CFO Magazine looks at the uncertainty surrounding healthcare reform and what we might expect in the near future. Here is an excerpt:
A recent Milliman survey estimates that group insurance rates will increase by 9% for HMOs and 11% for PPOs next year, which is modestly higher than in previous years. And companies may have to negotiate well to keep increases from rising even further.
Randy Lay, CFO of Lazydays, a recreational-vehicle dealer in Florida with about 500 employees, says the first offers he has seen from insurance companies for 2011 include rate increases of 30%, despite the company having begun to self-insure the first layer of costs last year. “The reconciliation between what you’d like to do for employees and what you can do, given the cost, is not getting any easier,” he says.
See the full article here. For more on employee/employer cost sharing, check this out.
Cost Cost share, Group Health Insurance Survey
Analysis of Medicare cost and utilization data has been extensively documented, most notably by the Dartmouth Atlas, and has revealed significant variation from one region to the next. Similar analysis using commercial insurance data, however, has been lacking. This study, the first to consider commercial populations, examines regional cost variation, providing cost relativities for claims paid by commercial payors for particular hospital referral regions. Among other findings, the study highlights the importance of negotiated provider reimbursement as a factor in the nation’s healthcare cost. While Medicare sets provider reimbursement rates based on formulas and rules, commercial provider reimbursement is set by negotiation between the insurer and the provider. This means, among other things, that regions with low Medicare costs could have high commercial costs. An examination of commercial data alongside Medicare data is crucial for understanding the true nature of healthcare cost variation across the country.
Cost Bruce Pyenson, geographic cost disparity, Michele Berrios, Sara Goldberg
The Early Retiree Reinsurance Program today launched a website: www.errp.gov.
Reform Early retiree reinsurance
We’ve blogged before about internal review in the reform environment. A new Client Action Bulletin looks at interim procedures for the external review process that non-grandfathered self-insured group health plans become subject to under the Patient Protection and Affordable Care Act (PPACA). This has implications for sponsors of group health plans, whether they purchase insurance or are self-insured and regardless of whether or not they are grandfathered.
Reform external review, Grandfathered status
The medical professional liability (MPL) insurance industry is currently enjoying an extended period of profitability, with ample capital and a near-record-low loss ratio. But legal and regulatory developments, along with the continued cycles in the market itself, could work to change the MPL situation. Understanding the effects of past underwriting results, claim frequency and severity, pricing, and investment income can provide valuable insights into what the future holds for the MPL industry.
Read the article from the Physician Insurer here.
Medmal medical professional liability, Rich Lord, Stephen Koca
We have talked before about ACOs (more info here and here and here). US Oncology today announced plans to develop a cancer-related physician-payor risk contracting model. Check it out.
UPDATE: Health Finance News picked up on this story on Sept. 2. Here is an excerpt:
The initiative comes at a time when providers across the country are preparing for the new landscape expected under the Affordable Care Act. The Centers for Medicare and Medicaid Services will pursue alternatives to the fee-for-service model through its Medicare Innovation Center, as well as its Medicare Shared Savings Program slated for 2012, whereby Medicare will implement accountable care organizations.
Due to the size of its physician network, which numbers more than 900 oncologists, along with an electronic health record that includes more than 1.6 million patient charts, US Oncology and Milliman officials see this data as the foundation of creating effective risk-based contracts.
“Physician-led organizations are ideally positioned to assess and balance the clinical, quality and cost demands of today’s healthcare environment,” said Bruce Pyenson, principal and consulting actuary of New York-based Milliman. Through Milliman’s work with US Oncology, Pyenson said they can “help oncologists create the healthcare delivery and reimbursement models of the future.”
Accountablity ACOs, Bruce Pyenson, Cancer
In general, most people can probably agree that improving consumer transparency would be a good thing that could have positive effects for the whole healthcare system. Can widgets help accomplish that goal? Healthcare.gov is trying it out.
