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Author: Chris Hadley

April 4th, Glenn D. Steele, Jr., MD, PhD., CEO Emeritus, Geisinger Health System

April 4th, Glenn D. Steele, Jr., MD, PhD., CEO Emeritus, Geisinger Health System

“Value-Based Healthcare: What it Looks Like, What it is, How to Achieve”

Glenn D. Steele Jr., MD, PhD; Chairman, xG Health Solutions; Vice-Chair, Health Transformation Alliance; Past President and CEO, Geisinger Health System

Glenn D. Steele

Dr. Steele will share how Geisinger, a vertically integrated healthcare organization serving a population of well over 3 million people in Pennsylvania, New Jersey, Maine, Delaware, and West Virginia, has developed and implemented value reengineering for populations of patients in both hospital and ambulatory care settings.  The reengineering of care between community practice and hospital-based specialty and sub-specialty will be detailed as well as the inception of the “warranty” and how it has recently evolved.  Dr. Steele will also share scaling and generalizing efforts through xG Health Solutions and the Health Transformation Alliance, taking the acute care and population health management innovations out to non-Geisinger, non-employed physicians and into markets where Geisinger has not expanded its provider component.

WHEN: Wednesday, April 4th at 5:30 p.m.  Heavy Hors’d’oeuvres from 5:30-6:30, Meeting from 6:30-8:00 p.m.

WHERE:  Children’s Hospital Conference Center, 13123 East 16th Avenue, Aurora, CO

REGISTER:   The cost for this event is $50. RSVP for this month’s event below.

Refunds are available provided you cancel at least five days prior to the event.

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 COPIC Financial Service Group, Ltd.

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The Opioid Crisis Grows!!

The Opioid Crisis Grows!!

As The Opioid Crisis Grows, What are The Latest Developments here in Colorado and the U.S.

 

As each day goes by, there is something new in the media and on the internet about the Opioid Crisis.  Colorado Public Radio on Jan. 19th talked about how Colorado got its Opioid problem —-“I don’t think you can overstate it. Pick a word, it’s as bad as you could get. More people dying every year than died in the entire Vietnam War,” said Rob Valuck, our keynote speaker at the Denver Medical Study Group meeting next Wednesday, Jan. 31st.

Last night, Rob was on a local news channel where he talked about a particular drug promoted by pharmaceutical companies for mental health issues that originally cost $500, now the price for the same drug is $1,500. As Rob shared about this drug, his point was patients weren’t going to pay out of pocket at the current price for this drug. So what happens when demand drops off, then there is an excess of the supply and price has to go back down. An additional issue Rob shared was this is the way drug manufacturers go out of business —by outpricing the market.

Even Colorado legislature is considering bills related to battling the opioid crisis in Colorado. One of the the more talked about bills in the news is SB18-022: Clinical Practice for Opioid Prescribing Bill. This bill will restrict the number of opioid pills that a health care provider may prescribe for an initial prescription to a seven day supply and one refuill for a seven day supply with certain exceptions.

Next week, Rob will describe the scope and impact of the opioid crisis here and in the U.S. He will help us to understand policy and program solutions being applied at the federal, state and local levels.  Then he will give three concrete steps to reduce opioid misuse in our homes and communities.

You won’t want to miss Rob’s presentation next Wednesday. You can register by clicking on the link below.

http://denvermedicalstudygroup.com/category/upcoming-events/

Sponsored by:

Colorado Medical Society
www.cms.org

 

SIM Recruits Final Cohort, Helps Practices Integrate Behavioral and Physical Health

SIM Recruits Final Cohort, Helps Practices Integrate Behavioral and Physical Health

SIM recruits final cohort, prepares practices for success with APMs

Sustainable healthcare reform requires new skills and a different understanding of how practices articulate their unique value to succeed in alternative payment models that reward the value (not volume) of care delivered. The Colorado State Innovation Model (SIM), which is recruiting for its third and final cohort, helps practices integrate behavioral and physical health, use data in actionable ways and retool processes to provide team-based, patient-centered care. One example of how this federally funded, governor’s office initiative helps practices prepare for success with alternative payment models (APMs): SIM practices have a “glidepath” with the new Health First Colorado APM.

SIM practices that are designated primary care medical providers don’t have to submit quality measures for the first year of the Medicaid APM and get full credit on the Medicaid APM point scale. Please encourage primary care practices to apply for the last SIM cohort by Jan. 19 to get the coaching and support they need to succeed in APMs, deliver whole-person care and use data more effectively: http://bit.ly/sim3application.

 

Why hospitals need to do more than just pen a sexual harassment policy

Why hospitals need to do more than just pen a sexual harassment policy

Even among the majority of practices that have a policy, current training methods are too passive, MGMA experts say.

