Them, Not Us

Brian Klepper

Posted 1/7/13 on Medscape Connect’s Care and Cost Blog

“How many businesses do you know that want to cut their revenue in half? That’s why the healthcare system won’t change the healthcare system.”

Rick Scott, Governor of Florida
Former CEO, Hospital Corporation of America
Quoted by Vinod Khosla at the Rock Health Innovation Summit in August (video here)

BK 711ahip-logoThe Washington Post recently reported that health plan lobbyists, charts at the ready, are working to convince legislators that unreasonable health care costs are everyone else’s fault. Karen Ignagni, the Executive Director of America’s Health Insurance Plans (AHIP) declared: “If you’re going to have a debate and discussion about what’s driving health care costs, you have to get under the hood.”

Her first argument is that many practices of doctors, hospitals, drug, device and health information technology firms make health care cost more than it needs to be. This is well-documented and true. But her second, that health plans are different than the rest of the industry, and that they do not negatively influence care or cost, is pure marketing.

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A Thousand Dollars Says Dr. Ezekiel Emanuel Is Wrong About ACO’s Long Term Prospects

Jaan Sidorov

Posted 2/1/12 on the Disease Management Care Blog

Approximately 15 years ago, the Disease Management Care Blog was a speaker at a conference with an audience mostly made up of managed care leaders. It boldly argued the nation’s disease management vendors were going to help put the nation’s health insurers out of business by simultaneously assuming risk and lowering costs.

Hows that for chutzpah. The DMCB was never invited back, but not because it isn’t an outstanding conference speaker who deserves fat fees.

It was because it was utterly wrong.

And so is this online commentary on accountable care organizations (ACOs) courtesy of the The New York Times. In it, Dr. Ezekiel Emanuel boldly predicts that by 2020, ACOs will drive health insurance companies out of business. They’ll do that by assuming full risk, dropping patient barriers to care, coordinating services, fostering communication, promoting health, banning fee-for-service, increasing efficiency, relying on evidence-based care, being locally responsive and competing against other ACOs on cost and quality

Dr Emanuel is being astonishingly overconfident for four reasons.

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Working for Health Care: What $15,000 Will Buy An American Worker

Jane Sarasohn-Kahn


What could $15,000 get you?

$15,404 was the average annual cost of health insurance for a family of four with a PPO plan in the U.S. in 2011. The cost was fairly uniform across U.S. regions, with the lowest of $14,743 found in the West, and the high of $15,981 in the Northeast.

This health cost watermark finding was published in the always-informative annual Kaiser/HRET Survey of Employer-Sponsored Health Benefits for 2011. This study slices and dices the employer-based health insurance market across many dimensions, in terms of size of employer, type of employer, employee cost sharing, prescription drug plans, among other parameters.

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Health Plans Enter A New World of Retail

Jane Sarasohn-Kahn

First posted 8/26/11 on Health Populi

Health plans are more aggressively managing medical costs, leaning out administrative inefficiencies, and looking for new customers. Plans are undertaking these strategies as they face uncertainties over the next couple of years leading up to the full implementation of the Affordable Care Act, according to a paper from Boston Consulting Group (BCG), Innovation, Diversification, and a Focus on Fundamentals, looking at how health reform will change the insurance landscape.

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The 100 Year Shift? Introduction and Overview

Vince Kuraitis and Jaan Sidorov

First posted 7/5/11 on the eCareManagement Blog

Gazing at the horizon, we foresee the potential for a tectonic realignment among physicians, hospitals and payers. Here’s a quick visual representation:



This essay is the first of a seven part series. In this first post we will capsulize our vision of this potential 100 Year Shift, answer initial FAQs, and lay out the structure for the rest of the series.

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Average Annual Health Costs for a US Family of Four Approach $20,000, With Employees Bearing 40%

Jane Sarasohn-Kahn

First published 5/11/11 on Health Populi

Health care costs have doubled in less than nine years for the typical American family of four covered by a preferred provider health plan (PPO). In 2011, that health cost is nearly $20,000; in 2002, it was $9,235, as measured by the 2011 Milliman Medical Index (MMI). To put this in context,

  • The 2011 poverty level for a family of 4 in the 48 contiguous U.S. states is $22,350
  • The car buyer could purchase a Mini-Cooper with $20,000
  • The investor could invest $20K to yield $265,353 at a 9% return-on-investment.

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Can Health Plans Explain Why They Aren’t Re-Empowering Primary Care?

