I enjoyed moderating the Blockbuster Medicare Innovations panel at the AHIP conference on Medicare, Medicaid and Dual Eligibles. In this video recap, I summarize the panelists’ key takeaways on supplemental benefits, home dialysis, and telemedicine.
Category: Health plans
Harvard Pilgrim and Tufts –the second and third largest health plans in Massachusetts– are merging. It deserves the front page treatment it’s receiving today (check out the comprehensive coverage in the Boston Globe) –and will have an impact on employees and members– but I predict that the long term impact on Massachusetts healthcare overall will be modest at best.
To boil it down, despite being ranked by NCQA as the top two health plans in the whole country for many years (here’s 2014 for example), it’s been a long time since either Harvard or Tufts had a major influence in the local market. That’s harsh but I don’t think I’m overstating things.
In 2001 when I was setting up my business and looking for health insurance, I asked around about which insurer to use. My doctors said they were indifferent, but a friend at Partners Health Care told me Blue Cross was the only plan they paid attention to.
The last time Tufts tried to seriously impact the market was about 20 years ago, when Partners HealthCare manhandled them in rate negotiations. And former Harvard Pilgrim CEO, Charlie Baker admitted publicly around the early aughts that when Harvard Pilgrim tried innovative reimbursement structures, hospitals just ignored them and converted everything into Medicare equivalents. And clearly the attempt to channel volume to community hospitals and away from Partners was a bust.
At least in Baker’s current job as Governor he has some influence.
I don’t mean to be cynical at all. I’ve followed both of these mission-driven companies for many years and would love the new combined entity to be an influential innovator –not just in holding down costs but in radically improving experience and quality as well.
But after so many years of banging their heads against the wall, will they give it another go? I kind of doubt it. As the number 2 player in an insurance market led by Blue Cross Blue Shield, and a healthcare market dominated at the Massachusetts level by Partners and BI/Lahey and overall by the federal and state governments, I see their role mainly around the margins. I’m not sure their leadership is ready to go all out to change the system either.
In the last several years, under CEO Andrew Dreyfus, Blue Cross has actually passed Harvard Pilgrim and Tufts in the NCQA ratings. It’s been more innovative as well, with the Alternative Quality Contract (AQC) in particular.
I looked back this morning at my blog coverage of these companies over the years and picked out some highlights.
I’ve interviewed the CEOs of all three:
- Tom Croswell, who will head the combined entity and is currently CEO of Tufts (2018)
- Eric Schultz, then CEO of Harvard Pilgrim in a four-part video series in 2011 and again in a podcast in 2013
- Charlie Baker, when he was running for Governor in 2014. (I interviewed every candidate that year)
- Andrew Dreyfus, CEO of Blue Cross Blue Shield in 2012
In my coverage (which is by no means comprehensive) I found a few examples of Harvard Pilgrim and Tufts trying to make waves in the market.
- 2005: Blue Cross seeks parity in imaging costs. This is an example of a positive dynamic with Tufts and Harvard successfully nudging Blue Cross on cost containment
- 2005: Harvard Pilgrim pushes consumer directed care agenda
- 2005: Help me Charlie! about how community hospitals struggled despite Harvard Pilgrim’s actions
- 2011: Narrow networks in Massachusetts: Can Steward and Tufts pull it off? (Spoiler alert: no)
There’s much more to say, of course, but I do wish the new entity luck! Massachusetts can use all the help it can get.
Steve Wiggins has seen a thing or two in his more than three decades as a healthcare entrepreneur. His Oxford Health Plans introduced “pods,” a precursor of the Accountable Care Organization and he led HealthMarket, an early player in the consumer directed health plan space. He’s carried the same themes into his current role as founder and Chairman of Remedy Partners, the leader in Medicare’s Bundled Payments for Care Initiative (BPCI).
As you’ll hear in this podcast, Steve’s a big believer in bundles, offering them as a proven solution for a large portion of the healthcare dollar, within almost any healthcare financing framework from traditional commercial coverage to Medicare for All.
Here’s what we discussed:
- (0:18) What is a bundled payment? How does it relate to other new approaches like ACOs?
- (3:05) Did bundled payments start in Medicare rather than the private sector? If so, why?
- (6:52) How well has BPCI worked? What does the future look like?
- (11:01) How do episodes and bundles tie in more broadly? I often hear that chronic care or end of life care are the big cost drivers, not episodic care. Can those statements be reconciled?
- (15:10) How should we think about bundled payments and related topics playing into the campaign, or should we just give up on that?
- (19:14) You’ve founded quite a few healthcare companies over your career. How does this Remedy compare?
- (21:41) How do you expect the company to evolve in the next few years?
The term ‘Medicare for All’ is being bandied about as the campaign for the Democratic Presidential nomination gets underway. Declared and potential candidates are warming to the idea.
