Non-profit hospital CEOs' compensation rises again | Modern Healthcare

The hutzpah is amazing!

Despite the ongoing public ire aimed at executives at not-for-profit healthcare systems because of their multimillion-dollar pay packages, their salaries and total cash compensation continued to rise at a far faster clip than average worker salaries in 2012—the most recent year with full data available.
Boards and compensation consultants continue to cite market forces—the need to keep up with peers to hold onto skilled healthcare leaders—as the main reason for the increases.
Total cash compensation grew an average of 24.2% from 2011 to 2012 for the 147 chief executives included in Modern Healthcare's analysis of the most recent public information available for not-for-profit compensation. Of those 147 CEOs, 21, or 14.3%, saw their total cash compensation rise by more than 50%.

Non-profit hospital CEOs' compensation rises again | Modern Healthcare

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Adventures in ‘Prior Authorization’ - NYTimes.com

 

DEAR Doctor,” the letter from the insurance company began. “We are writing to inform you that a prior authorization is required for the medication you prescribed.”

That’s usually where I stop reading. Thousands of these letters arrive daily in doctors’ offices across the country. They are attempts by insurance companies to prod doctors away from more expensive treatments and toward less expensive alternatives. To use the pricier option, you need to provide a compelling clinical reason.

In theory, this is a reasonable way to control costs by making it harder to prescribe costlier medications. In practice, it is a wasteful administrative nightmare, a cavalcade of recurring paperwork, lengthy phone calls and bureaucratic battles.

One study estimated that on average, prior authorization requests consumed about 20 hours a week per medical practice: one hour of the doctor’s time, nearly six hours of clerical time, plus 13 hours of nurses’ time. Other studies have suggested that prior authorizations could cost individual practices tens of thousands of dollars a year.

Adventures in ‘Prior Authorization’ - NYTimes.com

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At NewYork-Presbyterian Hospital, Its Ex-C.E.O. Finds Lucrative Work - NYTimes.com

 

When Dr. Herbert Pardes retired as president and chief executive of NewYork-Presbyterian Hospital in 2011, the institution honored him at its annual “Cabaret” fund-raiser. More than 1,000 guests dined on wild mushroom soup catered by the restaurateur Danny Meyer and listened to Kelli O’Hara, a star of “South Pacific,” serenade them with Rodgers and Hammerstein, Sondheim and Berlin.

But there were more thanks to come.

The next year, Dr. Pardes earned $5.6 million, which included $1 million in base salary, a $1.8 million bonus for his final year as chief executive and more than $2 million in deferred compensation, according to hospital tax records. That exceeded the amount earned by Dr. Pardes’s successor, Dr. Steven Corwin, who made $3.6 million that year.

Three years after retirement, Dr. Pardes is still employed by the hospital as the executive vice chairman of its board of trustees, a position that compensation experts say is rare in the nonprofit world, though much more common in for-profit companies

At NewYork-Presbyterian Hospital, Its Ex-C.E.O. Finds Lucrative Work - NYTimes.com

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Medicine’s Top Earners Are Not the M.D.s - NYTimes.com

THOUGH the recent release of Medicare’s physician payments cast a spotlight on the millions of dollars paid to some specialists, there is a startling secret behind America’s health care hierarchy: Physicians, the most highly trained members in the industry’s work force, are on average right in the middle of the compensation pack.
That is because the biggest bucks are currently earned not through the delivery of care, but from overseeing the business of medicine.
The base pay of insurance executives, hospital executives and even hospital administrators often far outstrips doctors’ salaries, according to an analysis performed for The New York Times by Compdata Surveys: $584,000 on average for an insurance chief executive officer, $386,000 for a hospital C.E.O. and $237,000 for a hospital administrator, compared with $306,000 for a surgeon and $185,000 for a general doctor.


