Month: June 2020

Outlier Wellness

Outlier Wellness

Posted on by jabittan
“Only a handful of outlier health problems are preventable in any real sense,” writes Dave Chase in his book The Opioid Crisis Wake-Up Call, “about seven percent, according to my colleague, Al Lewis.”

 

My last post was about the cost of outliers, how just a small percentage of patients account for a huge percentage of overall healthcare spending in the United States. We know that there are a few unlucky individuals whose healthcare is incredbily costly, yet they are not the first people we think of when we think about excessive healthcare spending in the United States. As a result, we fail to truly understand the weaknesses of our healthcare system and how our healthcare dollars are actually being spent. We introduce programs that don’t actually address the real problems in escalating healthcare costs.

 

This is where the ideas about and problems with wellness programs begin. Chase continues, “While the notion of workplace wellness and prevention was a noble idea, we now know that company after company is spending a huge amount of plan dollars and resources trying to do something that can’t be done.”

 

The idea of workplace wellness programs is to encourage healthy living habits and lifestyles of employees. Since our employers are usually paying a lot for our healthcare coverage and sometimes directly for our healthcare, anything employers can do that makes employees more healthy, outside of the healthcare space, will reduce the healthcare costs and needs of employees, generating a return on investment in the long run.

 

Unfortunately, the people who cost the most, who really drive incredibly high healthcare spending in the United States, don’t suffer from conditions that can be addressed through workplace wellness programs. Your plan to encourage workers to walk more, to buy foam rollers for the office, and to reward employees who count calories is not going to prevent an employee from being diagnosed with a congenital heart arrhythmia, won’t stop a rare blood disorder, and isn’t going to prevent any other unpredictable obscure disease from costing thousands or millions of dollars for your health plan.

 

What is worse, wellness programs usually just encourage those who are already living healthy lifestyles to flaunt how healthy their lifestyle already is. You likely won’t reach or encourage the employee who has a second job someplace else, the single mom with two kids who is just  trying to get dinner on the plate each night, or the employee who has been discouraged and dejected their whole life. An Apple Watch or an iPad isn’t going to solve the problem of a long commute, an unsafe neighborhood, or past trauma. We spend a lot of money on wellness plans that don’t address the real upstream social determinants of health for many employees, and can’t possibly address the health problems of the most expensive outliers in our healthcare system. The idea of workplace wellness programs has the right spirit, but the truth is these interventions need to happen at a much larger level than what the employer can really address.
The Cost of Outliers

The Cost of Outliers

Posted on by jabittan
Malcolm Gladwell is well known for his book Outliers, about people who become extremely successful thanks to intense practice, good luck, and supportive situations that enable their early practice and skill development. If you have read his book, you probably have at least a little exposure to the idea that some people are unique and can have a surprising influence on the world. But one area you probably haven’t considered with the impact of outliers, unless you study healthcare economics, is in medical spending.

 

In his book The Opioid Crisis Wake-Up Call, Dave Chase explains the issues with outliers in our system. “Six to eight percent of plan members are spending 80 percent of the plan dollars,” Chase writes.

 

We probably imagine that our healthcare costs are so expensive because so many American’s don’t eat well and don’t exercise. I have argued in the past that we don’t support a universal healthcare system in our country because many people think the problem is that others are not taking responsibility for themselves and are simply fat and lazy, costing more for the rest of us. The reality is that a huge amount of our total healthcare spending, as much as 80% according to Chase, is from a tiny percent of the population. Our outliers are driving the cost of healthcare up at an alarming rate, and it is not simply because these outliers are fat and lazy.

 

The people who spend the most on healthcare mostly have rare diseases, congenital conditions, or need extreme emergency acute care. Chase writes, “They tend to have complex health problems, usually with multiple comorbidities.” Because we don’t recognize that most of our spending goes toward outliers, and because we are biased against a vision of fat and lazy people, we adopt policies that bankrupt these outliers who often were simply born with bad luck when it comes to health.

