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Why Healthcare Must Be Transparent

The economics of American healthcare is undergoing a profound shift. Employers, policymakers and other purchasers are increasingly paying healthcare providers based on the benefit to the patient. For instance, the Centers for Medicare and Medicaid Services, (CMS) the agency that runs Medicare, adjusts payments to hospitals based on how well they perform on measures of patient experience, readmissions and patient safety. Private payers, too, are increasingly negotiating contracts tied to quality and safety performance.

Understandably, the changes to payment heighten sensitivity among hospitals and doctors about how their performance is measured. Even measures that have been exhaustively tested and validated face new levels of scrutiny when money is on the table. Many providers even call for delaying the changes in payment until measures can be perfected even more.

But employers and other purchasers of healthcare are determined to move forward with new payment standards without delay and will not await measurement perfection. After decades of enormous investment in healthcare with little or no accountability for quality, purchasers place a high value on understanding quality and don’t intend to reverse course and continue simply paying for everything. Employers and purchasers do not intend to return to the days when consumers had no information to make an all-important decision about which hospital to use, and purchasers paid the bill regardless of the quality of the patient experience. Purchasers want numbers, figures and rates on safety, quality and cost, calculated with vigilance, responsibility and respect for science. After decades of hard work and research, this is finally available to them.

See also: Not Your Mama’s Recipe for Healthcare  

Transparency has been the key to change. According to a multi-stakeholder roundtable convened by the Lucian Leape Institute of the National Patient Safety Foundation in 2015, “During the course of healthcare’s patient safety and quality movements, the impact of transparency – the free, uninhibited flow of information that is open to the scrutiny of others – has been far more positive than many had anticipated, and the harms of transparency have been far fewer than many had feared.” The effect is so dramatic, the report concluded, that “if transparency were a medication, it would be a blockbuster.”

The report cited my organization Leapfrog’s first-ever reporting of a measure of maternity care, early elective deliveries. These are deliveries scheduled early without a medical reason, and they pose risks to the mother and the baby, and frequently result in babies unnecessarily starting life in the neonatal intensive care unit. There had been many efforts in the past to curtail these unsafe deliveries, but it wasn’t until Leapfrog publicly reported rates by hospital that significant progress was made. In just five years, the national mean dropped from 17% to 2.8%.

Transparency has also accelerated reductions in errors and accidents that kill or harm patients in hospitals. The 2014 estimates from the federal Agency for Healthcare Research and Quality’s Medicare Patient Safety Monitoring System, which reports patient safety indicators, show progress in reducing hospital-acquired conditions, including a drop from 28,000 inpatient venous thromboembolisms in 2010 to 16,000 in 2014. This means 12,000 fewer patients in 2014 developing potentially fatal blood clots. It is very unlikely that we would have achieved a reduction of this magnitude without transparency.

Measurement and transparency do not have to be perfect to achieve remarkable progress in quality improvement. We see this in more transparent industries outside of healthcare every day. For instance, researchers studied the recent initiative in Los Angeles to issue safety grades rating the hygiene of restaurants and found it associated with a nearly 20% decline in hospitalizations from foodborne illness in the program’s first year. The composite grade used in LA was fairly rudimentary by the standards of measurement scientists in the healthcare industry, but the grade was nonetheless effective in educating consumers and galvanizing improvement.

Providers and health care executives sometimes point to flaws in their medical record and billing systems as problems that should delay the use of certain measures. However, public reporting is often necessary to break logjams in data collection. For instance, New York state’s public release of surgical mortality data for coronary artery bypass grafting procedures jump-started the movement to define and more carefully collect the procedure outcome data. Providers will get better at data collection when the data is used.

See also: Is Transparency the Answer in Healthcare?  

Current healthcare performance measures may not be perfect, but good people are working hard to steadily improve their validity – and that work should be done in the sunlight of transparency. Employers will gladly work collaboratively toward that end, as long as the work continues without delay. We have all waited too long for transparency and sensible payment, and the cost in human lives and suffering is already too high.

