The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

ACA Disrupts Business Model for Health Insurance Companies

By Bill Bithoney/Wednesday, August 14, 2013
Bill Bithoney imageAfter years of selling insurance plans in large measure to private employers, the ACA now requires private insurers to begin selling to individuals. The ACA has mandated public Health Insurance Exchanges within which qualifying employees will pick and choose from among multiple insurance plans within their market.  This represents a radical, disruptive change in the health insurance market.

Of special interest to many employers (and employees for that matter) is the simultaneous development of private insurance exchanges wherein employers contribute a fixed amount toward a health policy but then have the employee choose the level of plan and the insurer they prefer. 

It is hard to imagine a more disruptive model to the health insurance industry’s historical approach to selling insurance. It is also difficult to imagine a more exciting time in the health care industry.  Let’s all stay tuned!

William Bithoney, MD

Digital Health Records: Lower costs, better quality – eventually

By Bill Bithoney/Monday, July 22, 2013
Bill Bithoney imageBetween 2011 and 2012 the federal government spent over $9.2 billion for Meaningful Use (MU) incentives, which are part of a comprehensive plan to decrease the cost of healthcare as well is improve its effectiveness and quality. As of December 2012 just over half of US hospitals have attested to MU Stage I, and an additional $9 billion in incentive payments will go out as the remaining half reach this milestone.
Meaningful Use I, and later MU II, should be viewed as laying the groundwork for electronic health record interventions which may ultimately result in improved health care. For now, though, growing adoption of digital health records seems to be accompanied by higher provider charges: CMS has documented increases approaching 4%.  This may be due in large part to electronic health records’ ability to quickly document more precisely and completely all types of care provided, and to generate bills at the highest possible level of reimbursement.  CMS and other health insurers are actively investigating this issue.

States Allowed to Cut Back on Medicaid Payments

By Bill Bithoney/Monday, March 4, 2013
Bill Bithoney image60 Million Americans currently are enrolled in Medicaid and, as a result of the Affordable Care Act (ACA), over the next 2 years many more patients will be enrolled. While initially the Federal government will cover the cost of the increased enrollment in Medicaid, the share of Federal funding will eventually shrink.  The Obama administration has agreed to allow states to reduce payments to hospitals, doctors and other providers, perhaps in an attempt to get Republican governors to buy into the ACA.

Many states such as California and Illinois are already struggling to pay for the high cost of Medicaid. These states may find it essential to cut Medicaid payments to providers in order to dig out of already challenging deficits—even without the projected higher costs of Medicaid in the future.  On the other hand the Obama Administration’s position on this matter has infuriated hospitals and providers who believe that Medicaid already reimburses them below their costs of providing care.

These providers and healthcare advocates are using the path of judicial appeal to prevent planned cuts from taking place in California. In a brief filed with the appeals court, the administration has stated that “there is no mandate to reimburse providers for all or substantially all of their costs.” Will providers continue to provide care to Medicaid patients if the rules change? The President of the California Medical Association has said that “two thirds of the doctors in California cannot afford to participate in Medicaid because the rates are so low.” What will happen if the rates get even lower? Healthcare providers are watching this case closely.

Dr. William Bithoney

Price Transparency: How much will that medical procedure cost?

By Bill Bithoney/Friday, February 22, 2013
Bill Bithoney imageWhen buying a new car I want to know the exact price including financing charges before I sign on the dotted line. When I had my roof repaired last week I knew its exact cost before the work began.  However, if I call a hospital  to inquire how much a hip replacement will cost for my balky limb, the answer I will get from most hospitals is either vague or more typically no answer at all. You might be surprised to learn that many hospitals really do not know the cost for even relatively common healthcare services received in their facilities.

Researchers at the University of Iowa recently found in a survey of 120 hospitals that only 19 were able to give consumers an exact price for a hip replacement. Further when prices were given, they varied by roughly 1200%, from $11,000 to over $125,000, for the same procedure! They were provided with standard assumptions to help ensure accurate comparisons. Correcting this surprising gap in knowledge about their own costs is a critical step toward improving the cost of care. And providing apples-to-apples cost information to patients is the next step because, in a significant departure from today’s ‘normal,’ patients are becoming increasingly price sensitive.

Self insured employers and health plans are considering offering incentives such as splitting the cost savings when employees choose lower cost, high quality providers.  If employers rewarded employees for choosing lower cost providers who have demonstrably excellent outcomes, the business of elective surgery and non-emergent medicine would take a long stride forward in becoming price sensitive.  Most experts agree that this would quickly result in hospitals beginning to compete on price – and that would begin bending the health care cost curve in the right direction!

Dr William Bithoney

The Cost of Out of Network Care

By Bill Bithoney/Tuesday, February 5, 2013
Bill Bithoney imageThe issue of extremely high variation between in- and out-of-network fees is highly significant and not adequately addressed in the ACA.  Private physicians who remain out-of-network can charge insured patients and their insurance companies exorbitant fees for out-of-network care.  An excellent example is an anesthesia group that practices in an in-network hospital working with in-network surgeons.  Patients actively choose their surgeon but rarely choose an anesthesiologist, trusting their surgeon or assuming the hospital will do so. Patients in this situation can be hit with a surprisingly large anesthesia services bill. The anesthesia group does extremely well; however, the hospital that uses this group doesn’t benefit and may well lose business in the long run because of their sky-high fees.

In elective surgical cases and in most medical cases, price transparency is the answer.  Research has suggested that substantial savings are possible if consumers shop on line using price calculators such as the one available at Dartmouth Hitchcock Medical Center and the one being introduced by Harvard Pilgrim.  Such on line price calculators are currently most useful in employer based health plans where patients are incented in various ways, often financially, if they pick low cost, high quality physicians and hospitals.  Many insurers and employers are pushing for the use of such calculators and they are becoming more prevalent especially in states where legislation is clearing away obstacles to such information sharing.

It would not be politically feasible in my opinion to force physicians to accept all insurance types.  We must use price transparency and financial incentives for patients to drive health care business to the most cost effective providers.

Bill Bithoney, MD