I recently read the article "Some Claim ACO Status Without Truly Changing," about how some provider organizations are asserting they've "always been an ACO."  This did give me a déjà vu moment.

I feel like I'm in a time warp, caught somewhere around 1990. Remember that year?  Margaret Thatcher resigned, Manuel Noreiga turned himself in, Jim Henson died, Driving Miss Daisy won best picture… And that's also about the time that executives of provider service organizations got the idea that they could be managed care organizations and manage the financial risk of health care for a population. Most often those executives told me they had "always been responsible for a fixed budget."

Now the strategic theory behind provider organizations managing health care financing is a sound one on many levels. From the organization’s perspective, controlling all of the funds for a population is one way to protect their strategic market position. From a health care policy perspective, it makes sense to have clinical professionals making the decisions about rationing health care resources.

But, if the ACOs of the future are going to succeed, executives of provider organizations need to realize that it is not business as usual. That is the reason so many managed care initiatives owned and operated by provider organizations failed. They believed there was no difference.

What I heard at the time was the oft-repeated phrase: "If only we had all the money, everything would be fine" (still, of course, a popular phases these days too). But, since the clinical professionals who run most provider organizations are trained to think on a case-by-case basis (instead of a population basis), they are not well-suited for managing population-based health funding. And at that time, executives of many provider organizations quickly learned how tough it is to make a margin managing a pool of funds.   Some of the them learned the hard way (financially speaking).

Now before you send me a message about either the evils of rationing (some entity has to do it) or my negativity about the executive management of provider organizations, I would like to point out that I think that financing of health care services based on some risk formula (capitation, case rates, etc.) is generally a good policy decision. But, to be successful, executive teams of provider organizations need to become "data-driven" in their analysis and decision making.   

I think there is nothing significantly different from ACOs of today and the managed care programs of two decades ago (though many of program architects disagree with that statement). But, without some significant change in management tools and organizational culture, management teams of provider organizations are going to be as successful (as a group) at managing ACOs in the future as they have been at running managed care programs in the past.

A few weeks ago, I read a Wall Street Journal  article, "Law Prompts Some Health Plans To Cut Mental-Health Benefits," which summarized a Kaiser Family Foundation survey (Employer Health Benefits 2010 Annual Survey) on the effects of the behavioral health parity law on employer-sponsored health plans  – this article shouldn't have come as a surprise to those who are familiar with the past data. Of employers with over 50 employees, 69% didn't change their benefits at all. Of the 31% that did change their benefits, 66% changed their behavioral health benefit limits to equal physical health benefits; 16% increased their use of managed care; and 5% eliminated behavioral health benefits overall. That last 5% was, of course, the focus of The Wall Street Journal article.  

The article's authors did cite the Congressional Budget Office estimate that parity would increase premiums for group health insurance by an average of 0.4%, and the work by Steve Melek, a behavioral health  expert for the actuarial firm Milliman Inc., which showed that not providing benefits for mental health and addiction leads to higher overall health care costs. The article also referred to the fact that these plans would have to add back this coverage if the health care reform legislation moves ahead; the law requires that health plans offered through the soon-to-be-launched health insurance exchanges meet certain minimum level of benefits.

But the line that really got a rise out of me was the very last of the article; it referred to how the Screen Actors Guild (SAG) was going to help their members now that they had eliminated all their behavioral health benefits (both services and pharmaceuticals).  The article stated that their plan "will begin working with its members to help refer them to community-treatment options […]." I don't know what mythical free sources of mental health and addiction treatment services and pharmaceuticals the CEO of SAG was referring to, but I certainly haven't come across any. Our team at OPEN MINDS works with a wide range provider organizations who see the 'flood' of Americans who are uninsured and (in this case) underinsured looking for free services. Provider organization budgets for free services are very small—certainly not enough to cover the U.S. population currently uninsured and underinsured for the treatment of mental illnesses and addictions.

In the future, I'm hoping that policymakers will drop their references to this land of "happily ever after," wherein everyone can magically receive free behavioral health services. Policy decisions only work when you make them for the real world. 

Like many Americans, I was first stunned and then unsettled by the shootings that took place last week in Tucson. Since then, we’ve heard lots of debate about Jared Lee Loughner's motivations. Partisan media hyperbole? Targets on an election map?

