Health Wonk Review is up and thoughts on praying to the god of technology (5/28/09)

Ah Boston…one of the brightest stars in the health policy universe.

Speaking of Boston, the latest edition of Health Wonk Review is hosted by Tinker Ready at Boston Health News and it has has a terrific collection of posts on the latest activity in health policy.

There are a significant number of very good posts this week but one that interested me personally was a very nice and timely post by Dr. Roy Poses at Health Care Renewal. In it, he discussed HealthSouth’s digital hospital that was touted as the solution to all of our health care woes.

The hospital’s “shell” (it was never completed and is now slated to serve as office space) was plopped right alongside US HWY 280 in south Birmingham and every time I pass the beautiful edifice, I wonder about its lessons for health reform.

Dr. Poses sums it up pretty well when he states:

So we have gone from "the hospital model for the world," with great "promise," which "could save lives," proclaiming the "era of cyber hospitals," to a "pipe dream," just the shell of half-finished building.

So I wonder, if one were to identify every highly hyped, rapidly spun, magic new "innovation" promising to revolutionize patient care, and follow them forward in time, how many would even marginally improve health care, or provide benefits that marginally out-weighed their harms? How many would never come to be, or prove to be unworkable, useless, or even harmful?

But the short-term incentives for leaders of health care organizations push them to announce innovation after innovation, collect their bonuses and perks, and be somewhere else by the time their wondrous innovations prove to be not so good.

Keep in mind that some heavily promoted innovations, such as new pharmaceuticals, must be subject to randomized controlled trials and government approval. Yet, as perusing Health Care Renewal will show, many pharmaceutical companies have managed to make their glitzy innovations appear more efficacious and less hazardous by lavish, shrewd, and sometimes deceptive marketing, and by manipulating clinical research, and sometimes suppressing results. Medical devices are not subject to as much scrutiny. Health care information technology, and programmatic innovations by hospitals, health systems, managed care and health insurance companies can appear without any research evidence to support them.

This is why we all should be extremely skeptical of whatever new "innovations" our multi-million dollar health care CEOs are hawking these days.

As we work to improve health care, it is helpful to remember that technology is only one very helpful tool in our toolbox and focusing on it too intently without considering the other components of the health care system is like building a bookshelf with only a hammer.

Yes, digital hospitals could possibly reduce the cost of care per admission by reducing things like medication errors (which are still shockingly high) but they would not have an incentive to prevent admissions in the first place.

That is why it is so important that we reorient ourselves to look at the desired outcome, which is improved health and then continually adjust and improve our use of different tools to continually improve public health measures.

For example, Medicare makes various adjustments to hospital and other provider payments that account for local cost differentials. These differentials largely support a continuation of the wide variation that exists today in costs and their inverse relationship to quality (see excellent New Yorker article by Atul Gawande). But imagine what a difference it would make if Medicare phased-out these local cost differentials over time and phased-in local health improvement differentials. That means all Medicare payments to a hospital would be partly tied to their ability to improve the health of their local community. Now we're talking real change and alignment of incentives.

Fact is, digital hospitals will not save the day. But digital hospitals that are less concerned with combative insurer negotiations, unnecessary expansions, and marketing to attract more commercial patients and more concerned with serving as a vital cog in a larger public health system that is incentivized to improve health…that is something that could be very special. ~BAA

Balance is the Key to Life (Part I): the Public Plan

Just about everybody in the health policy world has made their thoughts known about the inclusion of a public plan in health reform. Some pertinent links include:

• Today’s Kaiser Report story “Senate Finance Committee To Discuss Public Plan Options; House Energy and Commerce Committee Discusses State, Regional Plans”
• Steve Perlstein’s column “A Public Fix for Health Care Need not Abandon the Market”
• The National Journal’s discussion “The Public Plan: Time Bomb?” which includes comments from health industry leaders
• Uwe Reinhardt’s post “Health Reform without a Public Plan: The German Model” at Economix

And finally, there are numerous thoughtful roundtable discussions, but an especially enjoyable one was hosted by the Diane Rehm show earlier this week. It included: Russell Mokhiber, Founder of "Single Payer Action," Len Nichols, director of the health policy program at the New America Foundation, Julie Rovner, health policy correspondent for National Public Radio, and Stuart Butler, Vice President, Domestic and Economic Policy Studies, The Heritage Foundation. [One can listen to the one hour broadcast here].