Beth Jones Sanborn, Managing Editor, Healthcare Finance News

According to a recent MGMA stat poll, more than 80 percent of healthcare organizations have a sexual harassment policy. However, experts say just having a policy isn’t enough. It all comes down to training and enforcement.

The poll conducted on December 12 analyzed 1,237 responses. Of those who responded, 84 percent said their organization had a policy that specifically addresses sexual harassment. Of the remaining 16 percent, 12 percent said their organization had no policy and four percent weren’t sure whether they had one.

[Also: Why hospitals can’t ignore their ‘Harveys’, must create supportive culture for reporting sexual harassment]

MGMA also asked how training was delivered to staff. The most common method was through a new employee orientation and an annual repetition of the training, often via online training at staff meetings that also includes an assessment, test or role-playing exercise.

Other respondents said the policy was only outlined in the employee handbook.

[Also: California medical board president under fire over business deal following sexual misconduct vote]

Simply having a policy just doesn’t cut it, said Judith Holmes, cofounder of the Compliance Clinic and an expert cited by MGMA. She cautioned practice leaders to “take a serious look at handling harassment” as the number of EEOC complaints and charges mounts, not to mention the numerous high profile figures and organizations that have come under an unwelcome spotlight amidst sexual harassment allegations in recent months.

She said now is the time to draft and implement policies, and that hospitals and practices must train employees on how to handle complaints and get a clear picture of what happens when you don’t take such steps.

“It’s going to be harder for that practice to defend a lawsuit if they can’t show that they had a policy, that they applied it, that they trained people on it and they followed it,” Holmes noted.

She suggested that the best training is usually accomplished by bringing in an outside expert, especially one that really understands the law surrounding harassment, and doing a separate training for upper management, supervisors and physicians that hones in in on how to properly and responsibly handle these types of investigations.

Handling a report the wrong way can make for a toxic work environment that can resonate with other staff and even patients.

“Ongoing bad behavior, it can just devastate a practice in the long run with high turnover, low morale — and if you think patients don’t sense the tension, you’re wrong,” Holmes said. “They see what’s happening underneath often, and you may not know you’ve lost patients to this kind of underlying stress and tension that your staff feels because there are all these problems going on that no one’s addressing.”

Another MGMA expert and member, consultant Will Latham, cautioned practice leaders to look out for behavior not just that violates policy, but also actions that impact staff morale. That includes degrading comments, inappropriate jokes, profanity, yelling, lack of cooperation or refusal to follow protocols and spreading nasty rumors.

It’s not okay to explain these behaviors away with excuses of stress, heavy workloads or past bullying. The presence of disruptive behavior, Latham said, is because it’s been tolerated in the past.

In addition to confronting the behavior when it happens, the hiring process can be an opportunity to stop a problem before it starts. Evaluating candidates thoroughly and gauging their willingness to accept and support an organization’s culture can help establish that zero-tolerance approach from the start, Latham said.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com

The Purpose of DMSG—To Become More Knowledgeable in Healthcare Innovation and Reform

The Purpose of DMSG—To Become More Knowledgeable in Healthcare Innovation and Reform

When we started out the Denver Medical Study Group, the purpose was to become more knowledgeable in healthcare innovation and reform. That created a learning platform for our group and that is why we do what we do. That’s why we bring in speakers that we bring in because they are doing it, whatever it may be.

We have had discussions with our group about where the decisions are made regarding good healthcare. It was almost unanimous that the best decisions are made at the local level. For example, we have a medical group here in Colorado that is doing an excellent job of providing primary care for their patients. But their CEO felt the need to focus more on mental healthcare as it has such a significant impact on physical healthcare. It was a tough financial decision since mental healthcare reimbursement is not very good. The decision was made to move forward with psychologists and counselors to be a part of their patients healing process. It has been very successful and they are considering bringing in a psychiatrist as well.

This type of strategic planning that steps “outside the nine dots” so to speak, needs to be done by other medical groups as well—and it is! Part of the focus of the Denver Medical Study Group is to provide examples of how that is being done and see where it can be replicated. Come join us to hear more about what other groups are doing!

 

 

DMSG’s Video Presentation Series

DMSG’s Video Presentation Series

In an effort to increase the exposure of the DMSG as well as the presentations of our guest speakers, we have captured the vision of the DMSG Community on video. In the profile video, I have shared my perspective on healthcare finances and my commitment to the healthcare industry. Check it out on our web site’s Welcome Page. Watch the video and encourage others in your business network to do the same. By doing that, you will help us get the message of the DMSG “regarding healthcare innovation and reform” out as we go into 2018.

