Managing Managed Care

Our inequitable, inefficient, oftentimes uncaring health care "system," revealed. -- Jeffrey G. Kaplan, M.D., M.S.

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Much of what I read in health care blogs these days are well-intentioned people advocating for weak structural changes that, in the long run do very little to restrain the ever rising cost of care both here and, increasingly, in other countries.  Unfortunately, there's no paradigm-shift, no epiphany and no panacea here; it's more like a shell game—'take more out of your pocket and you'll think twice about that test, that procedure, that ER visit.'

We read about the following reform strategies:

  • Cost-shifting: It puts practitioners at risk and that means 'misalignment' of incentives. The simplest example of this is when I send the patient to the specialists for what I can manage (if I have enough time and money). It's a shame but insurance companies do not recognize when I go the extra mile for my patients.

"Maryland has operated what is now the country's only all-payer rate-setting system for hospital services....and [this] is tied to a growth limit in Medicare payment per hospital admission. This system has eliminated cost shifting among payers, more equitably spread the costs of uncompensated care and medical education, and limited the growth of per-admission costs" but it is also putting a great deal of pressure on increasing volume and reducing per capita costs.  Notwithstanding, that they are changing their risk and budgeting processes, a là managed care, "Over the next 5 years, the commission will seek to shift hospital revenue away from fee-for-service models into population-based payment models that reward providers for improving health outcomes, enhancing quality, and controlling costs. Maryland already operates a “Total Patient Revenue” model that establishes fixed global budgets for certain rural hospitals on the basis of historical trends in the cost of providing care for the specific populations they serve. Future models may include providing a fixed amount of revenue for organizations caring for geographically defined populations, establishing rules that apply to all payers covering care provided by accountable care organizations, or bundling payments. The state's all-payer system offers a powerful platform that will allow CMS and Maryland to work together to test innovations and payment reforms."

[Rajkumar R, Patel A, Murphy K,  et al.  "Maryland's All-Payer Approach to Delivery-System Reform" N Eng J Med. January 10, 2014.]

  • Cost-sharing: Examples include, but are not limited to deductibles, multi-tiered pharmacy 'benefits,' patients having too much skin in the game and those incurring burdensome 'out of pocket' expenses.  Cost-sharing creates  barriers to appropriate access, and it destabilizes the 'Cost-Quality-Access' three-legged stool of health care reform.
  • The never-ending insurance companies' 'bag of tricks' that do little to improve the value of care and are antithetical to total quality management, efforts to maximize cost-benefit or improve an even more useful economic construct--cost-utility.
Information, feedback and mid-course-correction tools are critically important to gain even a modicum of accountability or reform (read: 'managed care'). In "Postponing Health Rules Emboldens Republicans," The New York Times, July 4, 2013, for instance, we read, that action, i.e., the delay raise "questions about whether new federal and state insurance exchanges, or the computer systems crucial to their operation, would be ready on time." Noting that Exchanges not only create a more competitive marketplace, but they are a door for real-time, confidential data and information exchanges about the structure, processes and outcomes of health care.
The translation of data into information, however, while critical has been and remains a daunting task.  For example, "The federal government is creating a data network to help verify the income and citizenship of individuals buying policies in the marketplaces, which are to start enrolling people on Oct. 1, to determine if the buyers qualify for subsidies. Through the network, each state exchange is supposed to be able to swap data with the Internal Revenue Service, the Department of Homeland Security, the Social Security Administration and the Health and Human Services Department, among other agencies.
People with knowledge of the administration’s work to put the law into full effect said the postponement was in part a result of delays by the I.R.S. and the Treasury Department in finishing proposed rules and regulations for businesses.
Catherine E. Livingston, who was the health care counsel at the I.R.S. until February, said the delay was 'a recognition of practical realities.' Employers and insurers are supposed to inform the agency of the people they cover. But without the final rules, employers and insurers could not program their computers to comply, said Ms. Livingston, a lawyer at Jones Day, a Washington firm.   That uncertainty, in turn, fueled" ..... etc.

