i know exactly what i was doing on may 10, 1998

My heart aches, I'm so proud of him.

Happy birthday, 12 year old.

Fragmented Systems Don't Mean Fragmented Care: What Accountable Care Organizations Can Learn From Employer-Purchasers

When the Commonwealth Fund has nice things to say about "disease management," the Disease Management Care Blog pays attention. Check out this Purchasing High Performance newsletter interview with Jerry Burgess of an employer-based health care coalition called Healthcare 21 and Chris McSwain of Whirlpool Corporation.

Burgess and McSwain agree that it's possible for an insurer/employer to have multiple vendors including disease management firms in a well functioning coordinated mix of health care services.

The DMCB likes this article, not only because it speaks to the merits of the Unified Field Theory approach to care management, but because it also describes a template for leaders of budding Accountable Care Organizations to consider. Like employer-purchasers described in this Commonwealth Fund article, ACOs are also going to find that having a hospital and a physician network are not enough. They'll need the help of service vendors to help manage their populations' clinical outcomes and costs.

Here's how to do it:

1) Get the principals in a room once a year to make sure everyone understands the need to work with each other (patient referrals, data transfer are two examples),

2) Manage the vendors like a "supply chain" that exists to improve health and productivity,

3) Don't get too cozy with the vendors,

4) Demand objective measurement and reward good performance in outcomes based contracting,

5) Find vendors that can be in it for the long term; three year contracts should not be unusual.

As an aside, the DMCB will point out that disease management organizations (DMOs) have a track record of performance when it comes to coordinating services with other entities, working in supply chain mode, being all business, emphasizing measurement and contracting over multiple years. They'll get it. The challenge for ACOs will be to get the other providers, hospitals, behavioral health suppliers and pharmacy managers to work together.

In fact, the DMCB wonders if helping ACOs to coordinate the other vendors may turn out to be a future role of DMOs. We'll see.

Hat Tip to a certain Maven for the alert about this article. You Know Who You Are.

(There's lots more on Accountable Care Organizations here)

Are Wellness & Prevention the Solution to the High Cost of Health Care?

The laconic Disease Management Care Blog attended a business leader meeting over the weekend. There were a series of presentations (this guy truly rocked), but it wasn't until a panel discussion on the promise of genetic medicine that the curmudgeonly DMCB was unable to resist raising its hand. Noting that insurance claims expense from genetic testing can run into thousands of dollars per patient, it asked the panelists to reconcile the cost of their enthusiasm with runaway health care inflation.

The panel gave the right answers, but that isn't why the DMCB is posting this tale. During the subsequent coffee hour, it was approached by a print media executive and was asked a simple question: isn't the purpose of covering wellness and prevention in the first place to fix things so that we can afford everything else - like genetic medicine - in health care?

The DMCB was aghast. It recovered its game face, however, and answered the question "no."

There are three good reasons for the uncoupling of wellness/prevention from sickness care which, in turn, helps explain how health insurers approach issues like genetic medicine.

1. Even if $2 to $4 are saved for every dollar spent on wellness activities, the total number of dollars revolving around wellness and prevention for the average health insurer or employer pale in comparison to the short term and unbelievable amounts of money being spent on, for example, testing and treatment for cancer.

2. Even if there is an eventual long term wellness and prevention "dividend" for diseases like cancer and heart disease (which is doubtful), we have a cost trend problem in 2010 with no end in sight.

3. Last but not least, a former editor of the New England Journal of Medicine pointed out to the young DMCB that money saved in one sector of health care doesn't mean that the savings get transferred to other sectors. He was right: actuaries and CFOs don't manage insurance that way.

The DMCB doesn't necessarily agree with the Carter-esque view that the Tooth Fairy is dead. American genius will make genetic testing - and all the other good things in our future - affordable. In the meantime, the belief that we can use wellness to "save money" and use that to pay for whatever we want today regardless of cost is a pipe dream.

The Medical Loss Ratio MLR and Disease Management: Can the Notes Be Cut?

In the movie Amadeus, Emperor Joseph II criticizes young Wolfgang's "quality" music with the observation that "....there are simply too many notes, that's all. Just cut a few and it will be perfect!"