The video series has 12 video vignettes approximately one minute long. We will be sharing these over the next few weeks with our DMSG Community and with others who may be interested in joining us. We welcome your comments as they are important to us  and they will also help boost the traffic to our site. Thank you for your help and support!

Here’s the first video:

Chris Hadley
President and Founder

 

DaVita Selling its Physician Network for $4.9 Billion

DaVita Selling its Physician Network for $4.9 Billion

On October 16th, DaVita’s Chairman and CEO, Kent Thiry spoke to the Denver Medical Study Group. His presentation focused on DaVita’s strategy for the company’s leadership and culture. It was a very interesting and informative presentation. One area that our group was interested in hearing more about was related to DaVita’s Medical Group. However, not much was shared at that time.

As Paul Harvey used to say “and now for the rest of the story” that may have been “under wraps” at the time of our meeting.

Since our meeting in October, DaVita has been in the local news related to its Medical Group’s operations with managed-care practices in six states including Colorado and the apparent acquisition on Nov. 28th of Northwest Physicians Network, a Tacoma, Washington-based independent physician association (IPA) of more than 1,000 primary care and specialty care physicians.

Now in today’s Denver Post (see the link below), DaVita is selling its physician network to health services company Optum. The use of some of the proceeds will be to buy back company stock over the next one to two years and pay down debt and other general corporate uses.

Denver’s DaVita selling its physician network for $4.9 billion

 

It’s Time for a Bipartisan Approach to Health Care Reform by Dr. David Pate

It’s Time for a Bipartisan Approach to Health Care Reform by Dr. David Pate

It’s Time for a Bipartisan Approach to Health Care Reform

By Dr. David C. Pate, News and Community
July 25, 2017

We all watched as the House of Representatives passed the American Health Care Act (AHCA).

It was hugely unpopular.

The bill then went to the Senate, where senators said they were going to start with a clean slate and instead tweaked the AHCA to come up with the Better Care Reconciliation Act (BCRA).

It soon became clear that the BCRA would not attract enough votes to pass, so Senate leadership made some further changes to the bill.

Still not enough.

Most recently, the leader of the Senate has indicated that a vote on a bill to repeal the Affordable Care Act (the ACA, known as “Obamacare”) without a concurrent replacement bill will be undertaken and Republicans will have two years to come up with a replacement bill.

It appears that there will not be enough votes to pass this repeal-only bill, either.

So, where do we stand, and where do we go from here?

Although it appears that Republicans have run out of options, I’m not counting them out. They are under tremendous pressure to repeal the ACA – and the fear of what will happen during the 2018 midterms if they don’t.

On the other hand, the prospects are dim, and I wonder whether the calculus of their risk with voters for the upcoming elections weighs in favor of doing something in a bipartisan manner. Republicans have the opportunity to be heroes and let their constituents know that they were the ones who “fixed” Obamacare.

In hopes of a bipartisan possibility, here are my recommendations. For this purpose, I am assuming that the ACA will remain the law of the land, simply because neither party has the desire, will or votes to scrap the ACA and start from scratch.

First of all, let’s be clear. Health care reform may consist of insurance reforms that regulate how the insurance market works (this is primarily what the ACA, AHCA and BCRA do) and/or it may consist of delivery system reforms that regulate how health care is delivered, which is a significant challenge facing the country but which was only cursorily addressed by the ACA and was not addressed in either the AHCA or BCRA.

Insurance Reform

Let’s address insurance reforms first. A bipartisan approach is possible if Republicans admit that their attempts to repeal the ACA have been unsuccessful and that the goal must now be to provide constituents with relief from increasing premiums and a limited choice of insurance plans in those counties where there is only one plan or no plan on the public insurance exchange.
Here, then, are the critical decisions to be made:

Commit to enforcing the individual mandate.

This is a bitter pill for the Republicans, but if they keep their eye on the prize – lowering insurance premiums – this is one step that would reduce premiums somewhere in the range of 7 percent to 20 percent, according to estimates I have heard from insurers. It can also be a good-faith gesture toward the Democrats, who would be likely to support this in exchange for concessions.

Commit to the cost-sharing reduction payments.

All businesses dislike uncertainty, and this is no less true for insurance companies. In times of regulatory uncertainty, they will increase premiums to decrease their risk. The cost-sharing reduction payments, which assist those who are below 250 percent of the federal poverty level with their deductibles, copays and co-insurance, are critical to the stability of the plans sold on the public insurance exchanges. The Trump administration has been making decisions month by month as to whether to pay these payments.

If the administration were to commit to making these payments and Congress would appropriate the funds for them, this would stem the losses of insurance carriers from markets and might entice some companies to return to the public exchanges. More insurance companies offering plans on the exchanges means lower premiums and lower annual increases. The Republicans have been making these payments anyway, and Democrats will readily support this measure. I would propose that we return stability to the market, commit to these payments and let Republicans take the credit.

