MCN | Medical Consultants Network

The Power of a Second Look

Home / MCNTalk / Tag: Health Policy

Viewing items tagged:

Health Policy

Law May Do Little to Help Curb Unnecessary Care

Most of the effort in health reform remains on the payment and access side. The elephant in the room is the treatment side. I believe that this will move to the front of the debate in the very near future.

This recent NY Times article from March 29, 2010 nicely lays out the problem.

As prior postings have suggested, there is little incentive on the part of patients, insurers, or doctors to not over-treat, over-diagnose, use more costly options in general, and in general fail to exercise the common sense and cost/benefit analysis that all of us exercise every day as consumers when it comes to our own dollars. While many may believe that carriers may benefit from saying no, in the aggregate they say yes more than not, and merely pass on the costs in the form of premium increases. And to the degree that carriers are regulated, they may have incentive to pass on costs, which may translate into higher profit when they are accustomed to and permitted to bring a certain percentage of revenue to the bottom line. The more cash that flows through a company, in general the greater the impact and capacity to profit.

A significant flaw in a system that does not have the consumer spending and watching their own money, as the apparent absence of and resistance to regulations that will determine and enforce what will be paid for, if not how much will be paid when it comes to health spending.

I remember years ago when I did hospital work, I crossed out some routine orders on a patient, which included multiple vitamins. The nature of this patient’s problem was such that she had no need for these pills, which were being charged at a rate of dollars for each unit dose. I was called by the hospital administrator and asked to explain myself. I politely told him that I decided what was appropriate for my patient based upon clinical needs, not a routine set of orders. He was most unhappy with me, as I was obviously depriving the hospital of a massive mark-up on this drug, and by questioning and exercising judgment, was seen as a threat to its bottom line.

As gatekeepers physicians have the ability to say no to the optional, the more costly or the clearly not indicated interventions for their patients. If we treated each patient as if the patient was paying out-of-pocket, we would take better care of them. But we also know that we may face unhappy patients, defections from our practice, pressure from colleagues, hospitals, vendors and perhaps a decreased income. Threat to income is especially significant when it comes to the procedures that we perform ourselves.

So we will trash, dismiss, or ignore studies, guidelines and mandates that may bring common sense and cost-containment to medical care. The increases in premiums will keep on coming and the US health bill will remain a 6th of our economy rather than the more modest 9th or so of many other developed countries. To not go along to get along is a bit like tilting at windmills.

By the way, some will cite liability concerns as rationale for many of the excesses, especially diagnostic procedures. While this may be true in part, I believe it is a flip remark that at best is a small part of the problem. Physicians exercise discretion regularly, and accepted standards of care will support a well-reasoned decision to not do something just as it may require that something be done. That is the nature of malpractice litigation – physicians having to defend themselves for their decisions. Having reviewed many an NPDB report, the majority of lawsuits have to do with a bad outcome from something other than failure to perform a particular test.

Little Pricey Pill

Arrgh. This article from April 12, 2010 Forbes ought to raise the ire of many a reader who needs a simple example of how our health care system is sick! You might even want to swallow a couple of the pills described, as they are used to treat ‘heartburn’.

It outlines what happens in a system when one is spending other people’s money. One is willing to have other people pay a lot more for something perhaps marginally more effective than a drug available over the counter ($165 per month vs. less than $20.00). Some companies and government payers wisely stopped paying altogether, saving millions with the stroke of a pen, and likely having zero impact on the health of their insured.

In fact, as a physician and an occasional patient, I find myself asking a question not raised in the article: How many of these pills ought to be taken at any price, rather than living with the occasional discomfort, or altering one’s diet or other lifestyle changes. A focus on cost of care ought to be combined with attention to need for care.

A side issue in the article is that mention is made of a panel to oversee effectiveness of treatments to determine Medicare disbursements being eliminated due to lobbying. The article I posted yesterday appears to reference a similar panel being in place. If any reader knows the distinction between these two, please comment.

Obamacare’s Cost Scalpel

Perhaps one of the rays of hope in cost reform is the proposed treatment evaluation to be undertaken by conducting ‘comparative effectiveness research’. The April 5, 2010 Business Week describes this effort. If successful it will result in a sober study of costly and new treatments alongside the tried, true and often generic options when it comes to drugs. Hopefully it will look at other costly treatment interventions vs. more conservative measures. In a system where the patient has no economic incentive to get the best result for the dollar, such research is necessary and the results should be tied to what is paid for by those who are tasked with writing the checks – be they carriers or the government

Our Company’s Experience with Health Insurance Premiums

As we launch MCNtalk, we are focusing on posting articles by others on health and medicine related topics. It is not our general intention to focus on MCN in these postings. This article is about all companies providing health coverage and all employees receiving these benefits.