Without competition in the marketplace (not only for price but also choice of primary care practitioners [PCPs]), and timely information about who the patient is, who's managing their care, how well the care is being managedwhat's working and was is not, health care reform is merely a 'shell game,' where the rules and methods of appropriate accessibility, cost-control and quality improvement wait in the wings, while cost-shifting and cost-sharing are center stage.
Health care's unaffordable, worse its cost is incomprehensible.  See the Time magazine's special report (38 pages), Bitter Pill: Why Medical Bills are Killing Us by Steven Brill where he deftly drills down the costs (or rather the "charges") for care.  This report will make your blood boil! Also, his 3min video there.  Will the ACA fix the problems?  Well, it's a start, but....we really need a tour de force--We need to move the system from underwriting risk to managing populations," said Aetna CEO, Chairman and President Mark Bertolini.

In my opinion, the Patient Protection and Affordable Care Act is flawed but it is medically necessary, not only to restore equity in accessing the health care marketplace and spreading or sharing the risk, but also for making the health care "system" more efficient even as it protect and maintains patients' dignity.  I am not being sarcastic when I say that I'd like to see health care insurers move away from what is essentially money laundering to taking care of patients, their warts (i.e., preexisting conditions) and all.

Fortunately, The Supreme Court is allowing coverage as defined in the PPACA [See Slip Opinion (the Syllabus, PDF, six pages)]— that is, the universal mandate is affirmed.  For those who cannot afford insurance, are between jobs, can't work, there will be vouchers, subsidies and special programs to keep them out of the ER.

Let us be very careful to not treat health care as if it were a commodity, which,  according to Merium-Webster, is "a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price" or "one that is subject to ready exchange or exploitation within a market."  Regardless, I remain hopeful about HIX (Health Insurance Exchanges) in the Patient Protection and Affordable Care Act (ACA): enrollment and transparency and accountability by insurers, community rating (ie, "spreading risk to ensure that the costs associated with those with high medical needs are shared more broadly across large groups rather than spread across just a few beneficiaries" and overall health care cost reduction when observed processes and outcomes are filtered by evidence-based medicine through 'unwarranted variation' analysis. [Jack Wennberg] 

For some encouraging models of payment reform, see "Next Generation Physician Payment and Delivery Models" by the AMA and theri white paper, "Physician Payment Reform: Early Innovators Share What They Have Learned."


As Victor R. Fuchs (Stanford University and author of "Who Shall Live? Health, Economics and Social Choice") said, pre the SOTUS vote:

"Even if the Affordable Care Act is fully implemented, however, most of the major weaknesses of the U.S. health care system will remain in place. First, funding is largely dependent on employment-based insurance and income-tested insurance -- two inefficient, inequitable methods. Second, delivery of care will still be highly fragmented, mostly uncoordinated and paid fee-for-service. Third, avoidable lapses in quality will remain, and health outcomes will continue to depend much more on nonmedical factors like obesity and smoking.

The country must recognize that in order to have everyone insured, there must be subsidies for individuals too poor or too sick to obtain insurance and compulsion for those who would opt not to buy insurance. Every high-income nation except the U.S. has universal coverage, but none achieved it without subsidies and compulsion.

We should also recognize that risk-adjusted per-person payment for defined populations ("capitation") appears to be the most efficient form of paying for care. The current fee-for-service system raises the cost of care by 20 to 30 percent for services that provide little or no health benefit. Another improvement would be to emphasize a team approach to care based on physician group decision-making, standardization of procedures and protocols, outcome measurement, and peer review. This is the most effective, efficient way to improve the quality of care.

Finally, we must slow the rate of growth of health expenditures through an independent institute for technology and outcomes assessment to provide physicians and hospitals with reliable information about the cost effectiveness of biomedical innovations."

Fuchs, V. "Competing for Better Outcomes and Lower Costs." NY Times, pub. on line June 28, 2012

And, thus there will be measurement and management.  To paraphrase the quality guru, Peter Drucker – Measuring results over time is key.  Indeed, the very act of assessing processes and outcomes usually has a positive effect such as improving accountability (cause and effect or even the Hawthorne Effect) by its very nature.  Also, there will be new rules of behavior for insurers who will, once again, use their analytic skills to manage care* and there will be competition in the marketplace (i.e., health care exchanges, etc.).