It’s easy to see why:
- After years of trying to defend complex, compromised Obamacare from GOP rhetorical attacks and legislative and administrative undermining, Democrats are going with a program that is popular and well funded
- Medicare especially appeals to the middle-aged and older population, who tend to vote. There’s no stigma attached to it
- It could be funded and implemented as a sweeping program at the federal level, which is ideal for a Presidential candidate to talk about.
However, I’d much rather see attention turn to continued expansion of Medicaid, specifically by offering people the opportunity to “buy in” to Medicaid coverage. This has real advantages:
- “It’s the prices stupid,” we have been told since 2003. Price, not utilization, is the main reason the US spends so much more than other countries. By design, Medicaid puts the squeeze on costs through lower reimbursement rates
- Medicaid has provisions to squeeze drug prices, too, something Democrats and Republicans favor
- Medicaid coverage is more holistic than Medicare. It includes programs to address social determinants of health, and is suitable for younger people including parents and children
- Medicaid is a partnership between the states and federal government, enabling individual states to craft solutions that fit their specific populations
Several states are already looking at Medicaid expansion as a way to address their specific issues. For example, New Mexico (a purple state) is getting serious about further use of Medicaid. The state has some distinctive characteristics:
- Medicaid is by far the largest player already, covering 40% of the population
- The uninsurance rate remains stubbornly high at 9%
- There are many undocumented and mixed status families who are shut out of the current coverage system
New Mexico is studying four approaches. (You can read the assessment here.)
- Targeted Medicaid buy-in: Medicaid-style coverage to those ineligible for Medicaid, Medicare, or the Obamacare marketplace. The state would subsidize premium costs
- Qualified health plan public option: A variant on the program originally proposed in Obamacare, with coverage on the marketplace in partnership with an insurer
- Basic Health Program: An Obamacare option already
- Medicaid buy-in for all: An off-marketplace program available to anyone except Medicare eligibles
The analysis leads me to the idea of starting with Option 1 as a trial run for Option 4. The advantage of Option 1 is that it doesn’t require federal approval, would bring uninsured people into the system who are currently discriminated against, and provide a test bed for further expansion. It would not disrupt the current market by drawing away healthy people, because it is only open to those currently outside the system.
Option 4 could come into force after the 2020 election, when the federal environment is more favorable and once New Mexico has learned from its initial experience.
Sometime down the road, an even more radical version would shift everyone into Medicaid. Private health plans would still have a role since everyone could be enrolled in Medicaid managed care. Providers and drugmakers won’t like the compressed reimbursement, but maybe it will encourage them to innovate on efficiency.
All of these proposals can be combined with value based approaches, which enable the efficient, high quality providers to succeed while containing costs and potentially boosting the patient experience and outcomes.
For now, I’d like to see the debate start up as part of the presidential race. Candidates visiting early primary and caucus states should dig in. In Iowa, for example, Medicaid for all is being discussed by local Democrats.
“Consumer directed health plans” were all the rage in the mid 2000s. The big idea was that if patients had ‘skin in the game’ in the form of greater financial participation in the cost of their care, they would use their well honed shopping skills to find the best deals and thereby drive costs down and value up. Employers embraced the idea, since it could reduce their costs and keep employees happy.
There was a general acknowledgment that patients would need better information and tools to transform into consumers, and there was plenty of optimism that these would be made available.
But now as Kaiser Health News reports (High-Deductible Health Pans Fall From Grace In Employer-Sponsored Coverage) employers are going back to more traditional plans. There are a few interesting things to note:
- No one uses the term “consumer directed” anymore. There’s an acknowledgment that this term became a euphemism for cost-shifting
- Employers tweaking health insurance offerings is not going to solve the healthcare cost problem in this country
- Employees don’t like the plans and in a tight labor market employers have to abandon them
Kaiser reports that:
Because lots of medical treatment is unplanned, hospitals and doctors proved to be much less “shoppable” than experts predicted. Workers found price-comparison tools hard to use.
Not all “experts” jumped on the consumer directed bandwagon. Back in 2007 I attended the World Health Care Congress where I heard people gushing about the benefits of consumer directed plans. They used employer sponsored 401(k) plans as a model of how employees would take responsibility once offered compelling products, information and customer service from companies like Fidelity and Vanguard.
But as I pointed out at the time in “What if the consumer can’t hack it?” employees had actually done poorly with 401(k)’s, investing too little, choosing low return investments, concentrating their holdings in their own company’s stock, etc. As I wrote:
In my view, 401(k)s are a lot simpler for employees to understand than health care. In a 401(k) you can make one or two decisions and then be on auto-pilot. For example, just contributing the maximum amount and picking a target-date retirement fund is about all that’s really needed. Results can be easily and objectively measured over time and compared with benchmarks. We’ll never be able to do that in health care.
I don’t totally discount the 401(K) analogy but we should at least acknowledge that the 401(k) experience has been far from perfect and that health care is going to be a harder nut to crack.
Looks like I was right.