Eliminate the employer mandate.

Here is a win for the Republicans, for whom mandates are anathema, and an opportunity for Democrats to make a concession.

The employer mandate was implemented because of the fear that employers would abandon coverage for their employees and send them to the public exchanges. This fear never was realized, and employers continue to understand that employee benefits are important and essential in being competitive for workers and talent. Let’s just get rid of it and let Republicans take the win.

Induce more insurance companies to offer plans on the exchanges.

There are several ways to achieve this. First is to enforce the individual mandate and commit to the cost-sharing reductions that I mentioned above. I offer up these additional ideas:

  • In those counties that have no insurer or only one insurer on the public exchange, offer reinsurance for a period of three years. This would minimize the risk for insurance companies to offer plans in those markets and encourage more participation.
  • Require that, if plans want to offer a Medicaid plan in a given state or individual plans in other counties in that state, they must participate on the public exchange in all counties of the state so that all counties end up with one or more insurance plan options.
  • Offer a public option through a private Medicare Advantage plan that allows enrollment starting at age 50 to take higher-risk patients out of the risk pool for commercial plans in those markets, pay the plan the average Medicare per capita fee for that market (which should be attractive to plans) and separate this population from the plan’s age 65 and older enrollees for purposes of calculating the plan’s star rating so that payments for the traditional Medicare enrollees are not diminished.

Enact changes that will reduce insurance premiums.

Enforcing the individual mandate and committing to the cost-sharing reduction payments I discussed above will decrease premiums. There are four more things we can do to lower insurance premiums:

  • Increase the age rating band.

Generally speaking, an insurer will spend five times more on its oldest subscribers as its younger ones. The ACA instituted a fee cap of 3:1, meaning insurance companies could not charge more than three times the premium to older subscribers as they do to younger ones.

Republicans are in favor of increasing that age rating band to 4:1 or 5:1 and doing so would lower insurance premiums for younger, healthier individuals needed in the insurance risk pools.

The downside would be that premiums for older individuals will increase, and Democrats would be likely to oppose this. I would propose that we increase the age band but provide additional subsidies to older individuals through the advance premium tax credit to help offset those premium increases.

  • Create invisible high-risk pools.

In most all populations, 5 percent of people account for nearly 50 percent of health care spending. Insurers have to increase premiums significantly for the remaining 95 percent of the enrollees to cover the costs of caring for this 5 percent.

An invisible high-risk pool would allow these higher-cost individuals to remain under the insurer’s health plan, but would cap the insurer’s liability and use state or federal funds to pay for all the costs above the cap. This could significantly reduce premiums.

Republicans are in favor of high-risk pools and included funding for them in the AHCA and BCRA, so this should not be a stretch. Democrats have generally been opposed to high-risk pools because of the experience with traditional high-risk pools, but an invisible pool would alleviate most concerns as there would not be a waiting list, a waiting period, decreased benefits or an inadequate network of providers.

  • Create an early buy-in for Medicare.

We could lower Medicare eligibility to age 50 or 55 and require those beneficiaries to pay the average Medicare per capita spending amount for that geographic area as their premium until they reached age 65. These are the highest-risk enrollees in commercial insurance plans, so removing them should improve the risk pool and lower premiums.

At the same time, these patients would be the lowest-risk patients in the Medicare risk pool, so if they paid the average Medicare beneficiary per capita spending amount as their premium, they should cover their costs in aggregate and not pose a negative financial impact to the Medicare program. The expansion of Medicare eligibility should be attractive to Democrats, and the ability to lower premiums and not add to the deficit should be acceptable to the Republicans.

  • Lower drug prices.

According to Politico, “Obamacare has helped reduce the overall growth of health care costs to the lowest rate in half a century, but prescription drug prices have continued to soar.” Many plans now spend more on drugs than hospitalizations.

There are many possible ways to reduce drug prices. Here are two:

      • Implement the equivalent of a medical loss ratio. The ACA put in place a medical loss ratio (MLR) for insurance companies that requires that 80 percent to 85 percent of the premium must go to providing medical services. The remaining 15 percent to 20 percent can be used for administrative purposes and profit. Any amount less than the 80 percent to 85 percent spent on medical services must be refunded to subscribers. Congress could impose similar limits on pharmaceutical companies and require that a certain percentage of their revenues be devoted to research, development and production of medications. Another percentage of their revenues could be used for marketing and administrative purposes. Revenues in excess of the limits on marketing, administrative costs and profits would have to be refunded to the health plans, employer-sponsored health plans and individuals who purchased their medications.
      • Tie profits to the length of pharmaceutical companies’ patents. Currently, pharmaceutical companies obtain patents that allow them to be the sole producer of a medication for a period of years. During that time, they can price their medications at levels as high as the market will bear. I would propose that as soon as the aggregate sales revenue reaches the amount a company has invested in research and development of the drug, the patent expires. This would discourage high prices that bear no relationship to the R&D costs, and firms not discouraged by this approach would pay for it in loss of patent protection. Their higher prices additionally would attract competitors.

