Price Transparency: Even Hospitals are Starting to Figure It Out!

 

credit-card-2Like many, we’ve been frustrated at the lack of price transparency in U.S. health care, especially form hospitals. Good news: They are coming around!

The American Hospital Association (AHA) has published an informative white paper, clearly explaining the state of price transparency for both hospitals and health plans. It surveys what hospitals are doing to ensure patients better understand their expected out-of-pocket costs, what tools health plans are offering beneficiaries to estimate costs, and the legal and regulatory environment. The language used in the white paper is strikingly different from that which we are used to seeing from hospitals:

Price transparency also can lead to improved quality and efficiency as providers benchmark and improve their performance against peers and national averages. To realize these potential benefits, policymakers and the public increasingly are calling for greater access to information.

Health Spending Slowed Because of Recession, Not Obamacare

 

Health spending has been slow in the U.S. for a number of years. It’s clearly not due to Obamacare. New research by Professor David Dranove and colleagues corroborates that the recession, which started in 2007, is mostly responsible for the reduced rate of growth of health spending:

The source of the recent slowdown in health spending growth remains unclear. We used new and unique data on privately insured people to estimate the effect of the economic slowdown that began in December 2007 on the rate of growth in health spending. By exploiting regional variations in the severity of the slowdown, we determined that the economic slowdown explained approximately 70 percent of the slowdown in health spending growth for the people in our sample. This suggests that the recent decline is not primarily the result of structural changes in the health sector or of components of the Affordable Care Act, and that — absent other changes in the health care system — an economic recovery will result in increased health spending.

Whether there will be significant economic recovery as long as Obamacare reduces incentives for businesses to grow and hire is not discussed in the article.

HSA Update: Assets in Health Savings Accounts Almost $23 Billion in June

 

Key findings from the Midyear Devenir HSA Research Report:

  • HSA assets almost reach $23 billion. HSA accounts rose to 11.8 million, holding assets totaling over $22.8 billion, a year over year increase of 26% for HSA assets and 29% for accounts for the period of June 30th, 2013 to June 30th, 2014.
  • Health plans drive growth. In the first half of 2014, health plans were the leading driver of new account growth, accounting for 31% of new accounts.
  • Continued strong stock market bolsters HSA investments. HSA investment assets almost reached an estimated $2.9 billion in June, up 45% year over year. The average investment account holder has a $12,473 average total balance (deposit and investment account).
  • Investors show solid returns. Investors achieved a 10.6% return on a 5 year basis.

HSA-Assets-6-30-14

Who’s Moving to Consumer-Driven Health Plans? Doctors’ Offices!

 

We have long cheered the rapid growth in consumer-driven health plans. Here’s more good news: Medical groups are increasingly covered by these policies. The American Medical Group Association just released a survey of its members:

The survey revealed that HDHPs along with CDHPs made up more than 1/3 of health plans analyzed and were as prevalent as PPOs. These plan types dwarfed HMOs, which made up only about 10% of analyzed plans.

The survey shows monthly HDHP and CDHP premiums are, on average, 80-85% of the premium of PPO plans. Medical groups also cover a slightly larger percent of the premium of HDHPs. Many groups with HDHPs include healthcare savings accounts with tax incentives or employer-funded reimbursement accounts for routine care. The yearly deductible for HDHPs is, on average, more than 4 times the deductible of PPO and HMO plans, exemplifying coverage focus on catastrophic illness.

Reforming Health Insurance to Promote Diagnostic and Pharmaceutical Innovation

 

Sovaldi is a wonder drug that effectively cures a strain of the Hepatitis C virus. The headline price of Sovaldi is $1,000 per pill, or $84,000 for a course of treatment. Too expensive? That’s what the head of the health insurers’ trade association says, and many agree with her.