*An example where insurers are managing care and making a positive contribution to health care - consider programs that reduce the readmission rate for congestive heart failure.  That's the low hanging fruit.

The managed care opportunity is its modus operandi—to simultaneously improve the quality, cost-benefit and access to care.  This can only be accomplished if health care is less fractionated, the incentives are aligned and someone is measuring and managing.  

You want this to be done privately?  That has about a 'snowball’s chance in he_l' of succeeding.  (No I am not advocating cookbook medicine or 'big brother'.) What I know from experience that we need is patient-centric data, its translation into information, and gently, unobtrusive feedback to practitioners at the point of service with the patient, a longitudinal perspective, care coordination, prevention, illness care and follow-through where there are no barriers to appropriate access, tests and treatments.

Here's what I feel is the short list for health care reform (and then I'll tell you why).  

We need, at minimum:

1) Equity in access but all must have some skin in the game.
2) Measurement and management using acuity-adjusted, longitudinal data about processes and outcomes.
3) Pay better for what works - i.e., align the incentives.
4) Do not pay for what does not work, is not helpful or relevant, is "shotgun" medicine, is redundant.
5) Favor primary care in dollars and in support of the Medical Home concept and in promoting the full use the bio-psycho-social model.
6) Document well—the medical record must speak to the needs of the patient and the standard of care; it must serve, in a large sense, a communication tool and a teaching document.

And, here's why we must have all six items:

A fortune 100 health care insurer's CEO recognizes the "imminent demise of his venerable, profitable business model."  Why? The Affordable Care Act is banning medical underwriting.  I say good riddance.  He did, however, acknowledge that the ACA's medical loss ratio rules (insurers must spend a fair portion of premiums on providing health care services) are having a "smoothing effect on premium swings'" adding, "We got pulled through the crucible against our will and have been reshaped because of it....For most of what has already been implemented, it has been a pretty good thing.” And, he went so far as to say that even an ACA tour de force, politically-speaking would NOT deter the inevitable--“Reform is not going to stop. It won’t go away.”

Bertonlini is auguring for having a more synergistic, even supportive relationship with practitioners, their practices, hospitals and other institutions and the public.  That sounds like repackaging the 'same old, same old' to me, but let's wait and see. (Vide infra, Comment from Harvey Frey of

Here's his hope for the future: "A new business model for insurers predicated on partnering with providers coupled with skillful use of technology can turn the focus back on the customer....We can use technology to make it easier for the consumer. Convenience is the new word for quality.”

Ref. "Aetna CEO: Health Insurers Face Extinction" originally appeared on the Health Data Management website, 2/21/12, and called to my attention by John Metz of JustHealth

However, also note: translating claims and clinical data into information is now ongoing and increasing expodentially.  This is "leading many organizations to turn to reference data management (RDM)" providing the "infrastructure needed to establish a single source of truth, enable interoperability, and optimize analytics for regulatory and value-based programs."
"Why the Time is Right for Reference Data Management.." Health IT Outcomes Newsletter, posted April 6, 2017

From: HARP Dialog; Harvey S. Frey, MD, PhD, JD <

Subject: [Dialog] Fwd: Aetna CEO: Health Insurers Face Extinction  2/26/12 11:40:45 AM EST

... the rest of what he is saying is jargon-speak, i.e. the name will change, the fundamental problems remain.

And some are still auguring for single payer.  
For instance, The following statement was just released by leaders of Physicians for a National Health Program ( An improved "Medicare-for-all system would provide truly universal, comprehensive coverage; health security for our patients and their families; and cost control. It would do so by replacing private insurers with a single, nonprofit agency like Medicare that pays all medical bills, streamlines administration, and reins in costs for medications and other supplies through its bargaining clout. [Their own, published] Research shows the savings in administrative costs alone under a single-payer plan would amount to $400 billion annually, enough to provide quality coverage to everyone with no overall increase in U.S. health spending."