Get rid of the Cadillac tax.

Neither party likes this. It is a tax on the richest employer-sponsored health plans. Republicans hate it because it is a tax. Democrats hate it because it is unpopular with unions. The reason it was implemented was to discourage rich health plans that encouraged health care spending and because it was a minor attempt toward equalizing the tax treatment of employer health benefits, which are excluded from income taxation, and health plans bought on the individual market, which are bought with after tax dollars.

Let’s get rid of it and replace it with a limit on the exclusion from tax exemption of employee health benefits. This could be set at the 90th percentile of benefits, which are typically received by those who are in higher-paying jobs and can afford the tax. The benefit of doing so is to achieve the purposes of the Cadillac tax, but not lose the revenue anticipated with that tax.

Roll back Medicaid expansion

(a win for Republicans), but replace it with tax credits and cost-sharing reduction subsidies for those below 138 percent of the federal poverty level, so that instead of being eligible for Medicaid in expansion states and not eligible for anything in non-expansion states, all of these low-income individuals and families could be covered under commercial plans on the public insurance exchanges. The latter would be a win for Democrats.

Delivery System Reform

I believe the approach outlined here could achieve bipartisan support for health insurance reform. For delivery system reform, we must first understand where the costs are coming from. I put them in three buckets:

Prevention.

The American health care delivery system does not do a particularly good job in this area. In its defense, until the ACA, insurers did not spend a lot in this area, even though prevention of disease is much less costly than treating the disease. Of particular concern to me is the rising epidemic of childhood obesity and the huge health care costs that will be associated with these children’s care as they become adults. I am also concerned about the opioid and other drug/alcohol addiction problems in this country and the corresponding health care costs and costs to society.

We need to identify and invest in programs that are effective in combating these health threats, and we need value-based insurance benefit design changes that not only provide prevention and screening services not subject to the deductible and copays, but also lifestyle medicine interventions for at-risk patients.

Low-value/no-value services.

It is estimated that 30 percent of health care services are of low value or no value. These range from treating patients with antibiotics for viral illnesses to futile care, or surgery when a patient is just as likely to achieve their goal with conservative treatment.

To address these problems, we need to change the reimbursement system from fee for service to pay for value so that providers are accountable for the outcomes of care and the total cost of care.

Here is an example from another sphere of care. My beloved dog just suffered a slipped disc and loss of motor function in his hind legs. Jake underwent surgery and is expected to recover.

However, the vet has offered three additional optional services: laser treatments, hyperbaric therapy and hydrotherapy. From what I understand, there is little research to support these treatments, but I love my dog and want to do everything that is reasonable to promote his recovery. From the fee-for-service standpoint, are they recommending these services because each one comes with another charge, or would they get some or all of these services if it were their dog, the way I would like for the decision to be made under pay for value?

Patients with multiple chronic diseases.

Twelve and a half percent of the American population has five or more chronic illnesses, and half of these patients account for half of all health care spending in the U.S. It is also in this population that a lot of mental health, behavioral health and substance abuse disorders coexist, at least doubling the cost of caring for this population. Under fee for service, care is fragmented and poorly coordinated, and there is huge opportunity to reduce spending and at the same time, improve outcomes, care and health.

To address all of this, we need to move from fee for service to pay for value to encourage health care providers to take accountability for patients across the continuum of care, better coordinate care, manage transitions of care, develop disease management programs and address underlying mental health issues.

For high-risk/high-cost procedures, I think commercial payers and the government should develop centers of excellence programs, where the use of those providers who are able to offer the best outcomes at the lowest total cost of care are encouraged by waiving out-of-pocket expenses and providing for travel expenses. A beneficiary could still choose to get care locally with the standard deductible and copays and co-insurance if they desired to, but they would be provided with a financial incentive to get care for high-risk/high-cost procedures at those hospitals with the lowest mortality and complication rates for that particular procedure.

We’ve seen multiple runs at the Gordian knot of care and costs in America now for decades, most recently with Obamacare and all the recent attempts to revise that law. Politicians of all stripes now have a unique opportunity to work together on behalf of millions of Americans. I hope they rise to the occasion.