And those numbers almost certainly understate the payment gap, since top executives frequently earn the bulk of their income in nonsalary compensation. In a deal that is not unusual in the industry, Mark T. Bertolini, the chief executive of Aetna, earned a salary of about $977,000 in 2012 but a total compensation package of over $36 million, the bulk of it from stocks vested and options he exercised that year. Likewise, Ronald J. Del Mauro, a former president of Barnabas Health, a midsize health system in New Jersey, earned a salary of just $28,000 in 2012, the year he retired, but total compensation of $21.7 million.
The proliferation of high earners in the medical business and administration ranks adds to the United States’ $2.7 trillion health care bill and stands in stark contrast with other developed countries, where top-ranked hospitals have only skeleton administrative staffs and where health care workers are generally paid less. And many experts say it’s bad value for health care dollars.

Medicine’s Top Earners Are Not the M.D.s - NYTimes.com

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Diagnosis - Insufficient Outrage - NYTimes.com

You don’t often see a good rant of moral outrage regarding health care in the Times, so here you go!

RECENT revelations should lead those of us involved in America’s health care system to ask a hard question about our business: At what point does it become a crime?

Diagnosis - Insufficient Outrage - NYTimes.com

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'Premium Shock' and 'Premium Joy' Under the Affordable Care Act - NYTimes.com Uwe Reinhardt

Community Rating Under the Affordable Care Act
Under the law, an individual health plan selling policies in the small-group and nongroup market — whether it sells policies through the state’s exchange or not — will be free to set its own premium for a given policy. But within a given age group, it must apply the same premium to all comers, regardless of their health and their gender. Furthermore, the health plan cannot reject any applicant willing to pay that premium, a provision called “guaranteed issue,” or cancel existing policies.
In other words, the X_i based on the individual’s health status in the equation above will be replaced by the average expected health spending per insured, with the average calculated over the insurer’s entire anticipated risk pool of insured members of a given age. To calculate the average, the insurer must consider as one single risk pool all enrollees in all health plans offered by the insurer, whether or not they are offered on the exchange.
This form of premium setting is known as “community rating.” Because it forces healthier individuals to subsidize sicker individuals through the community-rated premiums, it has been much debated.
Community rating invites “cherry-picking” by insurers — i.e., attempts to attract mainly low-risk applicants. To limit the profit potential from cherry-picking, there will be post-enrollment risk adjustments through which funds are transferred from insurers ending up with relatively healthier risk pools to those ending up with relatively higher risk pools.
The community rating under the law is not the pure version found in the social insurance systems of Europe (e.g., Switzerland, the Netherlands and Germany) or Asia, where even age is not considered in setting premiums. Rather, the American version is called adjusted community rating, because it does allow insurers to adjust the community-rated premium for the age of the applicant.
Age-adjusting is done by multiplying the community-rated premium for the youngest members in the expected risk pool by a standard, multiplicative age ratio to be used by all insurers. Thus the quoted premium can increase step by step with age, but only up to a multiplicative factor of 3. At a given age, smokers can be charged up to 1.5 times the regular premium.
The change from what was in place before the Affordable Care Act to post-law arrangements in the nongroup market can be illustrated graphically. In the chart below, we assume initially that all members of a given population are covered by either medically underwritten or community-rated health insurance, with a given package of covered health benefits. The white line represents the premium individuals would have to pay under medical underwriting. The dashed segment of that line is meant to show the actuarial cost and the premium range in which insurers in the real world would reject applicants outright. The green line shows the community-rated premium for this same population. We assume here that age is either not factored into the premium or the population in question is all of the same age, which is why the green line is horizontal.

Premium Shock
As the chart illustrates, a switch from medically underwritten premiums to community-rated ones raises the premiums for the relatively healthier members of the insurer’s risk pool. Many of them will suffer what has come to be called premium shock.
Younger and healthier members of the pool should realize that, in effect, they are buying a call option that allows them to buy coverage at a premium far below the high actuarial cost of covering them when they are sicker. The price charged the healthy for this call option is the difference between the premium they must pay and the current lower actuarial cost of covering them.
Furthermore, for Americans in households with incomes below 400 percent of the federal poverty line, the green and red lines exaggerate the impact of the law on their spending. These Americans will be granted often quite generous, income-dependent federal subsidies toward the premiums they face on the exchanges and their out-of-pocket costs for health care. This makes it well-nigh impossible to make general statements, based on averages, about the net after-subsidy impact of the law.