 

What is really detrimental to our system is that these outliers are often misdiagnosed. Chase writes, “In any given year, about 20 percent of the outlier group is completely misdiagnosed. This means that about 16 percent of plan dollars each year are being wasted on treatments for diseases the patients don’t have.” It will always be difficult to treat outliers. They are not typical patients, and have multiple health issues that interact in complex ways. But because we don’t make their care easy and because healthcare in the United States has so many barriers, we end up failing this population, and the errors and failures mean that we waste a huge amount of money and resources in their care. It doesn’t just cost the individual, but everyone on the healthcare plan.
Healthcare Safety and Data

Hospital Safety & Data

Posted on by jabittan
One problem with healthcare in the United States is that consumers don’t control their data and the information about them. Even the employers of healthcare consumers, who are paying for the services provided to patients and often responsible for whether patients have healthcare coverage at all, don’t have access to any of the healthcare data of the employees they pay to cover. Healthcare information is protected by providers and guarded by insurers.

 

A troubling result is that consumers and employers often don’t know much about the quality of care provided at a hospital or from a given provider, and don’t know about the safety record of providers and hospitals. Outcome measures are sometimes protected by law, and are other times hidden behind complex systems that prevent employers and consumers from finding and understanding the information.

 

Dave Chase compares the problem this creates to airline travel in his book The Opioid Crisis Wake-Up Call, “No corporate travel department would allow an employee to fly on an airline that suppressed its safety records (even if the FAA allowed it). In the same way, it’s unconscionable to blindly send an employee to a hospital with little or no information on its safety record. If the hospital suppresses that information, go elsewhere and tell your employees why.”

 

There are many ways in which we treat the healthcare system differently than other sectors for no apparent reason. I wrote about the way we don’t consider healthcare broker’s conflicts of interest in the same way we consider financial adviser’s conflicts of interest. In a similar example as above, we heavily scrutinize any spending by employees for lunches or hotel stays on trips, but we don’t apply the same scrutiny to hospital billing. Our failure to consider safety the way we would for employee travel, even though many employers spend more on their employees healthcare than on their travel, is a failure of how we think about the system.

 

I think that Robin Hanson and Kevin Simler explain a little of why this is in their book The Elephant in the Brain. We don’t know what medical care is effective and we don’t know which systems and providers are safe, but we do know when someone took time off work for care. We can signal our support for that individual with cards, balloons, and messages about how much we value them and hope they recover quickly. Much of our healthcare system and how we treat it is based on signaling. Accessing care shows others that we have resources and powerful allies who care about us. We also use healthcare to signal to others how much we care about them and what a valuable ally we would be to them. The result is costly, in terms of dollars and health and safety problems.

 

We have to get beyond this signaling mindset and approach to healthcare if we want to rein in prices and have a safe and effective system. If we want our healthcare to be sustainable for the long run, it can’t be built around signaling, but must actually be built around effective solutions. Employers have an important role to play by demanding the information they need to be accountable in providing valuable health benefits to employees. Hospitals, providers, and insurance companies can’t continue to monopolize and hide patient data, preventing employers and patients from making smart and economical healthcare decisions.
Another Note on Healthcare Brokers

Another Note on Healthcare Brokers

Posted on by jabittan
A point that Dave Chase makes in his book The Opioid Crisis Wake-Up Call is that employers are not fulfilling their fiduciary duties to their employees with regard to the healthcare products that they offer as benefits. I mentioned earlier that many companies have an HR person in charge of health benefits who doesn’t really understand health insurance and whose main goal is to not be yelled at by other employees for problems, high costs, and restrictions with their health insurance plan. The result has been a bit catastrophic, with plan costs rising continually, insurance companies and major healthcare systems ganging up on uninformed benefits managers, and healthcare brokers taking questionable bonuses from various arms of the healthcare sector.

 

David Contorno, founder of a company called E Powered Benefits, contributed a chapter to Chase’s book specifically highlighting many of the problems with the current broker arrangements that companies face. He writes, “Recently, a Blue Cross health plan offered their brokers a $50,000 reward for switching self-insured clients back to more lucrative, fully-insured plans. In sectors like financial services, that kind of undisclosed conflict could land a person in jail. In healthcare, however, such clear conflicts of interest are common and considered business as usual.” While this kind of broker arrangement is deplorable, the heat should not only be on the brokers. Employers are also responsible for ensuring they are partnering with brokers who are free from conflicts of interest, and there are groups now popping up to help employers identify brokers who don’t engage in such shady behind the scenes agreements with health insurance companies and healthcare systems.