Most recently, there has been a chorus of pundits singing about the ills of the mental health system. Michael J. Fitzpatrick, Executive Director of the National Alliance on Mental Illness, said, “The plain truth is that America's mental healthcare system is horribly broken and horribly underfunded. And across the nation, budget cuts continue to eviscerate community mental health programs that reach out to vulnerable individuals and put them on a path to recovery.”

But more surprisingly, have been the statements of key Republicans:

• Republican advisor Mike Murphy said on the Bill Mahar Show on January 14, 2011, "I'd like to see a better linkage between the gun control stuff we have now and the crazy-filter. Because if you look at Virginia Tech and you look at this guy, it is too easy for mentally ill people to get guns; because there’s no mental screening anymore."
  
• Virginia Republican Senate candidate Jamie Radtke (and head of the Richmond Tea Party) told ABC’s Top Line that "instead of it being about the political part, it’s really about needing to get our arms around our health care, the mental health policy here."
  
• Representative Mike Rogers (R-MI) said, "What we have to do is intervene earlier in that cycle of violence when they have this kind of disability. . ."
  
• Newly-elected Representative Allen West (R-FL) said, "The shooter was a very disturbed individual and it appears there were so many warning signs that he was going to do something horrible.  We should be focusing on the mental health crisis in our country, not politics."

Well, I have a simple piece of advice: if we want to stop tragedies like this from happening again, we should not repeal health care reform. Two years ago, national legislation passed that (finally) guaranteed that most individuals with insurance will have coverage for assessment and treatment of mental illness. The health care reform legislation builds on that non-discrimination parity legislation and assures that most Americans will have some form of health coverage that includes coverage of mental health conditions.

Earmarked funding for community mental health services will not solve the problem. We need to end fundamental discrimination against people with mental illnesses, and ensure that they have consistent access to the health care services that they need.

Americans are not of one mind about health care reform— a recent Gallup survey showed that 46% were in favor of repeal and 40% wanted to move forward with the law being enacted. (Interestingly, there were great differences in support of the law based on age – with the under 30 crowd clearly in support and the 50+ crowd favoring repeal.)

I can understand having qualms about some provisions of the health care reform law. If I were queen, I would have done things slightly differently. But, I am absolutely opposed to repeal. And what I don't see coming from the repeal advocates is a plan—for anything.

Our health care status quo isn't working for anyone—not for consumers, employers, governments, or anyone else. Last Thursday, the Congressional Budget Office concluded that between 2012 and 2021, repealing the law would increase the national debt by approximately $230 billion (more on that in a future blog post…). And so when I talk to the folks looking for repeal, my question for them is always: what's your plan?

Like many of you, on Monday I saw the news that a federal district judge in Virginia ruled that the insurance mandate in the health care reform bill exceeds the authority granted to congress under the Commerce Clause of the Constitution. (It apparently is Constitutional to mandate that employers provide health insurance, but not individuals – a distinction I don't quite get.)

But that is not the purpose of this missive. To all of my colleagues who are applauding the death of the individual mandate, I would like to give a quick remedial course in health care financing. In order for our health system to eliminate preexisting condition clauses and exclusionary enrollment in health plans, the current mandate for individuals to buy health insurance is a necessity. It is financially impossible to have one without the other; if there were no mandate, everyone would simply wait until they were ill to get health insurance – something akin to allowing an individual to buy homeowners insurance the day after they have a fire.

So what is the answer?
 

#1. Fight the Virginia Court decision to the Supreme Court (likely), and restore the individual health insurance purchase mandate within health care reform.

#2. Accept the Virginia Court decision and allow the return of preexisting condition clauses and exclusionary enrollment in health plans. I think this is poor (and penny-wise, pound-foolish) policy choice. We have many Americans who forced into bankruptcy paying for treatment for devastating acute and chronic health conditions.

#3.  Accept the Virginia Court decision and have the federal government provide health insurance for all uninsured persons, which would keep the ban on preexisting condition exclusions in health plans.

For those of us trying to find the “middle ground” in health care reform, I'd like to point out that ruling that individual purchase mandates are unconstitutional is likely to spur an increase in federally-financed coverage.  I'm not sure this is the outcome that many of those organizations financing the anti-health care reform lawsuits will want.  But, as they say, be careful what you ask for. . .

I just read a great piece in Becker's Hospital Review, “10 Key Trends for Hospitals in 2011,” which focused on hospital subject matter experts’ predictions for the new year. Their observations are relevant not only if you’re in the acute care sector of the field, but also serve as useful guideposts for any organization in the health care field.  