In the conversation, I got a good chuckle when, in response to the health care industry meeting with the President and pledging $2 trillion in savings, Julie Rovner attributed a quote to Michael Cannon (Cato Institute) where he said that all the industry leaders were at the table “because nobody wanted to be on the menu.” Classic.

Remember the old saying, don’t believe anything you hear and only half of what you see. Well in politics, its zero and zero. Right now, everybody is in posture mode, predicting the collapse of society if we go either one way or the other. But the truth, as usual, is somewhere in the middle. Fact, is we can achieve significant reform either with or without a public plan.

In the conversation, Len Nichols gave a very fair discussion on comparative advantage and provided an analogy to the U.S. Post Office. He stated that there are things that the private sector does well (like overnight shipping to highly populated areas – see FedEx and UPS) and there are things the public sector does well (like guaranteeing delivery to Podunk, Alaska). Most would agree that the competition has been helpful as it created an incentive for the USPS to adopt innovations pioneered by the private sector (e.g. tracking) and for private shippers to keep costs low. Think about it, one would have to agree that forty-four cents is a pretty cheap price to pay to send a letter anywhere in the country and letters being lost appear to be a think of the past.

If the USPS did not provide this guarantee, we would have to use either sticks, carrots, or a combination of the two to make sure the private sector filled this void completely. There is a lot of hassle and tweaking involved in this scenario as the shipping industry would find it easier to improve their finances by extorting/lobbying the government with threatened withdrawals rather than improving their service and operations. In response, the Federal government could just agree to pay the shippers 10-20 percent higher than their typical costs and be done with it. Does any of this paragraph sound familiar?

Mr. Nichols go on to say in a recent blog post:

More than 30 state governments offer their employees a choice between traditional private health insurance products and a plan self-insured by the state. In other words, the state bears the insurance risk of the self-insured product and selects its managers. These managers cannot profit from denying care. This experience combined with historic competition between public and private plans in both the Medicare program and California Public Employees Retirement System (CALPERS) serves as proof-of-concept: plans operating with politically appointed managers can compete with plans run by private managers if the rules of engagement are structured properly.

But two thing are sure. First, any public plan would need to build off of the strengths of Medicare/Medicaid (e.g. stability/security, nationwide coverage, transparency, consistency of benefits, low overhead, and innovative provider payments – yes, the government can innovate) as noted in a post by E. Richard Brown at the Health Affairs blog. But just as important, any public plan should improve upon the weaknesses of Medicare/Medicaid (e.g. political interference, fiat-driven payments, and “any willing provider” provisions).

As an example of how this could be done, the State of Vermont recently expanded its Medicaid primary care case management program into a public corporation (think USPS) that operates like a health plan with professional managers, where the state pays it a risk-adjusted premium, it manages care, and transfers any “profits” back into public health programs.

So where does this lead us? Hopefully in one or both of the following two directions, either a model much like the USPS where a public plan becomes an integral part of the health care system or a model like the Federal Employee Health Benefits Program (FEHBP), which is basically a highly regulated insurance exchange where the Federal government sets minimum standards and approves a variety of private health insurance options that span the entire country.