About The Author

David C. Pate, M.D., J.D., is president and CEO of St. Luke’s Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.

October 16th, Kent Thiry, Chairman & CEO of DaVita

October 16th, Kent Thiry, Chairman & CEO of DaVita

“DaVita’s Strategy for Becoming a More Integrated Healthcare Enterprise Through Diversification and Delivery”

Chairman and Chief Executive Officer of DaVita Inc., and Chief Executive Officer, DaVita Medical Group

We all know that healthcare is constantly changing. Insurance carriers, hospitals and provider groups are all undergoing changes in the way they provide and pay for services. DaVita is changing along with the rest of the healthcare industry. Kent Thiry’s presentation will explore DaVita’s strategy for becoming a more integrated, and therefore more durable, health care enterprise by diversifying both products and delivery models. This discussion will include DaVita’s international expansion, the opportunities and challenges of emerging technologies and delivery models that are shaping health care services, and Mr. Thiry’s thoughts on leadership in a values-based organization.

WHEN: Monday, October 16th from 12 noon to 2 p.m.

WHERE:  COPIC offices, 7351 Lowry Blvd., Denver, CO 80230

REGISTER:   RSVP for this month’s event by clicking the appropriate button below.

Click Here to Register

I will not attend this month’s event     

Sponsored by:    

Practical marketing solutions for the Healthcare community.

 

Hosted by:

It’s Time for a Bipartisan Approach to Health Care Reform

It’s Time for a Bipartisan Approach to Health Care Reform

It’s Time for a Bipartisan Approach to Health Care Reform

By Dr. David C. Pate
President and CEO
St. Luke’s Health Syste
News and Community
July 25, 2017

We all watched as the House of Representatives passed the American Health Care Act (AHCA).

It was hugely unpopular.

The bill then went to the Senate, where senators said they were going to start with a clean slate and instead tweaked the AHCA to come up with the Better Care Reconciliation Act (BCRA).

It soon became clear that the BCRA would not attract enough votes to pass, so Senate leadership made some further changes to the bill.

Still not enough.

Most recently, the leader of the Senate has indicated that a vote on a bill to repeal the Affordable Care Act (the ACA, known as “Obamacare”) without a concurrent replacement bill will be undertaken and Republicans will have two years to come up with a replacement bill.

It appears that there will not be enough votes to pass this repeal-only bill, either.

So, where do we stand, and where do we go from here?

Although it appears that Republicans have run out of options, I’m not counting them out. They are under tremendous pressure to repeal the ACA – and the fear of what will happen during the 2018 midterms if they don’t.

On the other hand, the prospects are dim, and I wonder whether the calculus of their risk with voters for the upcoming elections weighs in favor of doing something in a bipartisan manner. Republicans have the opportunity to be heroes and let their constituents know that they were the ones who “fixed” Obamacare.

In hopes of a bipartisan possibility, here are my recommendations. For this purpose, I am assuming that the ACA will remain the law of the land, simply because neither party has the desire, will or votes to scrap the ACA and start from scratch.

First of all, let’s be clear. Health care reform may consist of insurance reforms that regulate how the insurance market works (this is primarily what the ACA, AHCA and BCRA do) and/or it may consist of delivery system reforms that regulate how health care is delivered, which is a significant challenge facing the country but which was only cursorily addressed by the ACA and was not addressed in either the AHCA or BCRA.

Insurance Reform

Let’s address insurance reforms first. A bipartisan approach is possible if Republicans admit that their attempts to repeal the ACA have been unsuccessful and that the goal must now be to provide constituents with relief from increasing premiums and a limited choice of insurance plans in those counties where there is only one plan or no plan on the public insurance exchange.
Here, then, are the critical decisions to be made:

Commit to enforcing the individual mandate.

This is a bitter pill for the Republicans, but if they keep their eye on the prize – lowering insurance premiums – this is one step that would reduce premiums somewhere in the range of 7 percent to 20 percent, according to estimates I have heard from insurers. It can also be a good-faith gesture toward the Democrats, who would be likely to support this in exchange for concessions.

Commit to the cost-sharing reduction payments.

All businesses dislike uncertainty, and this is no less true for insurance companies. In times of regulatory uncertainty, they will increase premiums to decrease their risk. The cost-sharing reduction payments, which assist those who are below 250 percent of the federal poverty level with their deductibles, copays and co-insurance, are critical to the stability of the plans sold on the public insurance exchanges. The Trump administration has been making decisions month by month as to whether to pay these payments.

If the administration were to commit to making these payments and Congress would appropriate the funds for them, this would stem the losses of insurance carriers from markets and might entice some companies to return to the public exchanges. More insurance companies offering plans on the exchanges means lower premiums and lower annual increases. The Republicans have been making these payments anyway, and Democrats will readily support this measure. I would propose that we return stability to the market, commit to these payments and let Republicans take the credit.