The ‘top ten’ trends this group is expecting include:

1. Lower reimbursements
2. Recovery audit contractors (RACs) gather momentum
3. More uncompensated care
4. Political gridlock
5. Uncertain fate of healthcare reform
6. Anticipated ACO rules may open the floodgates
7. Greater focus on experimentation
8. States will further cut Medicaid spending
9. Healthcare IT payments start
10. More hospital consolidation likely

I think these will prove to be trends that all management teams will need to factor into their planning scenarios. So make sure that your team – and your plan – is ready for the new year.

I’ve written in the past about the need for specialist health care organizations (such as behavioral health organizations) to reposition themselves in an era of changing technology, science, and financing. There are many possible directions for repositioning – from primary care for individuals with chronic conditions; focused disease management programs for consumers with multiple chronic diseases and complex social support needs; and program to address unnecessary use of high-cost acute care interventions.

Now comes yet another study on the cost savings opportunities of prevention efforts in two areas – high blood pressure and diabetes. The study authors concluded that reducing the prevalence of diabetes and high blood pressure by five percent would save the nation about $9 billion a year in the short term. In addition, conditions related to those health problems would also be reduced, which would increase the savings to about $24.7 billion a year in the medium term.

The study was conducted using 2003-2005 data from the Medical Expenditure Panel Survey.   Study results were released on-line on November 18, and are scheduled to be published in the January print issue of the American Journal of Public Health.

This is data that can be the foundation for designing (and marketing) prevention programs.   For more on the evolving wellness and prevention market, check out these recent articles by our team:

• Market Opportunity in Prevention Programs: Reform Creates New Market Niche for Prevention (available to premium OPEN MINDS Circle members)
• New Science Changing The 'Perceived Value' of Prevention & Early Intervention  (available to all OPEN MINDS Circle members)
• Mental Illness & Addiction Prevention & Treatment Critical to U.S. Health Reform (available to premium OPEN MINDS Circle members)
• UnitedHealth Group Launches Diabetes Prevention & Control Alliance With Partners Walgreens & YMCA of the USA (available to premium OPEN MINDS Circle members)
• J&J to Grow New Wellness & Prevention Business as Part of Consumer Division (available to premium OPEN MINDS Circle members)

On October 11th, John Boehner (R-Ohio), the current House Minority Leader—and the presumptive Speaker of the House in the 112th Congress—warned that we should not expect funding to implement health care reform if the Republicans become the majority in Congress – “They’re going to need money from us to hire those 22,000 federal employees we think it’s going to take to run this monstrosity. And I’ll just tell you, they’re not going to get a dime from us.” 

Representative Boehner went on to acknowledge that an all out repeal of the health care law is unlikely, as President Obama will still hold veto power from the White House. But even if an outright repeal isn’t possible, Republicans will still have the ability to hold up funding for many aspects of the reform legislation through the annual budget process. If Republicans take control of the House (as most polls indicate is a very likely scenario), Boehner stated that it will be the Republicans “job to do everything we can to keep it from being implemented, to keep it from moving ahead.”

So, as I see it, the choice in this election regarding health care is a clear one.  Flawed or not, do you want health care reform?  The bill has many great features—elimination of preexisting conditions clauses and recission, access to minimum coverage for the poorest Americans, etc. But, I think we all recognize that it also comes with a range of problems to be fixed.

Which leaves one question to think about: If the Republicans are in the majority, what is their alternative proposal?

One of my greatest personal and professional peeves is the “constant critics.”  These are the folks who constantly complain and critique what you do – but have no proposed solutions and rarely get things done themselves.  My experience as the founder and executive of a small business is that while it is easy to play the role of critic, it is quite difficult to develop and implement real, workable solutions.
 
These days, I consider the Republican Party to be playing the role of the “constant critic” when it comes to health care.  They had eight years when they controlled all branches of government, and did nothing.  And now that someone else has taken a swing, all they have managed to do is complain.  This “constant critic” position was perfectly captured in a piece by Grace-Marie Turner, “Putting the Brakes on Obamacare: How a Republican Congress Could Begin the Process of Repealing This Unpopular Law,” in the August 25, 2010 edition of The Wall Street Journal.  Ms. Turner outlines “the six key strategies that a Republican Congress could employ to put on the brakes.”  Her plans for health care reform? – Defund it, dismantle it, delay it, disapprove regulations, direct oversight and investigation, or delegate to the states.
 
