“Chronic diseases cause seven in 10 deaths each year in the U.S.”
“About 133 million Americans — nearly one in two adults — live with at least one chronic illness.”
“75% of our healthcare spending is on people with chronic conditions.”
Shocking — that is, in terms of how misleading or even false the claims are and of how they created the wellness legend.
Take the statement that “chronic diseases cause seven in 10 deaths.” We have to die of something. Would it be better to die of accidents? Suicides and homicides? Mercury poisoning? Side effects of measles vaccinations gone awry?
The second statistic is also a head-scratcher. Only 223 million Americans were old enough to drink in 2009; divide 133 million into that number, and you see that a whopping 60% of adults, not “nearly one in two,” live with at least one chronic illness. Sloppy math and wording is common on the CDC site, as elsewhere it says that almost one in five youths has a BMI in the 95th percentile or above, which, of course, is mathematically impossible, as is the CDC’s calculation of our risk of death.
More importantly, how is the CDC defining “chronic disease” so broadly that so many of us have at least one? Is the CDC counting back pain? Tooth decay? Dandruff? Ring around the collar? “The facts,” as the CDC calls them, are only slightly less fatuous. For instance, the CDC counts “stroke” as a chronic disease. Although a stroke is likely preceded by chronic disease (such as severe hypertension or diabetes), it is hard to imagine a more acute medical event than one in which every minute of delay in treatment increases your odds of ending up like the Kardashians.
The CDC also counts obesity, which was only designated as a chronic disease by the American Medical Association in 2013 — and even then many people don’t accept that definition. Cancer also receives this designation, even though many diagnosed cancers are anything but chronic — they either go into remission or cause death. “Chronic disease” implies a need for continuing therapy and vigilance. If cancer were a chronic disease, instead of sponsoring “races for the cure,” cancer advocacy groups would sponsor “races for the control and management.” And you never hear anybody say, “I have lung cancer, but my doctor says we’re staying on top of it.”
That brings us to the last bullet point. Convention typically attributes more than 80% of healthcare costs to fewer than 20% of people, meaning that costly ailments are concentrated in a relatively small group. The implication would be that, if you address that small group, your savings are disproportionate. Instead, the CDC’s data attributes 75% of costs to about 50% of the adult population, implying almost the exact opposite of the 80-20 rule: The cost of chronic disease is widely dispersed. Indeed, if you remove the rare diseases that afflict about 1% of the population but account for about 7-8% of cost, you come very close to parity between the proportion of the population with chronic disease and the proportion of total health spending attributable to chronic disease.
This urban legend based on the CDC’s call to action, appearing verbatim more than a million times on Google, is among the single biggest causes of uncontrolled healthcare spending…and is responsible for essentially the entire wellness industry.
In reality, if you strip away the expenses of those chronically ill people unrelated to their chronic condition (which are included in the CDC’s 75% statistic); prevention and management of those conditions (ditto); those aforementioned rare diseases; and unpredictable or uncontrollable exacerbations: That 75% crumbles to about 4% of expenses that fit the category of wellness-sensitive medical events. Achieving a 10% reduction in those categories — a feat rarely accomplished, which is why vendors never disclose this figure — would reduce overall spending by 0.4%, or about $25 a year per employee or spouse. Hence, few employers would ever bother with wellness.
Instead, the CDC’s wellness legend, suggesting that 75% of costs can be attacked, encourages employers and health plans to focus on the opposite of what they should focus on. Penn State, citing this 75% statistic as justification for its controversial wellness program, provides a classic example of this wrongheaded focus, with unfortunate consequences for the university’ reputation and employee relations, with no offsetting financial benefit.
Typical of the wellness industry’s embrace of this wellness legend is Bravo Wellness — also the first wellness company to brag about generating savings by punishing employees. The company takes this fallacy a step further. It deftly substitutes the words “lifestyle-related and preventable” conditions for the CDC’s language “chronic conditions”; that implies that everyone with a chronic condition, even a congenital or unavoidable, rare condition, has only his lifestyle to blame. Vendors like Bravo encourage employers to get more employees to view themselves as chronically ill, or about to become chronically ill — and encourages them to access the system.