'Premium Shock' and 'Premium Joy' Under the Affordable Care Act - NYTimes.com

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Wendell Potter: A Rare Bipartisan Idea to Improve Medicaid and Save Money

 

The problem is referred to by policy wonks as "churn." Because of the way Medicaid is administered by the states, millions of Americans enrolled in the program lose coverage temporarily every year because of often minor fluctuations in their income or even a change of address. Many are removed from the rolls simply because they can't take time off from work to go to a Medicaid office to re-verify their incomes every three months, which some states require.

It's called churn because most people who are "disenrolled" -- to use insurance industry jargon -- are eventually reinstated. Their eligibility for Medicaid never changed. They lost coverage solely because of paperwork requirements or a slight and fleeting bump in pay from working overtime during a given week.

This is unknown in the private insurance world because once you enroll in a health plan, you can stay enrolled in that plan for a year, so long as you keep paying the premiums on time. It doesn't matter if you move from one street to another or work an extra shift to make a few extra bucks.

But staying covered for a full year under Medicaid is not a given, and the consequences of this churn are costly, and not just for those most directly affected. The situation is costly to taxpayers, too, because of the unnecessary administrative expense. It costs hundreds of dollars per enrollee to verify income multiple times a year and to process all the paperwork involved in reinstating a beneficiary. When you consider that 58 million of Americans are currently enrolled in Medicaid -- a number that will grow substantially next year when many states expand coverage under the Affordable Care Act -- billions of taxpayers' dollars are being wasted because of churn.

Those who fare the worst, though, are eligible beneficiaries who get dumped into the ranks of the uninsured.

"Even short gaps in coverage can lead to delay or avoidance of needed care," says Leighton Ku, director of the Center for Health Policy Research at George Washington University's School of Public Health and Human Services, who along with colleague Erika Steinmetz studied the effects of churn. They released their findings in a report last month.

Please read on…

Wendell Potter: A Rare Bipartisan Idea to Improve Medicaid and Save Money

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Not Running a Hospital: Do I get paid too much?

Not Running a Hospital: Do I get paid too much?:

"Here are the facts. As noted by the Globe, my total compensation was about $1 million in fiscal 2005. Of this, $650,000 was the base salary. Also, I was eligible for a 30% incentive compensation payment if the hospital achieved specified results for clinical quality, patient satisfaction, and financial performance. I received the full amount that year, $195,000. The rest of the million comprised payments made by BIDMC for life insurance and retirement. (Don't worry, there are no other perks, like cars or country club memberships!)

Now, some background on BIDMC: The hospital is a billion-dollar-a-year enterprise, about $800 million in clinical revenues and $200 million in research programs. Our annual capital budget is roughly in the range of $80 million. Last year, we raised $30 million in philanthropic donations from people in the community. We have facilities that cover about 3 million square feet. We see 50,000 emergency room visitors per year, 40,000 inpatients, and 500,000 outpatients. We have about 8,000 employees and about 800 doctors on staff. We are affiliated with six community health centers (one of which we own); several community hospitals and physician practices; and we own and run two off-site clinics in Chelsea and Lexington and one small community hospital in Needham.

So, if you were on my board, how would you set an appropriate salary?

- Sent using Google Toolbar"

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How the U.S. measures up to Canada's health care system | Worldfocus

How the U.S. measures up to Canada's health care system | Worldfocus:

"Edie Magnus: We were in a hospital that was affiliated with McGill University, and it was a regional system that had six hospitals that were affiliated with one another, and they annually have some 39,000 inpatients, and they do about 34,000 surgeries and they deliver about 3,000 babies. And managing all of this is a staff of 12 people doing the billing, the administration. What would an equivalent hospital in the U.S. take to run administratively?