This charge is inaccurate. The problem with Sovaldi is that all the costs are upfront. Spending $84,000 in a few months will potentially save hundreds of thousands of dollars down the road. As Margot Sanger-Katz wrote in the New York Times:

Research on the cost-effectiveness of Sovaldi is still in the early stages, but it appears that use of the drug has the potential to actually save money over the long run. Data from the C.D.C. suggest that more than 60 percent of people with hepatitis C will end up with chronic liver disease — and as many as 20 percent will end up with cirrhosis. Treating those diseases is costly. A liver transplant, the most expensive option for the small group of patients with end-stage disease, costs nearly $600,000.

This development can take twenty or thirty years, and not every Hepatitis C patient will end up needing a transplant. Nevertheless, according to the PriceWaterhouseCoopers Health Research Institute, Sovaldi will reduce long-term medical claims for employer-based plans.

graph1

The Health Insurance Bureaucracy Lives!

 

You know it never died. But in the health policy world, it is so easy to get caught up in the lingo used at conferences and in journals — Accountable Care Organizations, Pay-For-Performance, Population Health Management — that it’s easy to delude yourself into thinking that things have actually improved for the doctors and patients. So, it is valuable to get kicked back into reality by an actual practicing physician who takes the time to put pen to paper and write about her experience. Here’s Dr. Danielle Ofri:

The letter in my hand concerned one of my patients, Mr. V., who suffers from stubborn hypertension. His chart is a veritable tome, documenting the years of effort it took to find the combination of four different blood-pressure medications that controls his hypertension without upsetting his diabetes, kidney disease and valvular heart disease or making his life miserable from side effects. We’ve been on stable ground for a few years now, a state neither of us takes for granted.

But Mr. V. had changed insurance companies, and now one of his medications required a prior authorization. The last thing I wanted was for him to be turned away at his pharmacy and have his blood pressure spiral out of control, so I called right away to sort things out.

Hits and Misses

 

Women jogging

Jogging may be good for your heart: But endurance runners are more likely to die from heat stroke than a heart attack.

Big shrink is listening: A smart phone app that monitors your voice for signs of manic/depression.

There’s little reliable evidence that fish oil helps prevent heart disease.

Ridiculous study or common sense? Eating fruit and vegetables is associated with greater flourishing in daily life.

Your dog wears a watch: Why your dog seems to know what time it is.

Medicaid’s Perverse Financing Merry-Go-Round

 

health-insuranceMedicaid, which provides health-related welfare benefits to low-income individuals, is jointly financed by the federal and state governments. Before Obamacare, the split was 50/50 for rich states, but low-income states got more dollars. This mechanism is called the Federal Medicaid Assistance Percentage (FMAP). So, if California spent $50 on Medicaid, the federal taxpayer would chip in $50. However, for West Virginia, the split is 28.65/71.35. That is, for every hundred dollars spent on Medicaid, only $28.65 is spent by the state, and $71.35 comes from federal taxpayers. These dollars are not appropriated by Congress: They just roll out on auto-pilot, as calculated by the FMAP.

Healthcare Workforce Healthy, Hospitals Lagging

 

We’ve been observing an interesting trend for a few months: healthcare employment is growing apace, but hospital employment is lagging. The latest Bureau of Labor Statistics monthly report confirms the trend. At Forbes, Dan Diamond has a chart and an explanation:

What’s the culprit behind hospitals’ incredible slowth? There are a few factors — for one, the hospital industry is relatively large (hospitals employ four times the number of workers as home health agencies) and mature, which acts as a constraint on its growth.

But more importantly, the jobs trend line reflects the pressures on hospitals generally and inpatient care specifically:

Paying Doctors for Performance Does Not Work

 

Aaron Caroll, in the New York Times:

doctor-xray-2“Pay for performance” is one of those slogans that seem to upset no one. To most people it’s a no-brainer that we should pay for quality and not quantity.

In Britain, a program was begun over a decade ago that would pay general practitioners up to 25 percent of their income in bonuses if they met certain benchmarks in the management of chronic diseases. The program made no difference at all in physician practice or patient outcomes, and this was with a much larger financial incentive than most programs in the United States offer.