Clever alliteration, but did you notice any solutions listed among those Republican “key strategies?”  

Remember the story of the blind men and the elephant? In varying versions of the story, a group of blind men/men in the dark touch an elephant in an attempt to determine what it is; however, each one feels only one part of the creature, such as the tail or the leg. The men then compare notes and learn that all disagree on what they felt—the man who felt the tail thinks it is a rope, while the man who felt the leg believes it to be a pillar.  The story originated in India and is used to demonstrate the relativity of truth.

Well, such is the reporting on the fate of one insurer, Assurant Health, in an era of health care reform.  And, I’m certain that similar reports of facts, resulting distinctly different perspectives, will become more common as health care reform is implemented.

The facts: Assurant Health, a Milwaukee-based health insurance company, announced last month that it was laying off 130 employees in Milwaukee and Minneapolis.

The first perspective comes from “ObamaCare Has Failed,” an article by Grace-Marie Turner, Chief Executive Officer of the Galen Institute.  Ms. Turner writes:

“The wheels are coming off ObamaCare even sooner than most had predicted. The American people are not being fooled by the sugar-coated sales campaign, jobs are being lost, health costs are rising, and the first program to be launched is a dud […] 

Do liberals really believe that people aren't going to pay attention to double-digit premium increases that are coming, $575 billion coming out of Medicare to pay for massive new entitlement programs, the $500 billion in new taxes that are driving up health costs, the barrage of new regulations putting employers and the health sector in a straightjacket, and the despised individual mandate that will force Americans to purchase expensive, government-dictated health insurance?

Today’s news has direct evidence of jobs being lost as a result of ObamaCare. Assurant Health, a health insurer based in Milwaukee that specializes in individual and small group policies, announced that it is laying off 130 workers as of October 1. Assurant is a terrific company that was the first to sell a Health Savings Account policy and has continued to be responsive with innovative products to serve customer needs.

But new one-size-fits-all regulatory requirements are forcing insurers to slash personnel to meet new ‘administrative’ tests, rules that present real challenges to a company that focuses on direct customer service rather than selling policies thousands at a time. Assurant is highly adaptable and will survive, but many capable employees and their families can thank ObamaCare for losing their jobs.”

The second perspective comes from “As Reform Improves The Overall Market, Inefficient Insurers Could Take Hits,” by Jonathan Cohn, Senior Editor of The New Republic.  Mr. Cohn writes: 

“When Assurant Health, a Milwaukee-based health insurance company, announced this month it was laying off 130 employees in Milwaukee and Minneapolis, it blamed the health care overhaul for its struggles […].  The carrier is Assurant, which specializes in selling policies in the individual and small business markets […] – the place you find carriers that aggressively avoid people at risk of getting sick […]

The health law forces insurers to cover basic benefits […] And it limits the money they can spend on administrative overhead or broker commissions. Once fully implemented, reform will also prevent these carriers from avoiding people with pre-existing conditions. Make no mistake: These are all good things. They mean insurance is becoming more accessible, more comprehensive and more efficient.

Alas, that may […] be bad news for Assurant. If the company's name sounds familiar, that's because it was in the news early this year when a Colorado jury slapped it with a $37 million judgment for wrongly refusing to pay the bills of a woman in a car accident. (The company claimed the woman had hidden evidence of a pre-existing condition. The jury, obviously, disagreed.) And when the layoffs were announced, an article from the Milwaukee Journal-Sentinel noted that reform would ‘undercut one of Assurant's strengths – determining which customers are the best risks.’ I have no idea whether Assurant can find other ways to survive as a business. But, if it can't, then we're better off relying on competitors that can.”

I was struck by the difference in “perspective” on the facts...and would welcome your own unique perspectives.    

I read, with interest, a recent piece on the future of U.S. hospitals,  Service-line strategies for US hospitals, by the consultants of McKinsey & Company. The premise is quite simple – the full service hospital is going to have an increasingly difficult time competing. Their solution? "A commitment to clinical service lines as an organizing paradigm, much as many corporations organize themselves by business unit—is becoming a necessity. . . Specializing in a few service lines allows hospitals to build a critical mass of patients in select areas and to enjoy economies of skill and scale... "

This market focus on specialization – and the need to adopt service line management tools is not limited to hospitals. I see it as a key survival strategy for organizations in the behavioral health and social service niche playing field.