Uwe Reinhardt: You’d be talking 800, 900 people, just for the billing, with that many hospitals and being an academic health center. We were recently at a conference at Duke University and the president of Duke University, Bill Brody, said they are dealing with 700 distinct managed care contracts. Now think about this. When you deal with that many insurers you have to negotiate rates with each of them. In Baltimore, they are lucky. They have rate regulations, so they don’t have to do it. But take Duke University, for example, has more than 500,000 and I believe it’s 900 billing clerks for their system.

Edie Magnus: What are 800, 900 people doing?

Uwe Reinhardt: Well first of all there’s a contract. With each different managed care contract you have different rates. You have different things that need pre-authorization, not depending on the contract. You haggle over every bill. You submit the bill, the insurer rejects it, you haggle, and it may take 90 days to settle one bill. They don’t have that in Canada. You see, we spend in this country an enormous amount of money just administering claims. It’s a huge wrestling match over the payment.

- Sent using Google Toolbar"

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Healthcare Compensation Still Strong

Healthcare Compensation Still Strong

New survey results from Executive Compensation 2010/2011 show that hospital CEOs earn an average $353,900 per year, (CEOs at not-for-profits average $225,400; at home care facilities, $282,300 a year; at physician clinics, $254,000; at behavioral health facilities, $241,300; and at long-term care facilities, $235,700.

These executives, physicians, and skilled clinicians undoubtedly would make a strong argument that they deserve the salaries they're getting. Besides, it's what the market is paying, and it's hard to blame anyone for earning as much money as he or she can.

However, let's put this in perspective. According to the U.S. Census Bureau, 4.1% of U.S. households had an income between $150,000 and $200,000 in 2009, and 3.9% had an income of $200,000 or higher, while 11% of U.S. households earn between $15,000 to $25,000 annually. The median household income in the U.S. that year was $50,221.

I threw this in the 'contrarian economics' category because it has the 2009 income data.

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Paying for Reform - Updated

I was asked recently, how will we pay for reform. Tom Coburn, on Sermo.com, asked physicains to support him not supporting us physicians in asking for repeal of SGR with its $250 billion dollar price tag. I don't know when he had this sudden change of heart, feeling physicians should not get paid more for Medicare patients, but hey...

The other question was about the overall price tag of HR 3200, somewhere in the neighborhood of $100 billion a year, or $1 trillion over ten years.

[Cross posted at DailyKos.]
No problem. First and best answer: REPEAL THE BUSH TAX CUTS!
http://www.usnews.com/blogs/john-farrell/2009/04/15/no-tea-party-protests-for-teddy-roosevelt-republican-champion-of-the-income-tax.html

They were bad economics, bad public policy, and bad morally.

UPDATE: Susie Madrak at Crooks and Liars summarizes a Citizens for Tax Justice report on the disaster that the Bush Tax cuts were and are:

I'd advise listening to the two EXCELLENT "This American Life" episodes on HC reform:
http://cmhmd.blogspot.com/2009/10/this-american-life-hc-reform-part-2.html

Follow the links, download the MP3's and you can make audio CDs for the car.

There are lots of answers in there, but I'll give you a few easy ones:

1.) McAllen, TX and EOL Care:

http://cmhmd.blogspot.com/2009/05/annals-of-medicine-cost-conundrum.html

That's actually two, practice variation and EOL care.

2.) Prescription co-pays: $10 for a $20 prescription, $30 for a $600 prescription. (Unless you have a coupon from the manufacturer to make the $30 copay $0.00 - the second TAL episode explains this.)

3.) George Lundberg has a few ideas:
http://cmhmd.blogspot.com/2009/08/health-care-blog-how-to-rein-in-medical.html

4.) Uwe Reinhardt has a modest proposal:
http://healthaffairs.org/blog/2009/07/24/a-modest-proposal-on-payment-reform/

5.) Wendell Potter, too:
http://www.time.com/time/politics/article/0,8599,1920893,00.html

6.) Administrative costs:
http://cmhmd.blogspot.com/2009/07/health-affairs-2-articles-on-cost-of.html

Bottom line is, as has been suggested before, passing the bill is going to be half the battle, implementing reform in a way that is most beneficial to patients at the least cost to us as a society is next up.

