Covered California tries to force progress
April 08, 2016
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April 08, 2016
Covered California runs California's ACA health insurance exchange and is trying to leverage its clout to impose new conditions on insurers to improve health quality while reducing costs. Working with multiple insurance companies, it seems to be in a better position to facilitate collaboration among them; for example, one of Covered California's proposals is that insurance companies share data not only with doctors, but also with each other. Covered California is also trying to have insurance networks drop providers that are either high-cost or low-quality.
The move is bold, relative to what others in the industry have done. Part of the controversy, of course, is that people disagree about what quality means and how to assess it. Nevertheless, it seems that insurance companies have had decades to innovate in some of the ways outlined in the proposal, and probably could have accomplished more than they have. A separate objection is that the insurance networks for the relevant plans are already narrow, and that access to medical care may be inadequate if some providers are dropped from the network. It will be interesting to see if Covered California has enough market power to push these changes through.
March 31, 2016
Recently, there seems to be a lot of media coverage about drug prices getting out of control. Kaiser Health News published one article about an idea of financing expensive drugs through loans, paid off in installments. Some are arguing that these expensive drugs should be covered by insurance. What appears to be happening is that there are certain drugs that are both very expensive and cure a condition (rather than just manage a condition), such as some of the recent drugs for hepatitis C. In many cases, patients with those conditions can live a while without such drugs, and insurance companies have been slow to agree to pay for such treatment until the health of such patients have deteriorated. Insurance companies may even agree that over the long term, paying for the expensive upfront treatment can be worthwhile in theory (saving on health maintenance drugs over many years), but note that patients frequently change insurance plans which undermines the financial calculation. The resulting sub-optimal situation could benefit from a financed solution. There may be other solutions, such as insurance companies agreeing to pay for treatment in exchange for patients agreeing to stay with an insurance plan for a certain number of years; unfortunately, such ideas may be limited because of patients might not have much choice to stay with the same plan if their employers choose to change carriers to save costs.
Meanwhile, the American College of Physicians is reported as protesting high drug prices and as advocating for government intervention. As the chorus around drug prices grows, it'll be interesting to see how industry reacts.
March 26, 2016
Propublica's Surgeon Scorecard has been controversial and has garnered much praise and criticism. Everyone acknowledges that it's not perfect, but some (like us) think that it's a tremendous step forward, while others think that Propublica should have not published their findings. Kaiser sponsored a panel discussion about it, which was quite interesting. A couple people seem to claim that medical errors are worse now, than in 1999.
Fortunately, everyone on the panel (including someone in hospital administration) seems to be in favor of performance transparency in principle. Questions remain as to how to go about increasing transparency, and whether incremental efforts are good enough.
March 20, 2016
Kaiser Health News published an interesting article about Medicare investigating different ways of increasing cost-effectiveness when paying for drugs. One idea is to reduce the percentage that Medicare reimburses for the overhead of purchasing and administering drugs. The current scheme gives providers an incentive to recommend more expensive drugs since they would be reimbursed more themselves. Under the proposal, Medicare would reduce the payment for overhead by more than half. It seems like Medicare could go further by offering a percentage overhead reimbursement, up to a fixed limit, with exceptions being carved out for drugs that need special handling. However, that introduces complexity that might offset the savings. Medicare is also reportedly considering applying reference pricing for drugs, which could be an interesting way of giving patients an incentive to seek better value while preserving some choice. The article points out that these ideas come from industry.
Interestingly, not all of the ideas lead to short-term savings. The last idea discussed entertains reducing or eliminating patient copays for drugs that are considered effective. The idea is that while Medicare would end up paying more in the short-term, patients are more likely to adhere to their prescriptions, presumably enjoying better health and avoiding more expensive procedure costs.
March 12, 2016
Kaiser Health News reports on two states that are trying to help consumers compare pricing information. New Hampshire has started publishing the prices of some dental procedures and some prescription drugs, both of which are easy to shop. California, meanwhile, is posting average prices of medical procedures for large physician groups. The efforts seem modest in scope, but are nevertheless encouraging of a larger trend.
Meanwhile, the article also referenced a study by the Health Care Cost Institute, which questioned the extent that healthcare consumerism is likely to affect healthcare spending. The study found that 43% of the money spent on healthcare services for commercially insured patients were considered shoppable, with only 7% being paid out-of-pocket for shoppable services. I suspect that the 7% figure will increase with time, making consumerism a more powerful force than that study acknowledges.