The same kind of logic has been applied by the same kind political class to the health insurers' medical loss ratio or "MLR." According to the Patient Protection and Affordability Care Act (PPACA), "standard" health plans must now, depending on the type of business line, have a MLR of at least 80% or 85%. This is interpreted to mean that of every dollar in insurance premiums collected by insurers, at least 80 or 85 cents has to be spent on medical care. The remainder (15 to 20 cents) goes to insurance functions, such as marketing, investing, actuarial activities, underwriting, claims processing, associated overhead and profit or surplus. A low MLR could suggest skimping on medical services, bloated administrative overhead or excessive shareholder returns. Therefore, a high MLR is good, right?

Not exactly. Check out this still timely and well written piece on the MLR by James Robinson appearing in a 1997 issue of Health Affairs. He points out that the line that separates money spent for medical services from the money spent for insurance services is very blurred. Insurers are increasingly using premium to administratively promote efficient and high quality medical care, while providers are assuming varieties of insurance-like risk-based arrangements such as capitation, upside shared savings and pay for performance.

Accordingly, says Dr. Robinson, it's easy for a MLR to become "skewed." Being in a market with small number of providers, a large amount of capitated arrangements, a limited number of insurance products, a lot of large customers or government contracts and little attention to quality all require less administrative support and will therefore have a higher MLR. On the other hand, health insurers with large networks that insure significant numbers individuals and small businesses, pay claims on a fee for service basis and have NCQA accreditation are likely to have a lower MLR.

What's more, the MLR is not necessarily a good gauge of insurer efficiency. The MLR was originally developed to help regulators and investors assess health insurer solvency, creditworthiness and profitability. That's because a rising MLR could herald a looming inability of an insurer to pay its debt obligations. The converse assumption - that the MLR measures health plan quality or waste - is more uncertain. In addition, there are no studies that have shown that there is a correlation between the MLR and a) the health status of or b) the total administrative expense per managed care enrollee.

These inconvenient truths haven't stopped a hostile Congress from piling on insurers even after PPACA was passed. Much like Emperor Joseph, Senator Rockefeller prefers that health insurers not have "too many notes" in their administrative expenses and simply solve the problem by eliminating some of them. The good news is that PPACA requires that the National Association of Insurance Commissioners (NAIC) figure out just what "notes" belong among the legitimate administrative expenses of a health insurer and which ones can be assigned to the MLR.

It won't be an easy task. For example, the U.S. Senate report linked above decries the expensing of nurse "hotlines, health and wellness, including disease management and medical management and clinical health policy” in the MLR and cites them as examples of insurer shenanigans aimed at putting profits over patients. Fortunately, the DMAA The Care Continuum Alliance has come out with a more common sense position that reflects the realities described in the Robinson paper linked above.

The DMCB recalls that it helped lead a disease management program that was, in an abundance of regulatory caution, 'expensed' as an health plan administrative cost. The nurses took care of patients. We worried about blood glucose control among persons with diabetes, made sure asthmatics used their inhalers properly and worked hard to keep patients with heart failure from being unnecessarily admitted to the hospital. Based on Robinson's insights about the MLR and a common sense interpretation of what's going on in the trenches of disease management, it's silly to categorize population-based care as an "administrative" function.

Back then, the expensing of population-based care was a local and minor issue. Thanks to this now being the subject of an inflexible, clumsy and one-size-fits-all act of Congress, it's become far more important. The DMCB hopes that the NAIC will recognize that disease management makes beautiful music and that notes cannot be simply cut.

(There's lots more on Accountable Care Organizations here)

haven't done this in a while

Haven't blown my own horn in at least a few weeks.

Alysa, who I met last year when she ran a wonderful workshop on writing your way through breast cancer (at the Living Beyond Breast Cancer conference for women living with metastatic breast cancer). I introduced myself and gave her my book.

Yesterday, Alysa emailed me to say that she'd written a review of my book for oncolink and that she thought it would make me smile.

It did.