But let's get everyone taken care of first, and avoid the 18K to 45K people dying EVERY YEAR due to lack of access to health care and THEN we'll deal with reducing costs. Turns out, if you read the Gawande article, they may be by doing the exact same things.

And finally, $1 trillion over ten years is $100 billion a year, and we spend $2.5 trillion a year on HC already, so that is very little money in the grand scheme of national economics. So, as Uwe would say, "Go explain to God why you cannot do this. He will laugh at you."

Cheers,http://cdn.crooksandliars.com/files/uploads/2009/09/nationaldebt_42d6b.jpg

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This American Life HC Reform Part 2

This American Life:

This week, we bring you a deeper look inside the health insurance industry. The dark side of prescription drug coupons. A story about Pet Health Insurance, which is in its infancy, and how it is changing human behaviors—for example, if you have the pet health insurance, you bring your pet to the vet more often, and the vet makes more money and...well, you can see the parallels. And insurance company jargon, frighteningly decoded.

Prologue. Host Ira Glass describes the crazy world of medical billing, where armies of coders use several contradictory different systems of codes...and none of it makes us healthier. (5 minutes)

Act One. One Pill Two Pill, Red Pill Blue Pill.
Planet Money's Chana Joffe-Walt explains why prescription drug coupons could actually be increasing how much we pay, and prevent us from even telling how much drugs cost. (13 1/2 minutes)

Act Two. Let's Take Your Medical History.
Alex Blumberg and Adam Davidson recount how four accidental steps led to enacting the very questionable system of employers paying for health care. (11 1/2 minutes)

Act Three. Insurance? Ruh Roh!
Planet Money correspondent David Kestenbaum investigates the growing popularity of pet
insurance, and what it reveals about insurance for people. (14 minutes )

Act Four. Sorry Johnny... It's Only Business.
This American Life producer Sarah Koenig reports on a very surprising reason why insurance companies dump members, and how this reasoning contradicts President Obama's argument for what will lower health care costs. (11 1/2 minutes)

Again, a very interesting program to follow up on last week's episode.

In Act IV, the interview with Uwe Reinhardt is very thought provoking. Specifically, he talks about the power of suppliers (i.e., hospitals) in the insurer-provider tug of war, and about Maryland's "All Payer System," which I will try to learn more about and pass along when I do...

MP3 of Part 2

MP3 of Part 1 is not offered directly at the website. You can subscribe to the podcast and then download yourself here: http://feeds.thisamericanlife.org/talpodcast

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Facts About Healthcare Costs - National Coalition on Health Care

NCHC Facts About Healthcare - Health Insurance Costs:

In 2008, total national health expenditures were expected to rise 6.9 percent -- two times the rate of inflation.1 Total spending was $2.4 TRILLION in 2007, or $7900 per person. Total health care spending represented 17 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.1

In 2008, employer health insurance premiums increased by 5.0 percent – two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,700. The annual premium for single coverage averaged over $4,700.2

................

National Health Care Spending

In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012.1 Health care spending is projected to reach $4.3 trillion by 2016.1
Health care spending is 4.3 times the amount spent on national defense.3

In 2008, the United States will spend 17 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent by 2017.1

Although nearly 46 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.3

Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.4

Employer and Employee Health Insurance Costs

Premiums for employer-based health insurance rose by 5.0 percent in 2008. In 2007, small employers saw their premiums, on average, increase 5.5 percent. Firms with less than 24 workers, experienced an increase of 6.8 percent.2

The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008. Workers contributed nearly $3,400, or 12 percent more than they did in 2007.2 The annual premiums for family coverage significantly eclipsed the gross earnings for a full-time, minimum-wage worker ($10,712).