Important Alliance to Fight Health Costs

The Wall Street Journal reported that 20 large U.S. companies joined to fight high healthcare costs, launching the aptly named Health Transformation Alliance. Employers account for one in five dollars spent on healthcare in the U.S., yet they have relatively weak influence in the marketplace. But these influential companies are intent on aggressive action. With this kind of unified leadership, the alliance promises to shake the foundations of our health care economy.

There have been other efforts to harness the power of the business community to improve health care. My organization, the Leapfrog Group, is one such effort, founded by Business Roundtable in 2000 to address quality and patient safety in hospitals. Based on what we’ve learned over the past 16 years, here are three key principles for the alliance to start with:

  1. Lowering costs won’t automatically lower prices.

Whenever the subject of cost reduction comes up, some providers tout the enormous cost savings they have put in place through improved efficiencies, better technology or less invasive procedures. Recently, they have also pointed to the potential of large hospital system mergers to reduce costs through economies of scale. But employers are right to wonder why their own healthcare price tag continues to rise, despite these marvelous advances. Why don’t they see the cost savings?

Simply put, cost savings to the provider are not the same as cost savings to the purchaser. This sounds like such an obvious point. But the obfuscation over whose costs are saved persists and trips up progress year after year, with purchasers left scratching their heads. The alliance members will succeed in cutting their own prices only if they clearly demand that cost-reduction strategies have visible and substantial effects on their own bottom lines.

  1. Lowering prices won’t automatically lower costs.

Even if purchasers do succeed in lowering prices, the cost-reduction job is not done. That’s because the amount of waste in healthcare is profound. The Institute of Medicine estimates that as much as one-third of all costs are associated with unnecessary services, errors, infections and management inefficiencies. Not all providers are the same, and some incur much more waste than others. Whatever the price of a particular procedure, it’s no bargain when there are infections, complications and mismanagement—or if the procedure wasn’t medically necessary in the first place.

This is not chump change, this is game change. A 2013 study in the Journal of the American Medical Associaton (JAMA) reported that, on average, purchasers paid $39,000 extra when a patient contracted a surgical site infection. That excess doesn’t show up on the claim as a line item called “waste.” It is buried in a series of excess fees, tests, treatments and time spent in the hospital. Employers intent on cutting costs must factor wastefulness into the pricing equation.

  1.  Focus on the market incentives.

Our system of costs and pricing creates perverse incentives. The more a provider wastes, the more it can bill the employers. New financing models are slowly emerging, aimed at achieving value—the novel idea that payments align with patient outcomes. One of the most promising models is called “bundled pricing,” in which a health system is paid one total price for a particular procedure, including physician fees, radiology, hospital charges, etc. In this model, a provider is given incentives to actually reduce waste, so it maximizes profit under the bundle.

Some large employers have developed bundled pricing arrangements with a select group of health systems, for a select group of procedures. Walmart is a leader in this, as are employer members of the Pacific Business Group on Health. What have they found? A significant reduction in waste and better care for employees.

Another promising use of bundled pricing is coming from international medical tourism. Health services and pharmaceuticals are often much less expensive overseas than in the U.S. Most international providers offer bundled pricing and concierge hosting services. For example, Health City Cayman Islands offers bundled prices for certain heart and orthopedic surgeries, including all facility and physician fees, along with pre- and post-operative care at a lovely beachfront hotel. Its prices are one-fourth to one-fifth those for comparable services in the U.S.

The problem with medical tourism: determining the quality of international providers. Employer groups, like the Health Transformation Alliance, must address this in their work. Once again, waste and quality need to be factored into the cost equation.

3 Surprising Hazards Of Worksite Wellness

In an entirely entertaining Forbes online article, a truly effective healthcare leader, Leah Binder, lists the following three hazards of worksite wellness programs:

1. Dismaying and Alienating Employees. Who today doesn’t already know that smoking is unhealthy?

2. Bad Programs Don’t Save Money. Too many wellness vendors simply fabricate results.

3. Potential Harm to Employee Health. False positives on wellness-driven testing can lead to employee harm and huge, unwanted spending.