It is important to note that even though the public plan discussion gets the most “airtime” in DC right now, it is only part of a very intricate puzzle. But it does signify that our country is trying to find a “new balance” when it comes to health insurance coverage, which is a good thing. ~BAA

Health Wonk Review (5/14/09)

Ladies and gents, the HWR is hosted this week by our respected colleague Julie Ferguson at Workers Comp Insider (link). Not only is Julie an excellent poster but she also helps run the HWR by herding us blogger cats. ~BAA

Are dollars more democratic than votes? (follow-up on term limits)

Two points. First, regular readers will notice that the letters Ppb now appear after MedicaidFrontPage. No, that is not a new form of business entity – rather, it is a tagline of sorts. A wise man (thanks AV) once told me that those letters should drive decision-making in government programs. What do they mean? Well, they mean “good Policy should drive good politics which in turn, should lead to good budgets.” Wise man, indeed.

The problem with many states is that they have it backwards – budgeteers (kind of like mouseketeers but not as much fun) drive politics which in turn churns out short-sighted policies that are often no better than the private sector’s focus on quarterly targets. Case in point, [insert your state name here]’s recent legislative session.

Secondly, in an earlier post on Lessons Learned from Wellcare, I promised a follow-up on term limits but over the weekend, I read a nice column “Four Reforms for a Better Legislature” by Howard Troxler of the St. Petersburg Times that will save me the effort. The entire column is interesting but specific to term-limits, he states:

More experience

This is hard to admit because I was a strong supporter of the "Eight is Enough" term-limits movement in 1992. Like the 77 percent of Floridians who voted yes, I wanted to see those politicians kept on a short leash.

But time has proven that an eight-year limit has failed to make the Legislature more responsive to the people — just the opposite. It has made the Legislature much worse.

The eight-year term limit has only accelerated the race for power in Tallahassee, and made those seeking that power more susceptible to special-interest money than ever. It also has created a crop of young, brittle legislators with little sense of history, balance or experience.

The House is especially awful — callow, partisan, superficial, intemperate and secretive. The House is controlled by an almost Soviet-style inner circle whose power is locked down years in advance (a textbook example being the recently indicted former speaker, Ray Sansom). That inner circle dictates to House members from the day they are elected, and they go along. When former Speaker Johnnie Byrd (2002-2004) famously referred to his House members as "sheep," he was being unwisely blunt — but accurate.

It's no coincidence that our Senate usually is a moderating influence on the House. The Senate is less willing to jump off the cliff into untested policy, more sensitive to Florida's competing interests, and more likely to find common ground between its Republicans and Democrats.

Your typical senator is older, more experienced and tempered, often because he or she went through an "apprenticeship" in the House first. And the typical senator is much less likely to be bossed around by an inner power circle, as in the House. Each senator is more of an "independent contractor," with his or her own sphere of influence.

We probably shouldn't repeal term limits outright; there have been plenty of lawmakers over the years who needed to go. But a 12-year limit seems more reasonable, giving even House members a little more time to grow into statesmanship, slowing the all-consuming race for power, and raising up a crop of senior members with more judgment and independence.

One important caveat:

There's a good reason that I list longer term limits in third place, after fair voting districts and honest money. It would be a horrible idea to give 'em a longer leash without fair competition in their district, and without an honest reporting of their money.

Yes, many of us thought that term-limits would minimize some of the more outrageous shenanigans but it was kind of like cutting off your nose to spite your face. Or more applicably, reducing Medicaid payments across the board even though most providers are “doing the right thing,” so to speak.

One thing about term-limits that is interesting is that courts have held that campaign contributions are an expression of free speech and even though direct contributions can be restricted, there is no limit to what persons can provide indirectly. I guess the same can be said about legislators…even though terms can be limited, there is no limit to what former legislators can provide indirectly through lobbying, positions in the executive branch, service on organizational boards, etc.

Whereas U.S. Senators Baucus and Grassley know as much about Medicare and Medicaid as many of the executives at Federal CMS, it would be nice for that type of policy depth to exist in state legislatures. This is especially true given the pace of reform coming from Washington. Thus, it may be a good time for states to re-examine term-limits so that they discourage the bad apples from serving indefinitely while also allowing additional leaders with depth and gravitas to grow into their roles.