Accountable Care Organizations: Here's a Manuscript That Helps Us Move From the PPACA Legislation to Actually Making It Happen

After cracking open the latest May 5 copy of JAMA, the Disease Management Care Blog was going to read this article that showed a correlation between hospital readmissions and the number of days from discharge to outpatient physician follow-up. It was stymied, however, by a methodology that relied on 'hospital-level rates of early follow-up as medians with interquartile ranges.' 'Bleh!' said the DMCB, especially because the admission rates only differed by about 2%. This appears to be a good research idea gummed up by needlessly complicated statistics.

So instead, the DMCB moved on and turned its attention to this commentary in the same issue of JAMA by Stephen Shortell (Berkley) and Lawrence Casalino (Cornell) titled "Implementing Qualifications Criteria and Technical Assistance for Accountable Care Organizations." Don't worry if you can't get to the full manuscript, because the DMCB is here to summarize and commentize for you.

Recall that ACOs are the golden boy of D.C. policy makers, who view these entities as the next best thing to integrated delivery systems. The Patient Protection and Affordable Care Act (PPACA) says (on page 277) that the Secretary of HHS has until January 1, 2012 to establish a Medicare "shared savings" "program" (which sounds more permanent than a "pilot" or a "demonstration") involving ACOs that have a "legal" and "administrative" structure, can be accountable for cost and care over three years, have enough primary care providers, care for at least 5000 beneficiaries, have "patient centered care" and other quality "processes" in place and can provide timely and properly formatted "information" to the HHS Secretary. Examples of ACOs named in the legislation include provider group practices, individual practice networks, hospital-provider joint ventures and hospitals that employ providers.

"Shared savings," generally means that ACOs can expect to receive a fraction of Medicare's reduced claims expense that would occur thanks to their improved efficiency and quality of care.

If you're thinking 'uh oh,' you're not alone. Physicians and hospitals thinking of throwing an ACO hat in the "program" ring will need to ponder the a) up front costs necessary to create a truly high performing and cost reducing organization, b) reduced cash flows thanks to (for example) fewer hospitalizations and less testing, c) downside of a risk arrangement where costs could go up instead of down and d) track record of a fickle and cumbersome Federal bureaucracy.

Despite the risks, there will probably be no shortage of physician groups and hospitals that want to form ACOs and join the "program." Shortell and Casalino have some advice for the Feds on how to deal with them.

First, divide them into three categories:

Level I: these organizations meet the minimal criteria described above and get to share in upside savings, but little else

Level II: these organizations, as determined by a tighter and more comprehensive data reporting ability can not only share in upside savings, but also agree to take some downside risk.

Level III: these organizations have it all, can report everything and as a result get paid through partial or full capitation, laced with performance bonuses.

Secondly, provide technical assistance.

Such assistance would include help creating "organizations, legal, financial and budgeting relationships" as well as redesigning practices, implementing process improvement, fostering teamwork, getting an electronic health record up and running, scheduling patients for timely access, using e-mail and group visits and developing "patient self management support programs." To fund all this, the authors suggest that some of the money being targeted at implementation of EHRs could also be used to support ACO development.

And so it goes. The DMCB expects policymakers will think about this framework while they're writing up the regulations that define exactly how the HHS Secretary will run the "program." They don't have long to do so, since the deadline is about 1½ years away.

In the meantime, the DMCB also thinks

1) this manuscript is a good and necessary next step in the journey from legislation to actually making this happen. If your organization is thinking about pursuing an ACO, this should be in your knowledge library.

2) While the DMCB agrees that ACO assistance will be necessary (the disease management industry is particularly savvy about risk and has the scars to prove it), we shouldn't kid ourselves: no one has experience in setting up one of these newfangled ACOs. What's more, the money saving track record of many of the redesign elements described above is shaky at best.

3) that it will be interesting to see how willing newly formed ACOs will be to enter into relationships with the Feds that involve downside risk. As the regulations get written, policymakers will need to think about the wisdom of letting organizations put their endowments or brick and mortar up as collateral.

(There's lots more on Accountable Care Organizations here)

The Latest Cavalcade of Risk Is Up!

A remarkable repast on risk awaits you at the latest Cavalcade of Risk, skillfully hosted by Jason Shafrin of The Healthcare Economist Blog. There is no shortage of delectables for every taste. Check it out, there is nothing bad on this menu!