At our 2010 OPEN MINDS Strategic Planning Institute last month, I presented our recent analysis of our post-recession, post-health care reform model for specialists. In a nutshell, there are four likely delivery system market positions – two in facilities and two that are tech-enabled:

• Destination Specialty Services
• One-Stop Health Service Shopping
• Mobile, Home-Based, & Community Care Services
• E-Health & Remote Services

But, that is only part of the strategic positioning story. Within those delivery system market segments, the detail can only be answered by effective service line analysis and management. For your strategic planning – and then for your on-going market strategy implementation and operations management structure – service line management models are key to effective analysis and nimble management during this turbulent market environment. If your current planning isn’t grounded in an organizational view based on service lines, consider next year’s plan as a good place to start today.

Just in case you've missed it, there is a bill wending its way through Congress to extend the HIT/EHR incentives that are available to all other health care provider organizations through the Stimulus (ARRA) funds to behavioral health. On April 15, 2010, Congressman Patrick J. Kennedy (D-RI) and Congressman Tim Murphy (R-PA) introduced the Health Information Technology Extension for Behavioral Health Services Act of 2010 (HR 5040). The bill adds mental health and substance abuse professionals, psychiatric hospitals, substance abuse treatment facilities, community mental health centers, psychologists and clinical social workers to those eligible for electronic health record incentive payments established under the American Recovery and Reinvestment Act of 2009 (ARRA). Psychiatrists and psychiatric nurse practitioners are already eligible for this program under existing law.

You can learn about the bill at http://patrickkennedy.house.gov/PRArticle.aspx?NewsID=1770. We'll keep you posted on the status of the bill in our coverage of breaking developments in the field.

Were you as surprised by that question as me? In his piece, The Right Man for the Job - Why Mitt Romney should run Obamacare, Daniel Gross made the case for Mr. Romeny. My initial reaction was skeptical.

But, Mr. Gross outlines his view of the three principal requirements for the job. The first is experience in management, business, and organization. The second is the ability and capacity to commit and to act. The third is relevant experience in implementing a large-scale health-care reform program. Seems like a job just made for Mr. Romney. I am sorry I hadn’t thought about it before...

You may remember one of the few moments of levity in the incredibly complex and partisan discussions of health care reform came from Rush Limbaugh (surprisingly). In January, Mr. Limbaugh ended up in a Hawaiian hospital with chest pains. At a press conference after his recovery, he said, "Based on what happened here to me, I don’t think there’s one thing wrong with the American health care system. It is working just fine, just dandy.” What Mr. Limbaugh apparently didn’t know is that since 1974, Hawaii has had a statewide employer mandate for health insurance and near universal coverage for health care—a key provision of the now-signed health care reform bills. It was irony worth a chuckle.

Roll forward a month, and Mr. Limbaugh added another moment to remember when answering a caller's question on his radio show. The caller asked what he would when the health care reform bill passed. He responded, "I don’t know. I’ll just tell you this, if this passes and it’s five years from now and all that stuff gets implemented — I am leaving the country. I’ll go to Costa Rica." The irony is that Costa Rica has universal, publicly-financed health care—and one of the highest life expectancies on the globe (78.8 year). The very 'socialized' medicine that Mr. Limbaugh has long opposed. It was a great bit of humor in a very intense public discourse.

But, now the day has come. March 23, 2010, the health care reform bill was signed by President Obama. We have the countdown to March 23, 2015 to look forward to.

They say health care is recession-proof. But, that's not exactly the case. The health and human services sector has proven to be both recession-resistant and a recession laggard. And—if U.S. governors are right—the start of the ‘recession’ in the health and human service sector will begin on July 1, 2011. The fiscal year that begins in July will be “the most difficult to date,” according to a survey of 45 states released at the winter meeting of the National Governors Association.

States must find a cumulative $18.8 billion to balance their budgets in remaining months of the current fiscal year, and in fiscal 2011, an estimated $53.6 billion in shortfalls awaits, according to the survey. For governors, Medicaid is one of the top budget issues. Medicaid spending for fiscal year 2009 was $335 billion, an increase of 7.8 percent over the previous year. Enrollment increased 5.4 percent in fiscal year 2009 and will grow 6.6 percent in fiscal 2010. Additionally, 3.3 million more people were enrolled in Medicaid in June 2009 compared to the previous year—the largest one-year increase to date.