Electronic Health Records Electronic Health Records
We have blogged before about the future of long-term care (LTC). A recent article in Employee Benefit Adviser picks up the conversation. Here is an excerpt:
[S]tandalone LTC insurance sales have been in a funk lately. According to LIMRA, “Significant declines in individual LTCI sales continued through the third quarter of 2009, with 28% fewer buyers when compared with the first nine months of 2008 and a 29% decline in new premium.” Indeed, 2005, 2006 and 2008 were also down years, while 2007 was flat.Why have sales of individual LTC insurance been slowing? Many observers cite the “use it or lose it” aspect of LTC policies; consumers might pay premiums for years – even decades – and never file a claim. Some potential buyers may be put off by the idea of “wasting” the money spent on LTC insurance premiums, says Carl Friedrich, a consulting actuary and principal in the Lake Forest, Ill., office of Milliman.
LIMRA puts the average annual premium at about $2,160. Even with some discounts, a married couple might be looking at an outlay of around $4,000 per year to buy coverage. Many individuals and couples probably tell themselves that they have other alternatives (sell a house, tap a portfolio, rely on a relative) to spending so much money to protect against a financial drain that might never occur.
Hence the appeal of combo products. If clients need coverage for long-term care, they have it. If their need for custodial care is modest or nonexistent, the money they spent on life insurance or annuity premiums will provide a payoff for them or their beneficiaries.
For more on Carl Friedrich’s perspective on combo products, read this article.
Long Term Care Carl Friedrich, Long Term Care
One idea for improving the medical professional liability environment involes disclosing medical errors. This was explored in the paper, “Retooling Medical Professional Liability.” Here is an excerpt:
Often, all an injured patient and family may really want is to hear an explanation and perhaps apology from the doctor and to receive a reasonable monetary award—one that will see to his or her immediate medical and other needs with regard to recovery from the event. In an effort to facilitate this type of exchange, as many as 35 states and the District of Columbia have passed what are called I’m Sorry laws allowing a physician to discuss openly an adverse outcome with a patient and express empathy.
A new study looks at this dynamic at the health system level. Here are details from a recent article in American Medical News:
One health system that has embraced the practice for nine years has concluded that those fears are unfounded. Disclosing medical errors and offering timely compensation to patients or family members do not increase medical liability lawsuits, according to a new study on the University of Michigan Health System’s disclosure-with-offer program published in the Aug. 17 Annals of Internal Medicine.
Under the program, the health system conducts an internal investigation of all medical error reports, notifies patients and offers compensation when employees are found at fault.
The health system has had fewer lawsuits, lower liability costs and faster resolution of medical-error cases since the policy was implemented in 2001. Although researchers could not definitively link those trends to disclosure, they were able to conclude that instituting the program did not lead to more lawsuits.
Medmal medical errors, Medmal
The Health Beat blog revisits a study from last year, “Imagining 16 to 12.” Here is an excerpt summarizing the article:
Could we bring our nation’s health care bill down from 17% of GDP to 12%? An intriguing study from Milliman, the independent consulting and actuarial firm, says”yes.” Looking at actuarial data from some of our best and most efficient health care plans, Milliman’s analysts conclude that, in theory, it would be possible to trim our bloated health care system by 25%.
Before you dismiss the idea, consider this: not that long ago, we brought health care inflation down to less than 3% a year for six years running (1994-1999). During that time, the nation’s health care bill remained flat as a percentage of GDP.
And Milliman points out that today, our most efficient , high quality health plans are achieving similar savings by “reducing unnecessary inpatient stays” and “inappropriate imaging.” The site of service also changes to emphasize lower cost settings—for example, home care instead of nursing-home care, or office-based primary care instead of emergency room care. The authors of the Milliman report acknowledge that 12% is only a “target for what is possible, not a budget.” They are not suggesting that we try to cap health care spending at 12% of GDP.
But the actuarial firm points that that in the not-so-distant past (1991) health cared did consume just 12% of GDP. Now it equals 17% of the economy. Granted, medical technology continues to advance, but have we really made that much progress since the ‘nineties?
Read the full article here.
Cost, Reform 16 to 12, Bruce Pyenson, Kate Fitch, Sara Goldberg
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