Brian Klepper and David C. Kibbe

First published 10/30/2008 on The Health Care Blog

Brian’s Note: Recently I received a note from a New Jersey primary care physician who argued that, even more than Medicare, the health plans are killing primary care through extraordinarily low reimbursements. He wrote:

Through state legislation and regulatory changes over the past 10 years commercial carriers are now routinely and consistently paying less than Medicare in New Jersey.  Last year Aetna dropped to less than 65% of the local Medicare rate for a complex office visit.  This year, in my county, CIGNA dropped to 51.5% for the same office visit, and that’s when the RUC, as flawed as it is, declared that 53.5% of the full Medicare rate was what the practice overhead should be.  So now CIGNA is officially paying less than what the undervalued RBRVS system states is the cost of care.

To my mind, this type of reimbursement cannot be interpreted as anything else than an intentional effort to stifle primary care and it’s moderating influence over specialty, outpatient and inpatient excesses. While a robust literature – first by Barbara Starfield and more recently in Health Affairs – has nailed down that more primary care reduces risk and cost while improving quality, America’s health plans continue to pay primary care through volume-based reimbursement that functionally shortens office visits, increases specialty visits and diminishes our supply of primary care doctors.

David Kibbe and I asked about this problem this two and a half years ago. See below.

Sometimes a whisper is more powerful than a shout. Below is a cartoon from Modern Medicine that shows a Medical Home counseling session between a primary care physician (PCP), a specialist and the health plan. The PCP looks forlorn, while the specialist and the insurer have their backs turned, fuming. It is perfectly true.

Along with changing the way we pay for all health care and creating far greater pricing and performance transparency, we need to turn around the primary care crisis if we hope to substantively improve quality and cost.

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Medical Loss Ratios – Again

Roger Collier

First published 4/4/11 on Health Reform Update

A new study, reported in the American Journal of Managed Care, seems likely to add more heat to the continuing medical loss ratio controversy.

The Accountable Care Act effectively mandates that health insurers achieve MLRs of 85 percent for large group business and 80 percent for small group and individual business, with insurers not meeting these thresholds required to make rebates to affected policyholders. However, the ACA allows HHS to issue a waiver if the requirement would disrupt a state’s insurance market. So far, an individual coverage waiver has been granted to the State of Maine, with eight other states’ waiver requests being considered.

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Tire Kickers Need Not Apply – 8 First Impressions of the Medicare ACO Rule

Vince Kuraitis

First published 4/1/11 on e-Care Management

On March 31, CMS released the long-awaited “Medicare Shared Savings Program: Accountable Care Organizations” document (ACO Rule). Read the details here (strong suggestion: unless you’re working on your PhD in ACOs, start with the fact sheets).

There are many surprises. Here are eight first impressions on this 429 page tome:

  1. The bar has been set high…very high.  Tire kickers need not apply.
  2. Don’t expect to see many or any small ACOs.
  3. Patients will be confused by ACOs.
  4. Concerns over maintaining competition and avoiding antitrust are being taken seriously.
  5. CMS scores points for coordinating the ACO Rule across Federal agencies.
  6. CMS loses points for micromanagement and a controlling mindset.
  7. Possible losers — hospitals, ACO vendors.
  8. Possible winners — physicians, health plans.

The details follow.

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The “Post Health Plan” Health Plan

Jane Sarasohn-Kahn

First published 3/8/11 on Health Populi

“If nothing else, the health reform bill has signaled the beginning of the end of the health plan as we know and love it,” David Brailer, once health IT czar under President GW Bush and now venture capitalist, is quoted in Reuters on Hot Healthcare Investing Trends for 2011. One health plan Brailer called out that could be relevant in the post-reform, post-recessionary US health world is Humana.

I had the opportunity to spend time with Paul Kusserow, Chief Strategy Officer for Humana, during the HIMSS11 meeting. Our conversation began with me asking why the chief strategist for Humana would attend HIMSS.

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Power – Er, No, Risk – To The People

Paul Levy

First published 3/2/11 on [Not] Running A Hospital

What will be the biggest trend in the health insurance business over the coming years? A tendency to shift risk from the insurance companies to the public.

How fitting for a sector that was created to manage risk to do this.

Why is it happening? Even before the recent health care legislation in the US, insurance companies were looking for a way to shift the rising cost of medical care to others.

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Accountable Care Organizations: The Emperor Has No Clothes, Or, Jeff Goldsmith’s Plan B


Originally published 1/06/11 on HealthBlawg

The current all-ACO issue of Health Affairs includes a piece by Jeff Goldsmith entitled: Accountable Care Organizations: The Case For Flexible Partnerships Between Health Plans And Providers.  It is a proposal for how private sector health plans ought to pay for services, in order to save us all from what Goldsmith sees happening in the near future thanks to the Gold Rush mentality among health care provider organizations working to become ACOs before they’ve been defined in regulation.

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International Federation of Health Plans 2010 Comparative Price Report: Medical and Hospital Fees by Country


This sobering report arrived on my desk today. The International Federation of Health Plans is comprised of “the leading global network of the industry, with one hundred member companies in 30 countries.” Each year they prepare a report that compares pricing for common services.

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