 

Employers are responsible for the sound management of the financial resources they manage for their employees, whether it is retirement savings accounts or health insurance plans. Employers purchase and manage health insurance products for employees, however many of the healthcare decisions are made by people who don’t fully understand them, with the goal of not making people too angry, and with direction from actors who are not as independent as they claim. Chase worries that there could be an explosion of lawsuits against companies for operating in this system. Lawsuits holding companies responsible for out of control increases in healthcare plans could dramatically shake-up the way health insurance is provided and purchased in the United States. The bottom line is that as things stand now, the financial considerations of employees, the people who will use the product purchased for them, is not one of the main considerations in the purchasing of healthcare plans, and a lot of shady looking things take place among employer-broker-provider-insurer relationships.
Guidance Toward High Value Care

Guidance Toward High Value Care

Posted on by jabittan
In his book The Elephant in the Brain, Robin Hanson explains that a lot of medical care and healthcare services are more about signaling than about the value they bring to the patient in terms of improved health and effective management or treatment of a given condition. Healthcare has a lot of signaling, showing others that we make enough money that we can go do something for our health, pushing others to get care to show how much we value having them be healthy, and giving us or others a chance to show how much we know and understand the human body. However, not a lot of what we push people toward really demonstrates that it adds a lot of value.

 

This is a problem that Dave Chase thinks is a big contributor to our nation’s healthcare woes in his book The Opioid Crisis Wake-Up Call. Chase is critical of unnecessary services and a medical system that pushes people toward care, without providing means to ensure that the care we push people toward is actually valuable. He recounts a conversation he had with Dr. Martin Sepulveda, “indiscriminate provision of health care services – absent efforts to help people understand how to use those services – leads to voracious appetites from both patients and providers for services that add little value but add a lot of cost to the individual, company, and society.”

 

When a child runs to their mother for a kiss on a bruised knee, the kiss doesn’t actually add any value in terms of helping heal the child’s bruise. But the care provided by the mother does signal her love for her child, signals to the child that they are valuable and important, and signals to others that the child has allies who will aid them during a time of need. The example is extreme, but if you look close enough, you will see some of the same aspects at play in many of our healthcare interactions.

 

Increasing access to healthcare without helping people understand what care they should seek, without helping people understand what options they really have, and without guidance toward high value care, means that we will use healthcare in a wasteful manner. Paying providers just by the number of procedures they do, and not by how much they help patients, encourages unnecessary medical procedures. Telling patients that if they value themselves they will go to the doctor every time they feel a little off will lead to patients overusing primary care. And pushing people to the emergency room every time they say they don’t feel well could crowd our ERs and delay care for those who really need it. The problem is difficult to solve, and I want to acknowledge that it is hard to know what care is really appropriate and what is wasteful signaling. That is the point that Chase makes. Without more transparency and clarity in the system, we won’t really know what medical services we should and should not pursue, and we (along with providers) will likely overindulge in high-signaling low-value care rather than medical treatments that are really useful and meaningful.
Steel, Coffee Beans, and Healthcare

Steel, Coffee Beans, & Healthcare

Posted on by jabittan
“GM spends more on health care than steel, just as starbucks spends more on health care than coffee beans.” Dave Chase writes in his book The Opioid Crisis Wake-Up Call. “For most companies, health care is the second largest expense after payroll. This puts you in the health care business.”

 

It is incredible to think that major companies like Starbucks and GM spend more on healthcare than on the products they produce that make them stand out. It feels incredibly troubling and a bit counter to our American pro-business narrative for our companies to spend so much on something that is not a key part of their business and that is not part of their core competency. But as a quote from Warran Buffett that Chase uses to open the 11th chapter of his book says, “GM is a health and benefits company with an auto company attached.” 

 

I am among those who think that one of the greatest failures in America’s healthcare past was to allow businesses to provide health benefits with a tax break for the company. Rather than paying employees more money, which would come with higher tax rates, companies have been allowed to provide health benefits, which instead come with tax breaks. This is how we have fallen into a system where the quality of care, the structure of access to healthcare, and what you pay is largely determined by how well your employer does with navigating the complex healthcare landscape. You might work for someone like Harris Rosen who has figured out how to provide large amounts of preventative services with low costs, or you might work for a cash strapped organization with a random HR person trying to make healthcare plan decisions while also dealing with that employee who won’t take down the inappropriate calendar in their office and is simultaneously trying to review several applications for a new position.

