It is crucial for insurers to create an internal culture of information sharing so processes and guidelines evolve quickly. Insurers also need to provide regular training to sales, underwriting and claims employees and invest in data analysis and also offer rewards to whistleblowers,” he added. The industry as a whole should have a mechanism to share case studies, tools and training and should also create data standards that facilitate analytics, which is the unique provider code.
…The industry [needs] to collaborate in data analysis and to collectively engage with policy makers and consumer bodies. The industry also needs to collaborate with media to increase public awareness that fraud will not be tolerated and finally demand tougher laws and facilitate prosecution.
A new article in Insight offers a way to infuse more transparency into healthcare financing. Here is an excerpt:
In no other area of our economy do consumers receive services where they do not know the cost in advance and are not able to make comparisons to alternative suppliers. As a result, healthcare provider costs have remained immune from the economic forces that could control them. This immunity has contributed to greatly increasing provider costs, a major component in today’s rising healthcare costs.
The lack of price information stems from the confidential nature of negotiations between providers and payors. Providers compete with each other trying to get the highest payment from payors, and payors compete with each other trying to set the lowest payments to providers. In hopes of getting the best deal, both providers and payors want their negotiated rates to be kept confidential. Information is kept from the consumer that is necessary to make the best choices and drive an improved market.
A transparent cost network is designed to break down this limitation, giving consumers the price information they need to make informed decisions. Payors that can deliver this valuable product offering to consumers will likely gain market share for this lower-cost product.
Today’s Milwaukee Journal Sentinel reports that the community data pooling organization, Wisconsin Health Information Organization (WHIO), has launched a database that will now be available to large healthcare systems and, eventually, to consumers. The database will improve transparency and allow better understanding of healthcare quality and cost dynamics:
The database is drawn from the experiences of more than 1.6 million people and 72 million treatment services. In April, WHIO will add data from Dean HMO and Medicaid, which includes BadgerCare, the state health program for the working poor, adding the experiences of 1 million more insured people to the database.
“To us, the real opportunity is to look across all the claims aggregated here and get a picture of where we have cost-effective health care being delivered in Wisconsin, and where we have an opportunity to improve the cost-effectiveness of health care,” said Karen Timberlake, secretary of the state Department of Health Services and a WHIO board member.
“There isn’t a database like this that’s been available to providers to measure these sorts of things. And if you can’t measure it, you can’t improve it,” said Larry Rambo, chief executive of Humana’s Wisconsin, Michigan and Illinois markets.
Wisconsin is among a handful of states – including Minnesota, Massachusetts, Oregon and Washington – that have put infrastructures in place for pooling health data to improve quality and transparency, according to a briefing paper written this year by the consulting and actuarial company Milliman.
Click here for more information on these information exchanges.
Typically, pharmacy-benefit managers have carried out pricing negotiations behind closed doors, leaving insurers and other outsiders little idea of the actual prices PBMs negotiate for drugs or their profit margin.
The PBMs argue such secrecy is necessary to negotiate lower prices, but critics say it only helps PBMs pocket more money at the expense of others.
The president of the pharmacy-benefit managers’ trade group called the provisions a bad idea. “One of the great services PBMs provide is to play drug companies off one another and get big discounts on drugs,” said Mark Merritt of the Pharmaceutical Care Management Association. “The thing that drives prices down is competition, not this kind of transparency which tends to help suppliers keep prices higher.”
Greater transparency could result in drug makers giving smaller discounts to PBMs, which could lead to higher drug costs for insurers and consumers, according to analyses by the Congressional Budget Office of previous legislative proposals.
The Weiner provisions aren’t in versions of the health-care bill passed by other House committees. In the Senate, Maria Cantwell (D., Wash.), a member of the Finance Committee, said she wanted her committee’s health-care bill to include similar disclosure requirements for PBMs.
Some companies that offer drug benefits to employees are taking action on their own. Nearly 60 large employers accounting for more than $4.9 billion in annual drug spending, including McDonald’s Corp. and International Business Machines Corp., have banded together to demand greater transparency from pharmacy-benefit managers.
They have signed on 15 PBMs, including industry leaders Medco Health Solutions Inc. and CVS Caremark Corp., that are willing to disclose to the companies their acquisition costs for drugs and pass along any additional discounts they get.
One of the companies, Caterpillar Co., also negotiated prices for the drugs its employees buy from Wal-Mart Stores Inc., although it still uses a PBM to handle claims.
Troy Filipek, an actuary at consulting firm Milliman Inc., predicted that more companies will seek alternatives to traditional PBMs. “I think in general, plans just want to have an understanding of where PBMs are making their money,” he said.
Stepping outside the technical discussion, many communities are seeing a meaningful use of technology in the form of data-pooling initiatives. The Seattle-based Puget Sound Health Alliance today launched the latest version of its community scorecard, which offers transparency for health consumers looking for more information about care providers. Efforts such as these can help tie together disparate information from various different sources into a accessible and interoperable resource that can help inform care decisions.
What follows has been excerpted from a new paper, “Changing Expectations in Healthcare,” by Milliman Principal Jon Shreve.
Widespread evidence that our healthcare system is in need of substantial reform continues to mount. Most of this agreement centers on issues of access to affordable health insurance, the need to improve the quality and efficacy of care, and the costs associated with our present system. In order to achieve meaningful reform, a solution must address all three problems.
Of course this is easier said than done. While there may be general agreement on common goals for healthcare—increased access, improved quality, and reduced costs—there is no such agreement when it comes to how we accomplish these goals. If comprehensive healthcare reform is to occur, it should start with a clarification of the fundamental expectations for those involved in healthcare, and then incorporate policies designed to meet these fundamental expectations. Such expectations can help the healthcare system coalesce around interrelated responsibilities for patients, for care providers, and for payers.
Mike Kreidler, John Hammarlund, George Scriban, Scott Armstrong, and Ron Sims discuss EHR as a catalyst for healthcare reform, responding to a question submitted by Cody Augdahl.
For submitting this question, Cody Augdahl is a finalist in our question contest. Congratulations, Cody.
Q: I have another question that came from someone who submitted one before the event; it was submitted via e-mail. It’s kind of an interesting question. It asks us to imagine the day when, in fact, a majority of the U.S. population has adopted personally controlled health records. What kind of impact would that have more broadly on the system potentially, do you think? I mean, it’s a little bit hard to put ourselves out there and imagine the circumstance, Mike, but could you see how that might be a catalyst for other change?
Mike Kreidler: I think you need a great deal more transparency in the system than you have right now, and that’s one of the real problems. You can’t even do any accounting in the system right now because of the variation that you have.
Will electronic health record adoption suffer during the recession? The question was submitted by John Darby. Will Fox, consulting actuary and principal with Milliman, fields the question.
For submitting this question, John Darby is a finalist in our question contest. Congratulations, John.
Q: How is the economic downturn affecting healthcare reform investment?
Will Fox: We are seeing more and more businesses drop insurance, which is creating a bigger burden for those that do still pay for the insurance. Because of cost shifting, the uninsured burden gets passed on to those left in private insurance. Several aspects are squeezing that. Read more…