Binder writes “I don’t come to this conclusion lightly.”

Further, “…I believe we must call out poorly designed programs that prey on well-meaning employers and other purchasers.”

She points to a great book by on this topic by my friends and colleagues Vik Khanna and Al Lewis, Surviving Workplace Wellness…: With Your Dignity, Finances and (Major) Organs Intact.

Federal Health Rule Hits Firms for Millions

America’s Health Insurance Plans (AHIP) gather for their big meeting in Nashville this week, with many significant issues on the agenda, some of them headline news. For instance, industry insiders are watching closely the Supreme Court’s pending decision this month on King v. Burwell—which could remove health insurance subsidies in states that opted out of Obamacare’s Medicaid expansion.

There’s a less well-known but extremely important issue many business leaders want AHIP to tackle this week: “embedded MOOP.” That sounds like perhaps a form of fertilizer that could be used in a garden but actually refers to a, well, variant of fertilizer that Washington is known for producing: Embedded MOOP is a brand new regulation threatening to cost employers and other purchasers hundreds of millions of dollars this year alone.

MOOP stands for “Maximum Out of Pocket,” and it refers to the maximum amount your health plan will require you to pay for your health services in a given year—over and above what you contribute to your premiums. After you’ve paid out your deductible and copays and reached the MOOP, your health plan pays 100% of your subsequent bills for the rest of the year.

“Embedded MOOP” focuses on the out of pocket maximums applied to family plans. Typically, the MOOP for a family plan is two or three times higher than the MOOP for an individual plan. So, say your plan has a MOOP of $6,000 for individuals and $12,000 for families. You have a hospital stay that costs $50,000, for which your plan pays 80%, so you are responsible for the remaining 20%, or $10,000. If you have an individual plan, you won’t have to pay the full $10,000, because you would hit the maximum out of pocket cap at $6,000. But if you are part of a family plan, you would, because you haven’t hit the family plan maximum of $12,000.

That’s how things worked until a couple months ago, according to government directive. But now, for certain kinds of high-deductible health plans, the federal government just issued an ironically named “clarification,” which confusingly reverses those earlier requirements, effective immediately, or maybe effective in 2016–the lawyers watching this say the regulation can be read either way. The “clarification” to federal health rules says that MOOP applies separately to each individual “embedded” in a family plan, so each person covered under a plan has the individual cap.

Back to you in your hospital bed with the $50,000 bill: In this new interpretation of federal health rules, you won’t pay more than the $6,000 individual MOOP regardless of whether you are covered under a family plan or an individual plan.

Admittedly, a $4,000-plus windfall sounds like good news. Who cares if health plans don’t like it? But here’s the problem: The plan doesn’t pay the $4,000; your employer does–and so do you.

AHIP estimates 17.5 million Americans are enrolled in the kind of plans subject to this federal health rule on embedded MOOP. We might reasonably estimate that 3% of them, or about 500,000 people, will encounter a major hospital bill this year. If employers lose thousands of dollars on half of them, or even a quarter of them, there’s not enough room on my calculator for the zeroes in the dollar-figure estimate of loss. The bottom line: Employers will be out hundreds of millions of dollars because federal officials changed the rules mid-game.

Employers have to cover this loss right now, so many are hastily redrafting their HR budgets as you read this. The money will come from employee premiums, lower wage increases, reduced benefits or creating fewer jobs. And even though the new regulation sounds friendly to families on its face, in fact it makes already expensive family coverage even less affordable, because family premiums are likely to skyrocket with this new rule in place.

This is not the first time lawmakers cavalierly forced business to shoulder a major new healthcare cost. In fact, it’s a tradition. Commercially insured patients pay orders of magnitude more for each individual service than taxpayer-funded payers like Medicare and Medicaid do. That amounts to a subsidy to the tune of hundreds of billions of dollars transferred wholesale to the healthcare system from the workers in America’s economy.