Encouraging overdiagnosis, overtreatment and overprescribing isn’t just a bad idea on its own. It distracts employers from real issues such as provider pricing disparities, hospital safety, outliers (the small percentage of employees who really do account for half the cost (usually not because of a chronic ailment, though) and pharmacy benefit managers (PBMs), whose per-drug margins are about twice what they would be if anyone spent any time weed-whacking their obfuscations of rebates, implementation fees, etc. and simply negotiated the margin directly.
What to do next?
It seems like all our posts end the same way: Stop poking your employees with needles.
We’ve debunked wellness’s science and math, its outcomes, its philosophy … and now its epidemiological premise. Even as their credibility is shredded, most wellness industry players have steadfastly refused to defend themselves at all. Instead, they avoid all debates on this site, because, although many of the vendors and consultants appear to be incapable of critical thinking, they are smart enough to realize that facts are their worst nightmare.
Transparency, The New Buzzword In Healthcare
Healthcare price and quality have been nearly impossible to determine. Consumers can compare prices and quality of nearly everything they purchased, except healthcare — which truly has life and death implications.
Today, there is a new demand for healthcare transparency driven by:
Employers’ efforts to contain escalating costs
High-performing providers distinguishing their efficiency (price) and proficiency (quality)
Consumers seeking better value
Accomplishing this requires unearthing true and independently determined value — not just “secret” negotiated insurance rates, artificial fee schedules and quality metrics of questionable relevance.
Unknowingly purchasing healthcare with large price variations is a major cause of healthcare inflation and is estimated to cost Americans with employer-sponsored insurance as much as $36 billion a year.1 A recent study published in the Archives of Internal Medicine revealed prices ranging from a low of $1,529 to a whopping high of $182,955 for an appendectomy!2
The mystery of healthcare pricing contributes significantly to the escalating cost of healthcare burdening consumers, employers and taxpayers. Introducing transparency to the healthcare market will shrink price and quality disparities — saving employers and employees money while they receive better quality care.
Quality is as important a factor as price, yet most consumers do not incorporate it into their healthcare decisions, largely because that information is not readily available. Online opinions of physicians and hospitals generally focus on wait times or communication skills rather than clinical qualifications and outcomes. The former makes you comfortable or uncomfortable; the latter can be costly, even deadly.
So quality does matter. In fact, more than one quarter of inpatient stays experience a medical error: 13.5 percent of Medicare/Medicaid hospital patients experienced an adverse event (a serious event, including death and disability) and another 13.5 percent experienced some other temporary harm that required intervention, according to the Department of Health and Human Services.
Transparency — The Good, The Bad And The Ugly
The Good: Consumers want full transparency and with the convergence of technology, data availability and better analytics, it’s increasingly available and affordable.
The Bad: With more companies entering the transparency market, each one defines transparency as they see it, causing confusion and making comparison difficult. Worse, some parties actively impede transparency by claiming data ownership and censoring data for their own benefit.
The Ugly: Many companies touting transparency merely slap the transparency tag on products having little or nothing to do with transparency. Or worse, advertise it but then suggest a plan to develop it; in another word, vaporware. Perhaps most disturbing are companies selling their version of transparency while failing to disclose conflicts of interest.
Optimal transparency solutions should, at the least, meet criteria in four categories: unbiased, credible, meaningful and measurable. This article examines findings from a comparative summary of “transparency” companies in these four important categories.
Monocle Health Data conducted a study of seven companies alleging to provide either price and/or quality transparency of some sort. We developed and applied 25 criteria in the four categories named above. We did our best to verify accuracy and graded each company by these criteria using a simple three-tiered grade.
Plus — the capability was confirmed
Unknown — capability could not be determined
Minus — the capability did not exist or there was a clear deficiency
This study includes 200 footnotes documenting the findings. If you are interested in using our proprietary transparency comparison format or want more info, you may request it through firstname.lastname@example.org. There is no charge. The following is a summary of significant findings.