Eliminate the employer mandate.

Here is a win for the Republicans, for whom mandates are anathema, and an opportunity for Democrats to make a concession.

The employer mandate was implemented because of the fear that employers would abandon coverage for their employees and send them to the public exchanges. This fear never was realized, and employers continue to understand that employee benefits are important and essential in being competitive for workers and talent. Let’s just get rid of it and let Republicans take the win.

Induce more insurance companies to offer plans on the exchanges.

There are several ways to achieve this. First is to enforce the individual mandate and commit to the cost-sharing reductions that I mentioned above. I offer up these additional ideas:

  • In those counties that have no insurer or only one insurer on the public exchange, offer reinsurance for a period of three years. This would minimize the risk for insurance companies to offer plans in those markets and encourage more participation.
  • Require that, if plans want to offer a Medicaid plan in a given state or individual plans in other counties in that state, they must participate on the public exchange in all counties of the state so that all counties end up with one or more insurance plan options.
  • Offer a public option through a private Medicare Advantage plan that allows enrollment starting at age 50 to take higher-risk patients out of the risk pool for commercial plans in those markets, pay the plan the average Medicare per capita fee for that market (which should be attractive to plans) and separate this population from the plan’s age 65 and older enrollees for purposes of calculating the plan’s star rating so that payments for the traditional Medicare enrollees are not diminished.

Enact changes that will reduce insurance premiums.

Enforcing the individual mandate and committing to the cost-sharing reduction payments I discussed above will decrease premiums. There are four more things we can do to lower insurance premiums:

  • Increase the age rating band.

Generally speaking, an insurer will spend five times more on its oldest subscribers as its younger ones. The ACA instituted a fee cap of 3:1, meaning insurance companies could not charge more than three times the premium to older subscribers as they do to younger ones.

Republicans are in favor of increasing that age rating band to 4:1 or 5:1 and doing so would lower insurance premiums for younger, healthier individuals needed in the insurance risk pools.

The downside would be that premiums for older individuals will increase, and Democrats would be likely to oppose this. I would propose that we increase the age band but provide additional subsidies to older individuals through the advance premium tax credit to help offset those premium increases.

  • Create invisible high-risk pools.

In most all populations, 5 percent of people account for nearly 50 percent of health care spending. Insurers have to increase premiums significantly for the remaining 95 percent of the enrollees to cover the costs of caring for this 5 percent.

An invisible high-risk pool would allow these higher-cost individuals to remain under the insurer’s health plan, but would cap the insurer’s liability and use state or federal funds to pay for all the costs above the cap. This could significantly reduce premiums.

Republicans are in favor of high-risk pools and included funding for them in the AHCA and BCRA, so this should not be a stretch. Democrats have generally been opposed to high-risk pools because of the experience with traditional high-risk pools, but an invisible pool would alleviate most concerns as there would not be a waiting list, a waiting period, decreased benefits or an inadequate network of providers.

  • Create an early buy-in for Medicare.

We could lower Medicare eligibility to age 50 or 55 and require those beneficiaries to pay the average Medicare per capita spending amount for that geographic area as their premium until they reached age 65. These are the highest-risk enrollees in commercial insurance plans, so removing them should improve the risk pool and lower premiums.

At the same time, these patients would be the lowest-risk patients in the Medicare risk pool, so if they paid the average Medicare beneficiary per capita spending amount as their premium, they should cover their costs in aggregate and not pose a negative financial impact to the Medicare program. The expansion of Medicare eligibility should be attractive to Democrats, and the ability to lower premiums and not add to the deficit should be acceptable to the Republicans.

  • Lower drug prices.

According to Politico, “Obamacare has helped reduce the overall growth of health care costs to the lowest rate in half a century, but prescription drug prices have continued to soar.” Many plans now spend more on drugs than hospitalizations.

There are many possible ways to reduce drug prices. Here are two:

      • Implement the equivalent of a medical loss ratio. The ACA put in place a medical loss ratio (MLR) for insurance companies that requires that 80 percent to 85 percent of the premium must go to providing medical services. The remaining 15 percent to 20 percent can be used for administrative purposes and profit. Any amount less than the 80 percent to 85 percent spent on medical services must be refunded to subscribers. Congress could impose similar limits on pharmaceutical companies and require that a certain percentage of their revenues be devoted to research, development and production of medications. Another percentage of their revenues could be used for marketing and administrative purposes. Revenues in excess of the limits on marketing, administrative costs and profits would have to be refunded to the health plans, employer-sponsored health plans and individuals who purchased their medications.
      • Tie profits to the length of pharmaceutical companies’ patents. Currently, pharmaceutical companies obtain patents that allow them to be the sole producer of a medication for a period of years. During that time, they can price their medications at levels as high as the market will bear. I would propose that as soon as the aggregate sales revenue reaches the amount a company has invested in research and development of the drug, the patent expires. This would discourage high prices that bear no relationship to the R&D costs, and firms not discouraged by this approach would pay for it in loss of patent protection. Their higher prices additionally would attract competitors.

