Life sciences companies have always faced challenges communicating the clinical and economic value of their products and services to different groups of stakeholders. These challenges arise from the technical nature of research information, the different perspectives of various groups, (e.g. clinicians, payers and patients), and marketing regulations. However, with costs continuing to rise, political, business and advocacy leaders are all agreeing that health care spending is growing out of control. Therefore, no matter who wins the White House in November, “cost containment” will be the embodiment of “change” for health care in 2009 and beyond – and the current economic downturn and expanding government deficits will only fan those flames.…
3 Months Late – Massachusetts Waiver Extended
Just a quick FYI – Today’s Boston Globe reports that the Federal Government has approved a new 3 year Medicaid demonstration waiver for Massachusetts – with $10.6 billion to enable the continuation and growth of the state’s health insurance coverage expansion program. The original 3 year waiver expired at the end of June, and the state and Federal officials had been discussing a new 3 year waiver for many months before that deadline. Since the end of June, the state’s program has been running on a series of several week extensions to the old waiver granted by the Federal Government.…
The Granularity of Employer Provided Health Benefits
After writing last week about Pitney Bowes’ experience in creating positive financial returns by providing quality health benefits for their employees, I attended a panel of alumni and faculty from the Yale School of Management that discussed the topic “Do Consumers Make Rational Healthcare Decisions?” (I’m told a video podcast will be available soon.) While their consensus on this question was no, their discussion and Q&A included employer provided health benefits.
Professor Fiona Scott Morton noted that the value employers get from providing health benefits depends upon their industry – specifically whether the company retains employees or has a high turn-over rate. …
Value of Employer Provided Health Benefits
I recently heard Michael Critelli, Executive Chairman of Pitney Bowes Inc., talk about what the company has learned about the value of providing quality health benefits and services to their employees.
Because they have a workforce that is divided between their offices and customers facilities, Pitney Bowes has been able to conduct a natural experiment and see how providing access to different health and wellness services can effect their employees and the company’s costs. What they found was that providing a good quality health benefits package in conjunction with healthy food and exercise options, etc., has reduced health care costs for their employees that work in their own offices compared to employees who work off-site.…
ERISA: The Unbridged Chasm of Health Reform – Challenges for Massachusetts and Federal Action
A recent Boston Globe article about a possible legal challenge to Masschusetts’ health reform initiative indirectly raised one of the most stubborn challenges in health reform: The Federal ERISA law. (See below for more about ERISA.)
The contentious issue in Massachusetts is a proposal to require employers to both pay at least 33% of full time employees’ health insurance premiums and ensure that at least 25% of their employees are covered by their health plan. (The current requirement is that they do one or the other.) So why should this difference be the basis for a law suit? Actually, there isn’t really any legal difference. …
Digesting Medical Progress
One of the challenges for improving the healthcare system is creating a vision for what is achievable in a timeframe of months or years. The first step for creating such a realistic vision is to understand how progress has been made in the past.
A microcosm of such progress was described in a recent article in The Economist. This article describes advances in our understanding of stomach ailments – one of my favorite areas of biomedical progress because in the last several decades dramatic changes have occurred in our basic knowledge about this area, and so many people can relate to stomach problems.…
Questions and Answers About Pay-For-Performance (P4P)
An article in the July/August Health Affairs about Massachusetts health plans implementing Pay-for-Performance (P4P) incentives for physicians raised more questions than it answered.
The study found that P4P programs from 5 private sector payers “wasn’t associated with greater improvement in quality” compared to the overall upward trend in the factors measured. But the study didn’t address some overarching questions and basic realities about P4P, such as:
- How the payers P4P incentives to the physician groups was actually translated into incentives for the individual physicians – or smaller groups of physicians inside the larger groups?
- How the P4P incentives compared to the other financial incentives the physicians are facing?
Literacy, Communications and Star Trek – Cores for Reforming Healthcare
In talking to people about the problems with the US healthcare system, two fundamental truths have become apparent.
First, people really want the type of healthcare that is envisioned in science fiction such as Star Trek, where almost any ailment is treated with a single injection or pill, or a few waves of a healing wand. Unfortunately, medical science hasn’t accomplished that, except in a few instances – antibiotics for a bacterial infection, or perhaps relocating a dislocated finger or shoulder (and those still require weeks to heal and therapy to regain strength and mobility).
And second, the ongoing problem of healthcare literacy and communications may be getting worse as the complexity of medical treatments increases.…
The Face of Free Government Health Care
A couple of months ago I wrote about how one percent of adults in the US get free government health care. While the statistics in the February Pew study were very interesting (and somewhat shocking), I saw a report in a local Connecticut newspaper (The Day, June 26th) that put a face on these statistics.
The Day’s story was about Jihad Abdulshaheed, a 36-year-old man who had been incarcerated since November 2007. The judge was prepared to sentence to a one year sentence, and since he had already served at least 50% of his time, under the Department of Corrections guidelines for nonviolent prisoners he could have been released the next day.…
Cutting Medicare Physician Payments – Beyond the 10.6%
The focus on Medicare payments to physicians for the last six months has been on the 0.5% increase Congress enacted for the first 6 months of 2008 to replace the 10.1% reduction that would have occurred under Medicare’s Sustainable Growth Rate (SGR) formula. Legislation to continue this rate for the rest of the year failed a required procedural vote in the Senate last week.* This leaves Medicare physician payments after June 30th uncertain – although it is expected that Congress will do something in the next week, or three.
However, beyond the impending Medicare 10.6% reimbursement reduction for all physicians, the Graham Center of American Academy of Family Physicians published a short report on June 13th that expands the analysis to include pending change in how Medicare reimburses physicians in Physician Scarcity Areas (PSAs), and Health Professional Shortage Areas (HPSAs).…
MedPAC Gets Real About Promoting Primary Care
The Medicare Payment Advisory Commission released its annual report to Congress on Friday. In chapter 2 of its report, MedPAC makes two significant proposals for improving the financial incentives for primary care providers.
Great Incentives for Primary Care Practitioners Not Just Primary Care Services
First, it recommends changing Medicare’s reimbursement system for “evaluation and management” (E&M) services. While last year Medicare increased payments for E&M services, they couldn’t differentiate between types of physicians providing these E&M services, i.e. the Medicare system doesn’t distinguish between a family physician and a cardiologist if they are providing the same type and level of intensity of service.…
Behavorial Economics and Fixing Healthcare’s Cultural Problems
Peter Orszag, (the Director of the Congressional Budget Office), delivered a very interesting speech last week to the National Academy of Social Insurance about “Health Care and Behavioral Economics.” He discussed how behavioral economics – which combines insights from psychology and economics – can both help to explain cost and quality problems in the US health care system and be used to begin developing solutions to these problems. This seems – at least to me – to be a very reasonable approach to understanding why individuals and populations don’t respond according to standard economic theory – which assumes both perfect knowledge and benefit maximizing actions.…