1. Three of the seven were founded, owned or controlled by insurance companies or healthcare providers. This creates an inherent conflict of interest. What is most disturbing about these three is their lack of, well, transparency. They don’t reveal their potential conflicts. With a little research we found the conflicts, but no customer should have to work that hard — especially for a service that purports to give customers the full truth. These three companies’ conflicts were numerous and included:
Being founded by a consortium of state hospital associations;
Partially owned by a well-known hospital system;
Owned by a company marketing U.S. provider networks;
Publicly stated plans to offer its own provider network; and finally,
Owned by a global medical tourism company representing its own network.
2. Two of the seven promoted a provider network from which they receive compensation. Any time a seller claims to sell a “truth” product such as transparency, other sources of compensation from influential parties in the transaction should be divulged. In fact, for many industries it’s the law (think auto dealer rebates and real estate agencies). The conflict isn’t just the unseemly hidden compensation. In order to make networks attractive, their reps sell on access first and foremost, not quality or price. And there’s the rub. When networks include 90 percent of providers in the market, in the best case scenario, the network includes the best 50 percent and worst 40 percent of providers. And we all know about the wide disparities in healthcare price and quality. Broad network access — by definition — engenders disparities.
If a transparency company is selling access to a preferred network, it no longer has an incentive to reveal disparities (aka deficiencies) within its network. They’re paid to sell their network — not reveal provider-specific performance. And if they can get you to pay an access fee for the privilege of ignorance, well, they see that as an even more profitable sale — at your expense.
3. Three of the seven accept advertising revenues from providers as a primary source of revenue. Any transparency solution accepting ad revenues from those it’s supposed to evaluate without bias should be taken off the list of legitimate transparency solutions; they’re just one level away from “pay-to-play.”
1. Pay to play — Two companies use third-party sources that charge providers to participate in their “quality” assessment or to be more prominently displayed. And if the provider doesn’t pay the participation fee, it receives a “no score” which translates to a failing score. You can’t buy credibility. Worse yet, much of the data used in these companies’ “transparency” tools are from their own databases — not independent, recognized organizations.
2. Most companies did not use independently verified, fact-based information that has been cross-referenced from nationally recognized organizations. In fact, two of them used opinion surveys as their primary transparency tool, emphasizing the patient experience while ignoring independently verified, fact-based information. Opinion surveys are nice but patients want the best care possible, not just a pleasant experience, despite the trendy (and misleading) exclamation, “It’s all about the customer experience!”
3. Healthcare price and quality transparency is not the primary business for four of these companies. Those four companies’ primary businesses range from hospital consulting to selling networks to medical tourism to selling mobile apps. If a company’s primary business isn’t transparency, you know the business has other priorities that can change quickly — unbeknownst to the customer. If you want dedicated transparency services, free of conflicts, you’re most likely to receive that from a company dedicated to it as a primary business and core competency.
4. Use of appropriate comparative data — amazingly, six of the seven transparency companies failed this test. Most incorrectly compare Medicare data to commercial populations, use generic UCR fee schedules instead of the average cash payment, use market ranges instead of provider-specific data, or use an overall quality score that isn’t disease or procedure specific. Consumers have a right to know more than just whether a hospital earned a superior overall score — they have a right to know the score for treating their specific illness, and to know where each provider ranks for treating that illness.
5. Verifiable information from multiple credible sources and not just a company’s own database. Proprietary algorithms are one thing, but referencing a company’s own database as a valid source is intellectually dishonest. If the transparency company won’t or can’t provide auditable detail to support its findings, it lacks credibility. Keep in mind that data from at least two credible organizations is needed to validate conclusions. Only one transparency company met this standard.
1. Only one of the seven transparency companies used severity adjustments of appropriate data populations using at least two recognized severity-adjustment methodologies. Four of the seven didn’t demonstrate any severity adjustment capability. Severity adjustments allow for valid comparisons on a disease-specific, provider-specific basis so individuals can find providers who treat similar patients proficiently and efficiently.