 

The reality of healthcare spending by companies shows us that they cannot reasonably expect to have an inexperienced HR person handle healthcare benefits. The spending is too high for someone who is not completely focused on industry trends and changes, someone who doesn’t understand how insurance companies and PBMs work, and someone who has multiple other responsibilities to manage. If we want to keep private health insurance tied to our jobs, then we need to demand better from our employers and our public policy.

 

When we discuss the costs of healthcare in our nation, and when we consider whether a single entity (the Federal Government) should provide health insurance versus having everyone either buy private insurance through individual markets or receive health insurance through their employer, we need to consider the reality of business spending on healthcare. We need to ask whether GM should be producing cars and accountable to so many employees for their basic health needs. Maybe there is still a space for GM to be involved with the health of their workforce, but should they be the entire determining factor, spending more on healthcare than the steel that goes into the cars they produce? These are the questions I would like to focus on when we think about how we should access and pay for the care we receive.
Data Liquidity

Data Liquidity in Healthcare

Posted on by jabittan
Another piece of Dave Chase’s Fair Trade for Health Care as outlined in his book The Opioid Crisis Wake-Up Call is what he calls Data Liquidity. It is the idea that you can access your data, see it, contribute to it, and take it someplace else if you want. The idea that you have control over your data – the data you produce in the world, the data which is about you – is a new and growing idea in the world.

 

Data Liquidity is a problem with all of tech right now, but it is especially important in the healthcare industry. Chase writes, “Care teams do their best work when they have the most complete view of a patient’s health status. Anything less comes with an increased risk of harm. Likewise, your employees should have easy access to their own information in a secure patient-controlled data repository  – including the right to contribute their own data or take it elsewhere.”

 

In the world of social media, people (at least in Europe) have demanded to have the right to see their data and have it completely removed from a company’s server if they desire. In the world of finance, there is increasing pressure on the big three credit rating companies to be more transparent in how they determine an individual’s credit score, and some lawmakers want to push the companies to change what they consider and evaluate when generating a credit score. Within healthcare, the debate is on who owns a patient’s medical records. Does the medical provider own the records? Does the patient own the records? What records does the insurance company own?

 

Chase argues that patients need to own their medical records and have access to and control over them. Since most people get their insurance through their employers, Chase argues that it is up to businesses and companies to demand data liquidity and transparency within the contracts they establish with insurers and healthcare systems. It is up to the businesses which contract with employers or health systems to set fair rules related to data that give employees data power and the ability to ensure all of their providers have access to all of their pertinent records.

 

From tech to finance to healthcare, people are starting to see the importance of controlling data, and Chase is hopeful that this revolution will improve healthcare quality, reduce unnecessary procedures, and reduce healthcare costs.
Transparent Price Bundles

Transparent Price Bundles

Posted on by jabittan
One of the items that Dave Chase calls for in his Fair Trade for Health Care Plan in his book The Opioid Crisis Wake-Up Call is bundled prices. He wants pricing to be transparent and up-front so that patients know what services they are receiving, and he wants prices to be bundled for any procedures that we undergo.

 

As chase writes, “Imagine buying a car and getting a bill for the transmission six months later. You’d be livid, yet this sort of thing happens all the time in the healthcare industry.” If you have ever gone to an emergency room or had a surgery, you likely have experienced what Chase is talking about. You were probably billed for the procedure and the doctor who saw you, but then you might receive a separate facility bill some time later, or you might receive a separate bill from the anesthesiologist months after you thought you had finished paying everything from the procedure or emergency room visit that you had.

 

The amount of additional bills that keep rolling in from a single procedure can be frustrating and overwhelming. You likely get an explanation of benefits that to an ordinary person doesn’t explain much of anything, and then you get multiple bills from multiple entities with no clear explanation of why you are receiving another bill. The confusion can easily frustrated patients and prevent them from being able to contest what many see as unreasonable charges.