The other day we received our initial rate quote for our health insurance for our new plan year starting in July 2010. By way of background, MCN has over 100 covered lives in a number of states, so we rely upon national carriers to quote and provide coverage options for our staff.

Our annual increases for equivalent coverage to the prior year have been consistently in excess of 10% for as long as I can remember. We have coped with this by reducing coverage through increased copays and deductible and passing on a portion of benefits costs to employees to the degree they exceed the level the company will cover.

I personally remain baffled at the resistance to addressing this significant problem and wonder what drives certain individuals to fight for a status quo that is an illusion given the history that every employer faces, not just MCN. No rational employer will passively accept these increases and the assumptions that underlie employer based health care is fragile and approaching a breaking point. This is not a theoretical issue but one that impacts every person. It is naive to count on continued employer coverage, as it is naive to assume that an individual will continue with a given employer. How would we respond to any other vendor or supplier who increased their rates at a consistent rate in excess of 10%?

The email below was written to the company. It has been edited slightly. I welcome your comments

Brian Grant, MD

————————

To:  MCN Employees

Re: MCN Health Insurance 2010

March 25, 2010

These messages are predictable and not fun to write. And they underscore the need for major systemic reform, which the recent national health bills don’t in my mind more than hit the surface of.

We received our initial fee proposal from our current carrier. As you may recall, our increase proposal last year from our prior carrier last year, was 54%. We moved our coverage and the final outcome was in increase of about 15%.

The current proposal is 17%. About 14% of this is so-called community related increases – basically the overall cost of all in the plan. About 3% is MCN related, such as a chronic condition, some expensive births, and some other expensive claims. But to my knowledge there is really nothing over the top in our group or something unusual in a group of over 100. I should note for anyone nervous at this observation, that we at the company do not have access to individual claims information nor would we want access. But we were told in general terms about some of our unique experiences as a company.

We are not done yet and there will likely be some but not a whole lot of improvement in the above number. MCN has agreed to l pay a small portion of the coverage increases for employees. The rest will fall upon the employee in the form of higher out of paycheck costs, and/or decreased benefits via higher co-pay, greater deductible, or your decision to go to the lower cost policy with less benefits, such as the health savings account option. MCN can’t justify absorbing the major blow of an out of control system and the collective decisions of all of us to consume too much health care, pay too much for it, allow healthy folks to opt out and otherwise place companies in the role of the provider of health care to begin with. I believe that a willingness to foot any increase beyond inflation, which is less than 3%, is generous. In any event, MCN is not alone in passing on increased costs to staff. This has become the norm in most businesses.

Now to be fair, there is not a whole lot that you can do as individuals to impact this, but collectively there is and I want to speak to that. We have a situation that in the world of economic theory is called the tragedy of the commons. This refers to the old English commons that belonged to all, so folks would graze their sheep till there was no grass left and it was worthless for all. There was no incentive for an individual to not graze, since others would and the self-sacrifice of the non-grazer would only benefit others. Similarly in the oceans, absent fishing regulations and treaties, there is no incentive or reason for a fisherman to not fish a species to extinction, since others will do it if he declines to fish and he only forgoes his portion of what is left. Similarly in health care we have a situation where the health care consumption by one of us, is charged off to the rest of us, to the degree that we don’t write our own checks. But it goes up for all and by and large in the current system an individual decision to not consume has little personal economic benefit.

I am personally irritated by the notion that we are impacted by claims experience in the company. This action creates an incentive for a company to engage in illegal discrimination, such as not hiring individuals with chronic conditions, not hiring young women likely who use pregnancy benefits and the like. MCN won’t discriminate based upon illegal criteria such as this. It would be wrong and illegal, but such discrimination likely does take place in many a business and is very difficult to prove – when an individual presents with visible evidence of a higher demographic likelihood to be a high medical user. All a hiring manager need do is select another candidate for other reasons, not stating the health cost concern that could be driving the decision. I also find myself wondering if any dependent coverage purchase decisions have been made by staff who have a dependent who needs costly care and is going to use more benefits while at the same time others are choosing to not cover dependents who do not have any obvious health risks and are less likely to use benefits? In our US system where coverage is optional, such decisions are rational and make a lot of economic sense, but the rest of us pay for these decisions. I don’t fault anyone for making smart and logical decisions on this or any other personal issue like health coverage when there are choices to be made.

Setting this issue aside, let’s reflect on what we can control and which also may be impacting our costs and experience at some small level, but which if other policy holders would be mindful of, would have a real impact.