If you haven't started your management strategy for this time of economic freefall, now is the time. For starters, employ a three-prong recession management strategy consisting of short-term cash management, business development, and preparing for the post-recession marketplace.

For more, check out:

• Prepare for the Emerging Post-Recession Marketplace: Five Management Best Practices for Organizational Sustainability
• Anticipating Emerging Post-Recession Market Models: Consumer & Payer Demands for Behavioral Health & Social Services

The December 17 issue of Business Week had a provocative headline—The Coming U.S. Doctor Shortage: Health-care reform will mean 30 million more patients—and bigger crowds in waiting rooms. I thought the positioning of this piece played into the 'fear of health care reform' camp that looks at the nation's health as a zero sum game. If you give minimal coverage to all, the rest of us with insurance will suffer. But the piece did raise some interesting points:

• In 1997, lawmakers placed a cap on the number of medical residencies in order to contain costs under Medicare, which pays for most of these training slots.Medicare pays $100,000 a year per residency, at a total cost to the program of about $9 billion. The funding began in 1965 when the U.S. was preparing to extend government health coverage to 19 million elderly Americans. As the Medicare rolls grew—to 45 million by the end of 2008—a cap was placed on the number of medical residencies to control spending.
• According to the U.S. Department of Health and Human Services, last year there were nearly 17,000 fewer primary-care doctors than needed in inner-city and rural areas. The Association of American Medical Colleges predicts that by 2025 there will be a shortage of as many as 159,300 doctors.
• An amendment to the health-care reform bill—proposed by Senate Majority Leader Harry Reid (D-NV), Charles Schumer (D-NY), Bill Nelson (D-FL.)—would add 15,000 residencies at a cost to Medicare of about $1.5 billion to anticipate and prepare for this shortage

What caught my attention in the article was this handy chart—showing the growing demand for services and the almost-flat supply line. I believe we can flatten the demand line for physicians and increase the supply line with just a few policy changes.

On the demand side, if we encourage individuals to take more control of their own health care, demand for physician time will decline. There are also a variety of technological substitutions for physician office visits and an array of non-physician health professionals that can fit the bill.


On the supply side, there are two major ways to enhance supply. First, use technology to increase physician productivity—less paperwork, e-health to extend reach, and more. The other way is to pay primary care physicians more. Payment policies have favored procedure-oriented specialists—and the physician’s choice of specialties reflects this.

A few weeks ago, Newt Gingrich with the president/CEO of the National Center for Policy Analysis John C. Goodman jointly responded to President Obama's challenge for Republicans to show him a better idea on health care reform. Their ten ideas, outlined in the Wall Street Journal’s “Ten GOP Health Ideas for Obama” are as follows, with my reactions in red.

1. Make insurance affordable. This could be done by reforming the "arbitrary and unfair" taxation on health insurance. (Read: no more tax exemptions on employee health benefits)
2. Make health insurance portable. Employers should give employees insurance that can be brought from job to job, and people should be able to buy insurance across state lines. (Read: eliminate state-specific regulation of insurance comapnies and move to interstate insurance)
3. Meet the needs of the chronically ill. Help them take charge of their own care with Health Savings Accounts. (Not sure what this means)
4. Allow doctors and patients to control costs. Doctors and patients should be liberated from government-imposed payment rates that reward physicians for treating the sick but not for keeping healthy people healthy. (Not sure what this means)
5. Don't cut Medicare. Medicare's on an unsustainable course, but the $500 billion in cuts the Democrats propose are not the answer. (Interestingly odd for Republicans)
6. Protect early retirees. A bridge to Medicare can and should be built to help the millions who retire before they qualify. (Not sure what this means)
7. Inform consumers. Government data on cost and quality should be made public. (Of course. . .)
8. Eliminate junk lawsuits. "We do not need to study or test medical malpractice any longer," Gingrich and Goodman write, pointing to Texas' liability protection efforts as a model. (As a consumer, I'm skeptical of eliminating legal redress for medical malpractice without more regulation to 'disbar' bad physicians. As a health care analyst, the savings are only in the 1.5% range.)
9. Stop health care fraud. Approaches including third-party liability verification, and electronic payment can help cut the $120 billion lost to fraud every year, (Of course...)
10. Make medical breakthroughs accessible to patients. Red tape should be cut to get new drugs and treatments to patients faster. (Good on paper but full of practical, legal, and scientific problems.)