Policymakers don’t need to send certificates of appreciation to purchasers for their willingness to pay for the U.S. healthcare system. But, at the very least, government could stop scolding and punishing business for that investment. Alas, in 2018, employers will be hit with the so-called Cadillac tax, an excise tax on purchasers that have the audacity to spend too much on healthcare. And last year, purchasers were admonished by a federal agency for investing in employee wellness programs that they designed explicitly in line with Obamacare. Now, we have the embedded MOOP pummeling of 2015.

In the short term, the administration needs to revisit this regulation pronto, and we hope to see AHIP make the case this week. In the long run, it’s time lawmakers treated purchasers’ role in healthcare with less disregard and more common cause.

4 Goals for the NFL’s Medical Officer

On the cusp of the 2015 Super Bowl, NFL Commissioner Roger Goodell surprised fans with an unusual focus for his annual state of the league press conference: player safety. He announced that the league would hire a chief medical officer to oversee the league’s health policies. This is good news. But first and foremost, Goodell must firmly plant the goalposts for this new hire. What does the new top doc need to accomplish to win? Here are four goals to start:

Goal One: Make Concussions Rare

In 2014, there were 202 concussions among players in practice, preseason and regular-season games. With approximately 1,600 players, my back-of-the-envelope math calculates one concussion for every eight players — in one year alone.

The new chief medical officer will have some momentum to build on to address this issue. In recent years, the league has implemented tough restrictions about when and under what conditions players can return to the field after an injury. The league has also improved equipment and changed the rulebook to penalize hits to defenseless players. The number of concussions is down by 25% from 2013, and defenseless hits are down by 68%. The new medical officer needs to accelerate that progress.

Goal Two: Research and Enforce Best Practices

To make a major impact on players’ health and safety, the new medical officer will need to rigorously examine the protocols in place to protect players. No one can argue with the notion that, at its core, football is a contact sport; injury is inevitable. However, some injuries are entirely preventable, yet they can easily topple the career of a valuable player. In my world, we’d call this kind of injury a “Never Event” — it should never happen.

The new medical officer needs to consider how the team functions as a whole, get solid research on best practices and create enforceable guidelines for prevention. To protect past, current and future players, he or she will have to shake up the entire enterprise and institute a culture in which making the play is balanced with protecting the player.

Goal Three: Demand Safety off the Field, Too

One in eight is a frightening statistic for concussions, but, surprisingly, players may be safer on the field than in a hospital. Players — and league employees and their families — depend on the healthcare system just like the rest of us. True, players often receive treatment at elite centers of care, at the hands of celebrated physicians. But our research finds that even places with big reputations can be equally unsafe. One in six admissions to a hospital results in an adverse event, and as many as 500 people die every day from preventable errors, accidents and injuries in hospitals. Even the most highly regarded institutions struggle to keep patient safety a top priority.

But some providers are much safer than others, and the new NFL medical officer has a role to play in helping players and employees pick the winners. He or she can demand data on safety of hospitals and physician practices and use that data in decision-making. The NFL can structure health benefits packages to favor safest providers, encourage performance-based payment models and give employees transparent and candid information on quality and safety to encourage them to select the safest care. Many other employers and unions are successfully deploying these strategies, and they have good tools to help.

Goal Four: Be a Champion

Championship  isn’t exactly a standard element on boilerplate job descriptions, but it’s critical to this one. The NFL knows how to spot champions, and it should expect no less from this new hire.

The new chief medical officer needs to inspire a good number of people: teams, to change the way they function; youth, increasingly wary about the game; retired players, whose health issues cast a shadow over the whole sport; and the millions of fans who love American football.

Being a champion is the most important goal, because the NFL has the opportunity to go beyond defending its safety record and start playing offense. As a top-tier brand, the NFL could be a national leader, ensuring that safety comes first in America, on and off the field. By taking the right steps to protect players and the league, the new medical officer can inspire all the fans, not only to embrace the game, but to champion a healthier America.

This article was originally posted on Forbes.com.