Workers are now paying $1,600 more in premiums annually for family coverage than they did in 1999.2

Since 1999, employment-based health insurance premiums have increased 120 percent, compared to cumulative inflation of 44 percent and cumulative wage growth of 29 percent during the same period.2

Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by the end of 2008.5

According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers’ earnings since 1999.2

The average employee contribution to company-provided health insurance has increased more than 120 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.6

The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, that exceeds $2,000 a year, rose from 37.3 percent in 1996 to 43.1 percent in 2003 – a 16 percent increase.7

The Impact of Rising Health Care Costs

National surveys show that the primary reason people are uninsured is the high cost of health insurance coverage.2

Economists have found that rising health care costs correlate to drops in health insurance coverage.8

A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses.9 Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.

A new survey shows that more than 25 percent said that housing problems resulted from medical debt, including the inability to make rent or mortgage payments and the development of bad credit ratings.10

About 1.5 million families lose their homes to foreclosure every year due to unaffordable medical costs. 11

A survey of Iowa consumers found that in order to cope with rising health insurance costs, 86 percent said they had cut back on how much they could save, and 44 percent said that they have cut back on food and heating expenses.12

Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage.13 Many experts believe that this figure is conservative and that $300,000 may be a more realistic number.

According to a recent report, the United States has $480 billion in excess spending each year in comparison to Western European nations that have universal health insurance coverage. The costs are mainly associated with excess administrative costs and poorer quality of care.14

The United States spends six times more per capita on the administration of the health care system than its peer Western European nations.14

Acrobat version with references is here.

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Health Affairs - 2 articles on the cost of private insurers to the system

Two articles from Health Affairs regarding the cost of Private Health Insurers, for profit and not for profit, to physicians' practices, bottom lines, time and aggravation.

Peering Into The Black Box: Billing And Insurance Activities In A Medical Group -- Sakowski et al. 28 (4): w544 -- Health Affairs:

"Billing and insurance–related functions have been reported to consume 14 percent of medical group revenue, but little is known about the costs associated with performing specific activities. We conducted semistructured interviews, observed work flows, analyzed department budgets, and surveyed clinicians to evaluate these activities at a large multispecialty medical group. We identified 0.67 nonclinical full-time-equivalent (FTE) staff working on billing and insurance functions per FTE physician. In addition, clinicians spent more than thirty-five minutes per day performing these tasks. The cost to medical groups, including clinicians’ time, was at least $85,276 per FTE physician (10 percent of revenue)."


What Does It Cost Physician Practices To Interact With Health Insurance Plans? -- Casalino et al. 28 (4): w533 -- Health Affairs: "Physicians have long expressed dissatisfaction with the time they and their staffs spend interacting with health plans. However, little information exists about the extent of these interactions. We conducted a national survey on this subject of physicians and practice administrators. Physicians reported spending three hours weekly interacting with plans; nursing and clerical staff spent much larger amounts of time. When time is converted to dollars, we estimate that the national time cost to practices of interactions with plans is at least $23 billion to $31 billion each year."

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Snapshots: Health Care Spending in the United States and OECD Countries - Kaiser Family Foundation

Snapshots: Health Care Spending in the United States and OECD Countries - Kaiser Family Foundation:

"Health spending is rising faster than incomes in most developed countries, which raises questions about how these countries will pay for future health care needs. The issue may be particularly acute in the United States, which not only spends much more per capita on health care than any other country, but which also has had one of the fastest growth rates in health spending among developed countries. Despite this higher level of spending, the United States does not achieve better outcomes on many important health measures. This paper uses information from the Organisation for Economic Co-operation and Development (OECD)1 to compare the level and growth rate of health care spending in the United States with other OECD countries. In an increasingly competitive international economy, policymakers in the United States will need to be aware of how the health spending and spending growth in the United States compares to that of other nations."

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McKinsey: What Matters: Way too much for way too little

McKinsey: What Matters: Way too much for way too little

The title says it all. A great review of the American health care non-system.

Goes over administrative waste (83 cents of premium dollars go to actual health care at most in PHI market), outcomes, costs and prices, administrative burden, practice variation, and rationing (QALY's CER).

Some good response letters as well.