We have no impact in our use on fees charged and paid for care. The carriers make that decision and shopping for price is likely not a viable option for us in America. But we can and should make utilization decisions – whether to receive care or not, the extent of such care, and the type of such care.

Much of health care is discretionary and palliative. Some care is worthless or harmful. Estimates suggest that as much as a quarter to a third of health care has no significant impact on one’s health. As individuals we make many choices. I want to suggest to us that we pretend for a moment that a health care decision was at our own cost and that we had the money available if we wanted it, but if we chose to, we could keep the funds and use them in other ways, or save it. If that were the case, rather than ‘insurance paying’ how would we behave differently?

Hopefully we would still pay for necessary preventive care, vaccinate our kids and get flu shots. But certainly some would choose to not pay for what is clearly necessary. And many other complex medical decisions may be beyond the scope of some to judge, but with expert guidelines, the Internet and the ability to ask good questions, I believe that many of us can and should make decisions on our care and not rely only upon the advice of caregivers.

Let me suggest some areas of potential savings. Far from complete but worth thinking about and expanding upon with your own examples:

–          How many sessions of physical therapy, chiropractic care, or regular office visits are adding value and are worth the added cost, if at all?

–          How many visits to the primary care doctor are for self-limiting matters such as viruses and could be avoided with good self-care, hydration and over the counter medications?

–          How many brand name drugs could easily and appropriately be replaced with generics and have minimal if any additional benefit?

–          How many unfinished prescriptions are in your medicine chest and prescriptions not complied with but paid for?

–          How many ER visits could be avoided by not waiting till the evening or weekend when one was feeling ill? How many of these visits could have been to a much less costly urgent care center?

–          How many of us have declined a recommended test that might be interesting but not critical. For example an MRI to confirm what is clinically obvious and which does not alter the treatment course? How many of us have asked if a test is necessary and why, or if it is optional. What if we asked the doctor if he or she would order it if we had to pay out-of-pocket with our own money? Would we be so uncritically accepting if we had to write our own check for a thousand dollars or more?

–          How many surgeries could be deferred, and C-sections be avoided? Studies have addressed the fact that many procedures could be avoided with a different clinical approach.

Our health care system is broken. So called reform has passed and days later we are given a predictable double-digit increase in our premiums. MCN ought not be in the business of providing health care to employees anymore than we are in the business of providing rent, children’s education or food for our staff. A company has no moral, legal or ethical obligation to provide health benefits. It only has an economic imperative and the reality that benefits are expected at certain levels of employment and that its ability to hire and retain quality staff is impacted by benefits and pay. But be assured that it is the rare company that is not shifting more and more of the cost  burden of healthcare to staff directly as we are, or indirectly by salary reductions and lower increases.

I am baffled by the loud protests by people like us, who rely upon fragile employee benefits for health care, have significant and increasing out-of-pocket costs, and are faced with impossibly high premiums for non-group policies, especially if they have pre-existing conditions – yet who somehow have constructed a fear of a government mandated alternative. As I have long said, doing nothing is not an option, since our carrier by imposing such increases, is doing something –  and we in turn will not be passive by not responding to it. It impacts each one of us and most other working individuals, if we are lucky enough to have a job and an employer who provides some level of decent health benefits – which many of our neighbors do not enjoy.

There is more to come and we will keep you updated as we work through this process. Thank you for your understanding and support as we engage in this annual challenge.

Brian

Managed Care: Get Used to It

From the New York Times on Sunday March 14, this article states the obvious; that avoiding change in the health care system is not an option and that payers will exercise some decision-making and control over what is paid for and permitted. An inherent challenge in any system where the payers are not the consumers is that usual marketplace controls are not present. When we pay ourselves, we generally exercise restraint. In health care it is the rare service that is paid for by the patient. The patient has no particular motivation to not consume, or to shop for price, and the providers have motivation to treat and sell services to the degree that they can be medically justified. An interesting thought experiment would be to imagine a patient seeking or being advised to obtain a given treatment, and then instead of  being given the treatment, they are given the money that the treatment would cost at the place they were considering, and told that they have a choice of getting the treatment, keeping the money and foregoing the treatment, shopping for the treatment at a lower cost and keeping the difference, or  changing the type and extent of the treatment (for example switching from a brand name to generic drug). Obviously the complex nature of diagnosis and treatment would make decision-making a challenge for many. Furthermore, irresponsible behavior combined with the perverse incentive of keeping the cash would mean that many would take the money and not vaccinate their kids, and generally be more resistant to preventive care where they are not currently suffering or in pain. Health reform proposals as best we can tell, are not meaningfully addressing the excess utilization trends that occur regularly.