After all, they do not call them “statesmen” (and women) for nothing. ~BAA

Lessons learned from Wellcare

To get an idea as to how aggressive Wellcare’s former executives were with their lobbying efforts, take a look at a recent post by Adam Smith of the St. Petersburg Times at The Buzz: Florida Politics,

We're not as cynical as some about big-time campaign donors and bundlers -- First Amendment and all -- but this week's WellCare news should remind us why we should be seriously wary of many of the major campaign bankrollers in Florida. WellCare and its subsidiaries pumped $2.4-million into the Florida political system in the '04 and '06 cycles, more than 90 percent of it to Republicans (top recipients were the RPOF, Ken Pruitt, Tom Lee and Frank Farkas, according to an AP analysis). A day after lawmakers convened to consider sweeping changes to Florida's Medicaid system, WellCare wrote a $100,000 check to the state GOP, which received $1.2 million from the company all told.

WellCare stopped making political donations after major problems and an investigation subsequently erupted, but thankfully the state GOP found other major donors to help pick up the slack. Like Jay Odom.

First amendment and all, a few things strike me as odd about Wellcare’s lobbying:

• First, Wellcare is capitalized through stock but its primary source of revenue is government programs. There is something especially “icky” about using funds dedicated for the care of vulnerable persons and using it for self-serving purposes.
• Second, Wellcare is essentially a state contractor. Again, one should get an “icky” feeling when a contractor of one branch of government uses money to lobby another branch of government.
• Finally, something in me says that these types of shenanigans are easier given the state’s term-limits but I leave that discussion for another day.

That said, Wellcare could justly say that they were only advocating on their and their shareholder’s behalf. But there is such a thing as growing too big and going too far and in that regard, many of the State’s leaders were either asleep at the wheel or were enablers because rather than reigning in an out-of-control Wellcare, they cashed the checks.

One only needs to look at Dante’s Inferno to the see that users, fraudsters, and betrayers of special relationships fill the lowest levels of Dante’s Hell. Yes, we say “hate the sin, not the sinner” and thus, it is our responsibility to change the culture such that service to taxpayers and beneficiaries are first and foremost in our leaders’ minds.

Call me naive but one can only hope. ~BAA

Wellcare taken to the woodshed for actions of prior management team

There has been a lot of interest lately regarding Wellcare in the state of Florida, where their subsidiaries cover over 400000 Medicaid beneficiaries (about 40% of the Medicaid HMO market - data available at the following link).

As reported by Florida Health News and the Wall Street Journal yesterday, Wellcare was charged with felony fraud and has agreed to pay $80M in order to defer prosecution. The crux of the fraud was that the organization was required to spend 80 percent of their mental health and substance abuse dollars on the provision of services (aka the 80-20 rule) and instead they paid 80 percent to a subsidiary that took another 20 percent off the top and so forth and so on such that only around 50 to 60 percent of the premium dollar actually went to care.

On Monday, Wellcare also announced that it was dropping its profitable Medicare PFFS plans a year early and speculation was that they wanted to free up capital to settle the fraud claims and also drop a line of business that was the primary cause of their February suspension from enrolling Medicare beneficiaries (see FHN reports on the speculation and the suspension).

Personally , I remember reading a Medicaid managed care market segment report a few years ago where an analyst was sincerely puzzled as to why Wellcare had twice the margin of any of their competitors and I think we now have at least a partial explanation.

In the announcement, U.S. Attorney A. Brian Albritton stated that the fraud was committed by persons no longer with the company and he attributed their motive to pure greed. Additionally, the Tampa Tribune reports that prosecutors expect to file criminal fraud and conspiracy charges the former executives responsible for the fraud.