2. Provider price rankings and quality ratings for both chronic illnesses and episodic care for hospitals and doctors on the same platform was offered by only one of the seven companies. The standard approach was to provide a price for each procedure, office visit, prescription, lab test, imaging procedure, etc. and let the user compile the total cost — if they can. With chronic illnesses comprising two-thirds of all benefit costs, it is critically important to rank and rate providers based on price and quality on a severity-adjusted basis for managing a chronic illness, including all costs for treatment, over an entire year.
3. In- and out-of-network provider comparisons were offered by only three of the seven companies (see Unbiased above). A meaningful transparency solution should provide consumers with ratings and rankings on providers who are both in- and out-of-network. Any “transparency” solution that excludes out-of-network providers isn’t transparency, it’s self-serving censorship detrimental to the consumer.
This is particularly important with high-deductible plans. I’ll give my personal experience: Pfizer sent me a Lipitor $4 copay card. I took it to CVS Pharmacy and was told that under my health plan, I would have to pay $250 for using a brand medication instead of generic — but they’d gladly reduce this by $4. I thought this surely was a mistake so I called CIGNA and was told its in-network pharmacy’s interpretation (CVS) was correct. CIGNA doesn’t tell consumers that it’s cheaper to fill prescriptions at out-of-network providers.
Excluding out-of-network providers isn’t transparency — it’s charging users for the privilege of buying high-cost services from in-network providers. Perhaps it’s time to question the value of networks — and any transparency solution that ignores out-of-network providers.
4. Robust analytic report package updated monthly. Six of the seven companies don’t offer monthly analytic reports. Another transparency requirement should be timely reports generated from robust analytics and the ability to “drill down” into the data to see exactly why and how each provider earned their ranking and rating. You deserve to know the supporting facts — after all this is transparency. True transparency is driven by analytics and subject matter expertise, not just a provider directory lacking supporting analytics.
1. Only one solution ranks by price and rates quality by quartile. Almost all of the transparency companies use a three-, four- or five-star rating system. Unfortunately, since half of the transparency companies in this study also sell networks, the rankings and ratings are largely meaningless — they only rate in-network providers and almost all of the providers are rated as average or better. This is unrealistic. In fact, the biggest disparities between provider price and quality performance are in the bottom 50 percent. Consumers deserve to know true rankings and ratings so they can avoid the bottom 50 percent of doctors and find a doctor in the top 50 percent who best meets their needs. Ranking doctors and hospitals by quartile gives consumers a short list of the best doctors, for specific diseases, to choose from — not just an endorsement of another network.
2. Only one solution offers an on-line, interactive data cube to support users requiring sophisticated analytics. This enables a robust, flexible, user-friendly reporting package that’s population-specific to each employer and allows employers to establish dashboards and benchmarks for health plan performance and their vendors (e.g. network performance, disease/medical/case management). Five companies did not offer any reporting package.
3. Only two companies offer a savings measurement tool. One company provides an ROI worksheet using employer-specific assumptions to calculate savings. An important transparency feature is the ability to project accurate ROI and savings using employers’ own assumptions — before and after engaging the transparency company. Savings projection tools, along with the analytic reports, give the employer actionable intelligence to identify areas of improvement and measure vendor performance.
The rise of healthcare transparency is inevitable — it epitomizes the old saying, “How do you keep them down on the farm once they’ve seen the big city?” Consumers are slowly realizing that not only should they be able to see price and quality information on healthcare providers — they have the right to see accurate, meaningful information.
The healthcare industry is on the cusp of tremendous change brought about by the adoption of healthcare IT solutions. The ability to extract data which can then be shared with consumers will forever change the way healthcare quality is measured, and create new pricing metrics that extend far beyond in-network and out-of-network.
1 Save $36 Billion in U.S. Healthcare Spending Through Price Transparency (White paper), Thompson Reuters, February 2012.
2 Renee Y. Hsia, MD, MSc; Abbas H. Kothari, BA; Tanja Srebotnjak, PhD; Judy Maselli, MSPH. Health Care as a “Market Good”? Appendicitis as a Case Study; Arch Intern Med. 2012;172(10):818-819.