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COST: Is This What They Went to Med School For? | New America Blogs

COST: Is This What They Went to Med School For? New America Blogs:

Excellent summary by Joanne Kenen at New America:

"Two new studies released this week online by Health Affairs examine how health care providers, particularly physician practices, interact with insurers. One study found that doctors personally spend the equivalent of three full weeks a year on billing and related insurance information. The overall cost to their practices (their time as well as other medical and clerical personnel) was about $31 billion a year (in 2006)—which as study author Larry Casalino noted, was about six times what we spent at the time on the State Children's Health Insurance Program and nearly 7 percent of total national expenses on physician and clinical services. Primary care practices spent more time on these administrative tasks than specialists. Very little of the data—only about two hours a year for the doctor—pertained to quality data.

"The second study looked at the billing and insurance-related activities at one large multi-site, multi-specialty California group practice. The cost (in physician and clerical time) turned out to be $85,276 per physician, or 10 percent of operating revenue. (And that excluded the time the doctors spent recording procedure and diagnosis codes). And this California practice isn't bogged down in paper; they already use electronic medical records for both clinical and billing data. (Some older studies, before medicine began its slow and not always so steady migration to Health IT, showed even more time and money spent on administration in the days of pure paper.)"

Additionally, from the second paper:

Impact of complexity. Previous reports have suggested that the complexity inherent in the current multipayer financing system is responsible for increasing the administrative burden associated with medical groups' transaction processing.15 During our interviews, informants frequently described the contributions of complexity in the payment system to billing and insurance burden. For example, the patient population of our study site is covered by hundreds of insurance plans, each with its own rules about benefits covered and under what conditions, payment rates, and often billing procedures. This complexity adds burden to billing and insurance tasks, including procedure coding, drug formulary authorizations, discussions with patients, submission and appeal processes, and receipt of payments. The complexity also increases the chance for error and dispute, increasing the likelihood of payment follow-up and collections. Even high-deductible plans, which might appear to avoid administrative burden for initial services during the year, impose billing/insurance costs because each service, including those within the patients' deductibles, must be evaluated and processed.

I've also classified this under Physician Income and Physician Autonomy, because these burdensome duties and their concomitant expenses impact both significantly. If you think your PHIs are paying you more than Medicare, you need to factor this into the equation.

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A national healthcare reform primer - Los Angeles Times

A national healthcare reform primer - Los Angeles Times

The cost of covering the uninsured ultimately will depend on the number of people included, the specific benefits they receive, and the amount of financial help the taxpayers would provide. The only agreement among economists who study the issue is that the tab would be a big one:* $200 billion to $250 billion a year, says Joe Antos of the conservative American Enterprise Institute.* $150 billion to $175 billion a year, says Len M. Nichols of the liberal New America Foundation.

According to CMS, we spent $2.1 Trillion on all of health care with costs rising rapidly. So even using AEI’s numbers, this only represents a 10% increase to cover all Americans.

Regardless of what happens, will I be able to keep the insurance I have now?

LA Times answers: “Almost certainly” and “Further, most people get their coverage at work, and this would continue.”

Which is too bad. Given the choice between keeping my $15 K a year policy and buying into a public policy (Medicare – like, if not Medicare) at lower cost, with less red tape, no pre-approvals, fighting for benefits and on and on, I believe most would choose the public option after it has shown its stuff. But if a public option is put out there, it allows the transition to begin away from bloated private insurers as they will have to compete with public policies.


If I don't have health insurance, would I have to buy it if an agreement on reform is reached?

This is the tricky mandate issue. Advocates say you can't cover everyone unless you make everyone buy a policy.Although nobody from the administration is using the "M" word these days -- a mandate would represent a big expansion of government authority -- many believe it is the logical way to go. So do Democratic leaders in Congress.Before such a mandate could become law, however, Congress would have to decide the amount of financial subsidies to help people pay for their coverage. Most people without health insurance work full-time and earn less than $30,000 a year. Meanwhile, the average policy for a family of four under job-based coverage cost $12,680 last year, with the employer paying $9,325, according to figures compiled by the Kaiser Family Foundation. Coverage for an individual through work cost $4,704, with the employer paying $3,983.A decision on a mandate would also involve intense negotiations between the government and the insurance industry over the terms and details of coverage.