Personally, I'd like to see the 'health care insurance industry' change into a 'health care industry.'  I believe they are still well-positioned to be a team player lending management oversight in today's version of managed care– the multi-player Accountable Care Organization.  If I believe Obama, that industry will be reined in.  Watch as they attempt a major public relations campaign...


I'd like to close by expressing hope in programs like the ACA and others like it that I believe are just waiting in the wings for the political right moment.  For instance, consider the ACA and Preventive Care:

In one report, Shih A, Berenson JA,  Abrams, M. "Preventive Care and the Affordable Care Act: The Effects of Healthcare Reform on Prevention" released by Medscape, 04/18/2012, a third of non-elderly adults without health insurance coverage were up to date on recommended preventive screenings, compared to 56% of insured, non-elderly adults.*

In particular, the following survey findings are quite telling of poor performance in prevention:

  • 78% of uninsured adults reported that their blood pressure had been checked in the past year, compared with 91% of adults who were insured all year;
  • Just 61% of uninsured adults reported that their cholesterol had been checked in the past 5 years (or in the past year for those with hypertension or heart disease), compared with more than 78% who were insured all year;
  • Among women aged 50-64 years who were uninsured during the year, only 47% had received a mammogram in the past 2 years, in contrast to the 78% of women who had coverage all year; and
  • In the recommended period, only 62% of uninsured women had Pap tests, compared with 79% of women who were insured all year.

* All differences in the receipt of preventive services are statistically significant when uninsured and insured non-elderly adults are compared.

In addition to eliminating cost-sharing for approved preventive services, the ACA makes Medicare cover wellness visits that include a personalized prevention plan and health risk assessment (HRA), a review of personal and family medical history, and screening for cognitive impairment.[10] This may cause the patient to receive advice and referrals for community-based services to assist them with nutrition, weight loss and smoking cessation.

Reforms focuses on strengthening the primary care infrastructure—most critical in improve preventive care delivery.

“Aside from the medical home demonstrations and initiatives created under the Affordable Care Act, several commercial health plans and several states are testing new payment approaches to support the medical home model of care. At the state level, 41 state Medicaid and CHIP programs are planning or implementing medical home pilots for low-income beneficiaries that test an enhanced or revised payment approach to promote the medical home model of care.[24] As coverage expansions and medical home initiatives of the Affordable Care Act get under way, it will be important for preventive medicine professionals to support these reforms and help our nation achieve a high-performance healthcare system.”

In closing, to quote from my favorite advocacy group, the National Breast Cancer Coalition, 

  • No Pre-Existing Conditions – Beginning in 2014, group health plans and new individual plans will no longer be able to exclude breast cancer survivors from coverage or charge them a higher premium by defining breast cancer as a pre-existing condition.
  • Lifetime and Annual Caps – Health insurance plans are prohibited from imposing lifetime caps on benefits, and the use of annual dollar limits is restricted.  Beginning in 2014, annual limits will also be banned. 
  • No Rescission – Insurers can no longer cancel a breast cancer survivor’s insurance policy when she or he needs it most. 
  • No Discrimination – Beginning in 2014, no longer will insurance plans be allowed to charge more simply because of gender, health status, location or participation in a clinical trial. 
  • Other Protections – Access to internal and external appeals processes; access to clear and standardized information about insurance options through a new web portal as well as through state-based health care consumer assistance programs; and the right to designate or retain a primary care provider.
It also means that patients will continue to have a voice in the process.  Under the ACA, educated health care consumers will have an opportunity to play a role in a range of decision making bodies implementing health care reform.

P.S.  Here's a simple way to cut costs and improve quality.  In the era of HMO's is was called case management or care coordination.  (See a special youtube video bu searching there on <ACOs: Coordinated Care> by; it is suitable for any health planner or "Accountable Care Organization (ACO) Care Coordinator" (a person or persons, previously called a "Case or Disease State Manager" and before that, a "Social Worker").

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