That said, I am quite hopeful that Wellcare has turned a corner. Their new management team has stopped their overly aggressive lobbying efforts and retooled and reinvigorated their compliance programs and as reported by FHN,

In the wake of the raid, WellCare's board of directors -- which includes former Florida Gov. Bob Graham -- formed its own investigative committee and hired separate counsel. Within weeks, Farha, Behrens and Bereday were out, and a former WellCare executive, Heath Schiesser, was installed as president. The board also appointed an executive chairman, Charles G. Berg.

Last summer, WellCare executives filed statements admitting the company overbilled the state and paid about $35 million in restitution.

WellCare has cooperated fully with the investigation, Albritton said, and if it abides by the requirements in the deferred prosecution agreement, it will not be prosecuted in court and will not have a criminal conviction on its record. He said prosecutors gave a lot of thought to the matter before offering the deal, but decided it was fair for several reasons: Those responsible were no longer employed there, and prosecution would force WellCare out of business, which would hurt people who weren’t responsible, including shareholders, employees and patients.

This episode is just another example of how the Wall Street culture of greed took our society down the wrong path. It is a shame that innocent Medicaid beneficiaries and Wellcare shareholders and employees paid the price for the actions of some terrible people and let us hope that anyone found responsible faces serious consequences.

That said, we all should have known better. It is one thing for an organization to be rewarded for increasing efficiency but another for them to do it in an opulent and arrogant way that defied explanation. Also, we have got to expect a different type of leadership from the organizations that care for our most vulnerable citizens.

To answer the question from the graphic above, unadulterated greed is not good (as the current recession proves) but significant incentives that align payment with patient outcomes are an imperative if we want to improve the performance of our health systems. That way, the Wellcares of the world could put their creative geniuses to work improving care and being rewarded as opposed to finding ways to cut corners. Of course, this is a radical change for most Medicaid programs but it is one that is necessary. ~BAA

[Just as an aside and to stir up a bit of controversy, it would be interesting to track the ratio of MBAs to clinicians in major health care organizations. Not to say MBAs are always bad and clinicians are always good, I have seen it cut both ways, but in the aggregate, it would give one a relative feel about the values of an organization.]

As any athlete will tell you, “follow-through” is pretty important

As health information technology gears up to steam out of port, it is important that we match good policies with good practice. All too often, especially in the political arena, leaders focus more on fast and easy press releases, photo ops, and town halls and less on the long, hard, slog of implementation and maintenance.

[For any person interested in health information technology, the “dog versus cat” debate should be required reading. One can find good discussions at the eCareManagement blog and The Health Care Blog. Personally, I have never been much of a “cat” person.]

For example, Florida’s legislature recently passed S462, which permits the Department of Health to collect and monitor prescription drug data in an attempt to reduce “pill mills” and “doctor shopping.” Sounds great, right? Well, yes and no…it intends to achieve a laudable aim but will more than likely constitute one more data silo that will sit on a server somewhere and be underutilized in terms of health services research.

Even more importantly, in a state that has a spotty contracting history and ranks dead last (yes, 50th) in state employee pay per capita, it is vitally important that Florida “follows-through” to make the process as easy, secure, and effective as possible.

To see how this process could go terribly wrong if not managed well, one can look at a recent report in the Washington Post and a nice commentary at Insure Blog. As reported by the Post,

Hackers last week broke into a Virginia state Web site used by pharmacists to track prescription drug abuse. They deleted records on more than 8 million patients and replaced the site's homepage with a ransom note demanding $10 million for the return of the records, according to a posting on Wikileaks.org, an online clearinghouse for leaked documents.

The Commonwealth of Virginia has yet to confirm a security breach of its Virginia Prescription Monitoring Program but it has shut down portions of its website and is referring inquiries to the Federal Bureau of Investigation.

With the necessary move to put sensitive information into electronic health records and to share that information with providers for the purpose of coordinating care, it is imperative that we move beyond simple press releases and empower thoughtful, deliberate leaders whose time horizon is greater than 2 years. ~BAA