The industry has indicated it's willing to deliver "guaranteed issue" (nobody gets turned down) in return for a law requiring mandatory purchase of insurance.The National Assn of Insurance Commissioners has proposed a model act for the states as a way to control costs. It says that the highest rates for any age group should be no more than 400% of the lowest rate charged to any group.

This would be reduced to 300% two years after the law is passed, then to 200% after five years. That would mean a 63-year-old living in San Diego, for example, could not be charged more than double the rate paid by a 25-year-old in Santa Monica.Price differences and subsidies are crucial. It would be meaningless to have the guaranteed right to buy health insurance if you make $30,000 a year, have high blood pressure and diabetes, and a policy would cost you $10,000.

Well explained. I don’t think it is “tricky,” as there must be guaranteed insurance for all and none can be left out or much savings gained by easy access to primary care is lost.


If I have a business, would I have to buy coverage for my workers?

The answer to this question may determine the success or failure of health reform efforts.

I’m a de-linker in the sense I don’t think insurance should be linked to income and, if you like the deep economics of it, ALL benefits are from wages anyway, so if you want to do like Germny and others,you could use a payroll tax specifically for this purpose. This will cause lots of sturm and drang, however.

Would there be some help for older workers who don't have coverage on the job and can't afford an individual policy?

Perhaps.

Again, if we don’t get everyone in, it is not very “universal”, is it? I don’t know enough about the mind set of Congress to make a prediction, but how would the people who are just beginnning to enter their health care using years not be central to the solution?

Might there be a public health insurance plan?

This idea, backed by the president, would create for the first time a public insurance plan to compete with the myriad plans offered by private-industry insurers. The plan would be designed to provide a benchmark for quality coverage, with a basic package of comprehensive benefits. The Obama health plan issued during the presidential election campaign envisioned that millions of the 47 million uninsured would move into a public plan.

To quote Helen Hunt in, “As Good As It Gets,” “I hope, I hope, I hope, I hope.”

How can the country pay for a reworking of its health insurance system?

A nice discussion of some potential savings. This will cause a lots of discussion, but I would go back to the top of the article and point out that even the AEI’s estimates (which I admittedly have not read) which I expect are all worst case scenarios, estimates only a 10% or so increase in costs. I happen to be one who believes that the waste in our system is at least 30% and that in perhaps 5 years we will begin to see those savings. But, even if it costs more, it is the right thing to do.

Their bottom line:

If Obama can figure out a way to persuade Congress to expand coverage to millions of uninsured people, while keeping those with coverage happy, it will be a feat of political magic that has eluded presidents for decades.

I agree. It is up to us to make not doing the right thing a very unattractive option.

Cheers,

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A Public Health Insurance Plan | OurFuture.org

A Public Health Insurance Plan OurFuture.org:

As the ball rolls along in our debate, one thing that keeps coming up is the idea that everyone must have insurance. Being forced to buy insurance from a private insurer ($15K a year at our house - from a "not-for-profit" !) is obviously not an option for most, especially considering the median family income is only about $60K. Medicare spends anywhere from $6K to $14K per enrollee (65 and over, mind you). So can a public option be the solution?

Here are the key findings of the report, but you can click the link above to get the full report, an executive summary and a PowerPoint show.

The report contains these findings:
• Medicare has controlled health care costs much better than have private health insurers over the last 25 years.
• The private insurance market is highly consolidated and needs competition from a public health insurance plan to lower skyrocketing premiums.
• Administrative costs are dramatically lower under public health insurance plans,
resulting in enormous savings to the system.
• The bargaining power of public health insurance plans significantly reduces provider costs.
• In a head-to-head competition, the public Medicare plan is much better at containing costs than private Medicare Advantage plans.
• Independent analyses show substantial savings can be achieved from a public health insurance plan that competes with private insurance plans.
• Quality and effectiveness innovations occurring under the public Medicare plan show that public health insurance plans have greater potential to drive the quality revolution than do private plans.
• Public health insurance plans increase choice, competition and accountability.

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