthcare Consumers Want

In continuing to write about patient engagement—what do patients want in order to become engaged healthcare consumers?  There is an article from the February 2013 issue of Health Affairs entitled, “Engaged Patients Will Need Comparative Physician-Level Quality Data and Information About Their Out-of-Pocket Costs” that has some of the answers.

In this fantastic article, Jill Mathews Yegian, Pam Dardess, Maribeth Shannon and Kristin L. Carman conducted a review of the literature and conducted interviews to come up with the following findings:

  • The percentage of healthcare consumers that have viewed comparative healthcare quality information has actually gone down in the last several years from 36% to 30%.
  • The article then posts 3 reasons why healthcare consumers want quality and cost information, but don’t make use of it:
  1. Healthcare consumers are unaware that quality varies dramatically across healthcare providers.  If a person thinks healthcare quality is pretty much the same everywhere, then why bother with a comparison?
  2. Healthcare consumers are largely insulated from healthcare costs.  If a person’s out-of-pocket costs are pretty much the same everywhere, again, why bother with a comparison?
  3. Existing healthcare quality and cost information is hard to find and hard to understand.

All good reasons.  However, times are changing.  (1) High-profile media exposure on variable healthcare quality and cost is building—see the New York Times articles by Elisabeth Rosenthal. (2) Consumer-directed health plans have grown dramatically over the last 5 years—creating more financial ‘skin in the game’ for healthcare consumers.  (3)  Healthcare quality and cost information is becoming easier to find—through services such as Compass Professional Health Services (I am obviously biased here).

The article then goes on to describe the healthcare consumer situations that are more conducive to using comparative quality and cost information.  First, situations where there is a financial interest on the part of a healthcare consumer are more conducive to healthcare ‘shopping.’  Second, healthcare services that are non-emergent and allow the time necessary to perform the comparisons are also more ‘shop-able.’  Examples in the article include, joint replacement, bariatric surgery, maternity care and colonoscopies.  I would add (1) outpatient imaging (e.g. MRIs, CT scans), (2) complex outpatient tests (e.g. sleep studies), (3) lab, (4) durable medical equipment and here’s a HUGE one, (6) MEDICATIONS.

What does all this mean for employee benefits professionals and healthcare consumers:

  • Comparing quality and cost in healthcare is still in its infancy.  There was a time when using a car and a cell phone was in its infancy too—overtime consumers and the market will drive adoption.
  • Imagine a world where healthcare consumers vote with their feet to find high-quality and cost-effective care.  Consumer choice has driven (no pun intended) hundreds of choices of high-quality, affordable cars and smartphones.  The difference between healthcare today and healthcare in the future may be as different as comparing the horse to the car or the rotary phone to the smartphone.

Click on the 5-min video to see how Compass is helping to bring that new world of healthcare to employers today.