So what do you think? Can this GOP hit list be married with the existing bills to give us something resembling universal coverage with cost containment? Let me know what you think!

Regardless of the final direction health care reform legislation will go, comparative effectiveness research (CER) will be a part of it. While many see CER as a vital piece of the puzzle, some in the health care industry are on the fence about its actual value in improving health care as a whole. A New England Journal of Medicine piece I read recently, by Alvin I. Mushlin, M.D., and Hassan Ghomrawi, Ph.D., M.P.H., “Health Care Reform and the Need for Comparative Effectiveness Research” gave four straightforward reasons for how/why CER is both valuable and necessary in our existing system:

1. Findings from CER will provide a buffer against “blind” cost containment.
2. CER can identify preferred therapies, promoting changes in care and outcomes by identifying and validating such treatments. Such research suggests ways for new financial incentives to be applied both safely and effectively.
3. CER should enable innovation in medicine, by creating ‘disincentives’ for the development of “me too” drugs and devices, and by raising expectations and demands for clear evidence of superiority.
4. CER serves as what the authors call the “first line of defense against blind cost containment,” and can serve as a stimulus for the academic medical and public health communities, thus resulting in greater demand and more opportunities for physicians-scientists to get in on the research.

Let’s wait to see how CER fares in the final health reform bill—and if either side stifles the progress in science and service delivery that CER can bring about and that the health care system as a whole desperately needs.

I was heartened to see that the Senate version of the health care reform bill would set the medical loss ratio for health plans at 85% for large group plans and 80% for small group and individual plans, and that the House set everyone's rate at 85%. The original proposal by Senator John D. Rockefeller of West Virginia had the ratio at 90%—a number rejected as unrealistic.

And, the reform bills have a penalty clause built in for insurers failing to hit the prescribed medical loss ratio (MLR)—they have to rebate the difference to their customers. See "To Your Health: How Congress plans to get insurers to spend money on actual health care" by Slate writer Christopher Beam. For major insurance companies, this wouldn't change much. The average MLR of for-profit insurance plans offered to large employers is about 84%. Small employers, or companies with 50 or fewer workers, have an average MLR of 80%. But, in the individual insurance market, the MLR is around 70%.

While this is a great start, I think 80% is too low. And, the devil is in the details, so to speak. The reform bills are still defining what exactly 'health care spending' is—a critical set of definitions. Stay tuned

The health care reform bill tug-of-war currently happening between the House and Senate is too much for many of us to keep up with. I took interest with an article in Slate by Christopher Beam that includes a hit-list of those health care reform issues that still need to be ‘hammered out’ in the final bill. His six issues include:

• The exchanges—while the House bill would create a national exchange, the Senate bill would create a series of state-based exchanges. There’s no happy medium. It is either state or national.
• The mandates—what will be the real penalty for not buying health insurance? The House bill would charge a 2.5% tax on all income above the filing threshold ($9,000/individuals or $19,000 for couples), while the Senate bill would impose a flat penalty, which itself fails to acknowledge the wide variance in American income levels and their ability to pay up. The employer mandate is a big one as well; will employers pay an 8% tax on total wages or levy a $750 fine per employee? Who will be eligible for exemptions?
• Medicaid expansion and subsidies—the House bill would make Medicaid available to individuals earning up to 150% of the poverty level, while Senate bill would expand it 133%. The differences are in the subsidies, in that the House bill provides far more support for families at or below 300%, while the Senate bill seems to focus more on middle income families between 300% and 400%.
• CHIP—key questions posed by Beam: “Does Congress really want to end the Children’s Health Insurance Program and push kids into exchanges and Medicaid, as the House bill would do? Or does it want to extend CHIP until 2015, as the Senate bill would do?
• Narrowing the ‘donut hole’—the gap in Medicare coverage known as the ‘donut hole’ is addressed far more in the House bill, which phases it out altogether by 2019 by ‘filling’ it with money from the pharma industry. The Senate bill would only close the gap halfway (and only temporarily).
• Paying for it—the House would levy a 5.4% surtax on individual income above $500,000 while the Senate would tax plans that cost more than $8,500 for individual and $23,000 for a family; Senate would also tax indoor tanning services (yes, seriously).

As our eyes dart back and forth between this legislative ‘volley,’ I will be interested to see how flexible the House and Senate are on certain issues—and which issues they refuse to compromise on.