Get rid of the Cadillac tax.

Neither party likes this. It is a tax on the richest employer-sponsored health plans. Republicans hate it because it is a tax. Democrats hate it because it is unpopular with unions. The reason it was implemented was to discourage rich health plans that encouraged health care spending and because it was a minor attempt toward equalizing the tax treatment of employer health benefits, which are excluded from income taxation, and health plans bought on the individual market, which are bought with after tax dollars.

Let’s get rid of it and replace it with a limit on the exclusion from tax exemption of employee health benefits. This could be set at the 90th percentile of benefits, which are typically received by those who are in higher-paying jobs and can afford the tax. The benefit of doing so is to achieve the purposes of the Cadillac tax, but not lose the revenue anticipated with that tax.

Roll back Medicaid expansion

(a win for Republicans), but replace it with tax credits and cost-sharing reduction subsidies for those below 138 percent of the federal poverty level, so that instead of being eligible for Medicaid in expansion states and not eligible for anything in non-expansion states, all of these low-income individuals and families could be covered under commercial plans on the public insurance exchanges. The latter would be a win for Democrats.

Delivery System Reform

I believe the approach outlined here could achieve bipartisan support for health insurance reform. For delivery system reform, we must first understand where the costs are coming from. I put them in three buckets:

Prevention.

The American health care delivery system does not do a particularly good job in this area. In its defense, until the ACA, insurers did not spend a lot in this area, even though prevention of disease is much less costly than treating the disease. Of particular concern to me is the rising epidemic of childhood obesity and the huge health care costs that will be associated with these children’s care as they become adults. I am also concerned about the opioid and other drug/alcohol addiction problems in this country and the corresponding health care costs and costs to society.

We need to identify and invest in programs that are effective in combating these health threats, and we need value-based insurance benefit design changes that not only provide prevention and screening services not subject to the deductible and copays, but also lifestyle medicine interventions for at-risk patients.

Low-value/no-value services.

It is estimated that 30 percent of health care services are of low value or no value. These range from treating patients with antibiotics for viral illnesses to futile care, or surgery when a patient is just as likely to achieve their goal with conservative treatment.

To address these problems, we need to change the reimbursement system from fee for service to pay for value so that providers are accountable for the outcomes of care and the total cost of care.

Here is an example from another sphere of care. My beloved dog just suffered a slipped disc and loss of motor function in his hind legs. Jake underwent surgery and is expected to recover.

However, the vet has offered three additional optional services: laser treatments, hyperbaric therapy and hydrotherapy. From what I understand, there is little research to support these treatments, but I love my dog and want to do everything that is reasonable to promote his recovery. From the fee-for-service standpoint, are they recommending these services because each one comes with another charge, or would they get some or all of these services if it were their dog, the way I would like for the decision to be made under pay for value?

Patients with multiple chronic diseases.

Twelve and a half percent of the American population has five or more chronic illnesses, and half of these patients account for half of all health care spending in the U.S. It is also in this population that a lot of mental health, behavioral health and substance abuse disorders coexist, at least doubling the cost of caring for this population. Under fee for service, care is fragmented and poorly coordinated, and there is huge opportunity to reduce spending and at the same time, improve outcomes, care and health.

To address all of this, we need to move from fee for service to pay for value to encourage health care providers to take accountability for patients across the continuum of care, better coordinate care, manage transitions of care, develop disease management programs and address underlying mental health issues.

For high-risk/high-cost procedures, I think commercial payers and the government should develop centers of excellence programs, where the use of those providers who are able to offer the best outcomes at the lowest total cost of care are encouraged by waiving out-of-pocket expenses and providing for travel expenses. A beneficiary could still choose to get care locally with the standard deductible and copays and co-insurance if they desired to, but they would be provided with a financial incentive to get care for high-risk/high-cost procedures at those hospitals with the lowest mortality and complication rates for that particular procedure.

We’ve seen multiple runs at the Gordian knot of care and costs in America now for decades, most recently with Obamacare and all the recent attempts to revise that law. Politicians of all stripes now have a unique opportunity to work together on behalf of millions of Americans. I hope they rise to the occasion.

About The Author

David C. Pate, M.D., J.D., is president and CEO of St. Luke’s Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center