 

In Chase’s Fair Trade for Health Care, providers would have to be up front about any costs that patients are going to incur before a procedure or encounter. This would include bundling all prices together ahead of time to reduce surprise billing. A patient can try to anticipate charges, but if they can’t anticipate who will be billing them, they cannot truly have a sense of what a procedure will cost them. This is an unfair practice from healthcare providers and drives up costs for everyone.
Rationing Care

Rationing Care

Posted on by jabittan
A fear in the United States is that moving toward a universal healthcare system would mean that we would have to ration care. At this point, our doctors and nurses are already overwhelmed by the number of patients under their care. They already have packed waiting rooms and some specialties are booking out months and months in advance. Big cities have primary care providers with full practices, and rural towns don’t have enough doctors, especially specialists, for their population. Opening up the healthcare system to make sure everyone has affordable access means that the system will become even more backlogged, and care will have to be rationed to prevent it from being overwhelmed by a sudden flood of people scheduling appointments.

 

However, Dave Chase points out, in his book The Opioid Crisis Wake-Up Call, that we are already rationing care. He writes, “While some worry about rationing care, the volume-driven reimbursement system has always rationed choices by pushing us toward costly, invasive treatment options.”

 

In other words, we are already doing a poor job of allocating healthcare resources, and we are already rationing our healthcare in an inequitable manner. We are rationing it by price, shutting out those who cannot afford treatment and over-prescribing unnecessary treatment to those with the means to pay for it.

 

I think a big hesitation around universal healthcare in the United States is that we tie everything into deservingness. We have ideas of who deserves a raise, who deserves to have a nice car or a fancy office, and who deserves help and who doesn’t. Healthcare fits into that same system of deservingness, and giving healthcare to people for free means that we won’t be rationing care by the same system of deservingness. Suddenly, people who are wealthy who have been telling themselves and others how much they deserve their wealth and the things it brings would not be prioritized by the healthcare system, and priority would maybe be given to those with the most serious need or who had the greatest likelihood to benefit from medical intervention. This doesn’t seem to fit with our American story, and that is where the fears of rationing care may stem from. Like Chase said however, we are already rationing care, but not in the most effective and equitable manner.
Pharmacy Benefit Managers

Pharmacy Benefit Managers – Another Shadow Healthcare Actor

Posted on by jabittan
Unless you are a health policy person, I’m guessing you have not heard of pharmacy benefit managers, or PBMs. The Commonwealth Fund describes a PBM as “a company that manages prescription drug benefits on behalf of health insurers, Medicare Part D, large employers and other payers … by negotiating with drug manufacturers and pharmacies to control drug spending.” I always thought that pharmacy prices were set directly by my insurance carrier, in contracts that they had worked out somewhere along the line. But it turns out it is more complicated than that, and if you are like me, you will probably understand that PBMs provide some value, but also feel as though they are another actor doing little but driving the cost of healthcare up. For me, it is probably a bit unreasonable, but I hate PBMs.

 

In his book The Opioid Crisis Wake-Up Call, Dave Chase explains how pharmacy benefit managers negotiate rebates with drug companies and insurance carriers for specific drugs. However, the rebates don’t actually get back to the patients. Usually the insurance carrier and PBM are the ones who benefit from the rebate, and specific medications are pushed toward patients so the PBM and insurer can get the rebate. PBMs operate way in the back, and don’t get the same scrutiny as health insurance companies. They are hidden and shielded from risk, which means they have little incentive to put patients first.

 

“PBMs are typically paid by the transaction or employee; it’s not their money, so its not their risk,” writes Chase. “They may strive to handle claims quickly and efficiently, but their defenses against fraud and abuse of prescription drugs are antiquated. The shared responsibilities of the employer or government agency and the PBM create situations in which neither can see the whole picture. Criminals exploit this weakness, leading to a flood of prescription opioids on the street. The American insurance system has allowed this distribution explosion to occur, doing little to nothing to halt its growth.“

 

The quote above highlights the misaligned incentives with PBMs, insurers, and governments or employers. PBMs that hide data, favor medications for unclear reasons, and don’t face a lot of direct risk have created lots of problems for the American healthcare system. I opened with a discussion of pricing problems brought on by PBMs, and Chase’s quote shows how they have also contributed to the abuse of prescription opioids. Chase’s book, with examples like the ones laid out in this post, paints a worrying picture of pharmacy benefit managers in the United States. It is partly the complexity they add in the system, and partly the shady behind the scenes deals they are a part of that make me dislike them so much. This type of confusing and apparently unethical role for PBMs is also part of the reason that a lot of people want a universal healthcare system that is able to negotiate drug prices and set specific limits on some costs. It might not save everyone a ton of money in the long run, but it might be more ethical and clarify some of the most confusing parts of the system.