Healthcare Town Hall

Data released today by S&P Dow Jones Indices for the S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 3.02% over the 12-months ending March 2013, decelerating from the +3.11% annual growth rate recorded in February. It posted the lowest rate of growth since January 2005.

Seven of the nine S&P Healthcare Economic Indices showed slower annual growth rates for March 2013 compared to February 2013. Annual growth rates for five of the healthcare indices hit their historic lows in March. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.46% in March, down from +4.63% reported for February. The Commercial Index rate hit its historic low in March. Annual growth rates in Medicare costs increased by 0.82%, according to the S&P Healthcare Economic Medicare Index, up from +0.78% recorded last month.

The Hospital Index’s growth rate hit its historic low of +1.86% in March, down from +1.92% recorded in February. The Hospital Medicare Index posted a +1.89% annual rate in March, up from +1.73% recorded last month. The Hospital Commercial annual growth rate hit its historic low of +1.81% in March; it posted +2.03% in February.

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Cost Healthcare, John Cookson, S&P

Data released today by S&P Dow Jones Indices for the S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 3.10% over the 12 months ending February 2013, slower than the +3.82% annual growth rate recorded in January.

All nine of S&P Healthcare Economic Indices showed slower annual growth rates for February 2013 compared to January 2013. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.62% in February, down from +5.41% reported for January. Annual growth rates in Medicare claim costs increased by 0.78%, according to the S&P Healthcare Economic Medicare Index, down from +1.40% recorded last month.

The Professional Services Index annual growth rate was +4.19% in February 2013, down from the +5.00% January point. The Professional Services Commercial Index decelerated to +6.86% in February, down from +7.61% reported in January. The Professional Services Medicare annual growth rate set a new low of -0.87% in February, down from +0.02% posted in January.

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Cost Healthcare, John Cookson, S&P

Accountable care organizations (ACOs) and patient-centered medical homes (PCMHs) may provide nurses with greater career options. In this Nurse Zone article, Milliman’s Patty Jones discusses some new roles opening up for nurses skilled in care coordination and data analysis.

Here is an excerpt:

“Accountable care and a lot of the initiatives coming out of health reform provide some interesting and new opportunities for nurses,” said Patty Jones, RN, [MBA], a principal at Milliman, a consulting and actuarial firm in Seattle, adding that the positions will take advantage of skills nurses already have and necessitate some to develop new talents.

…“For an accountable care organization to be successful, they are tasked with coordinating the needs of a member or a patient over a series of services and different levels of care over the course of time,” said Jones, explaining that efforts will focus on case managing smoother transitions between settings and ensuring the patient takes prescribed medications and follows through with appointments to avoid re-hospitalizations.

“This is a natural place for nursing and nurse leaders to use skills in terms of care coordination and assist the patient to reach out and get attached to other levels of care,” Jones said.

Newer emerging roles, Jones said, involve patient education and engagement. But the teaching must take place within the framework of the patient’s readiness to learn and motivation for changing to a healthier state.

“It’s a coming together of the science and psychology of nursing,” Jones said.

A third area of opportunity for nurses involves resource management at the patient and organization level, not something all nurses are skilled at or interested in.

“There are real opportunities for clinical leaders, nurses included, to be part of the financial and resource management discussion,” Jones said.

Additionally, nurses will need a population view, similar to a public health approach, to identifying and closing gaps in preventive care. However, it will require an analytic mind and comfort with data.

For more perspective on how healthcare’s changing landscape is affecting nursing professionals, click here.

Reform ACOs, Healthcare, nurses, nursing, Patty Jones

Harmful medication errors, or preventable adverse drug events (ADEs), are prominent quality and cost issues in healthcare. Injectable medications are important therapeutic agents, but they are associated with a greater potential for serious harm than oral medications. The economic burden of preventable ADEs associated with inpatient injectable medications and the associated medical professional liability (MPL) costs had not been previously described in the literature.

This study finds that the healthcare and MPL costs associated with preventable ADEs are substantial. The authors estimate that inpatient preventable ADEs associated with injectable medications increase annual U.S. payor costs by $2.7 billion up to $5.1 billion, while MPL costs associated with injectable medications total $300 million to $610 million annually.

The study was published in the December 2012 issue of American Health & Drug Benefits.

Cost adverse drug events, Bruce Pyenson, Healthcare, Helen Blumen, Kosuke Iwasaki, medical professional liability, Susan Forray

In the United States, premium deficiency reserves (PDRs) are one of several categories of accident and health liabilities required under statutory accounting principles, GAAP, and by actuarial standards of practice.

The topic of PDRs has been discussed in various authoritative guidance materials and also in published actuarial literature. Despite all of this published information, issues concerning the calculation and reporting of this reserve are still interpreted differently among various industry professionals such as actuaries, accountants, and insurance regulators.

Professional disagreements on PDRs often arise because of the level of perceived authoritativeness of source documents. Confusion also arises from the lack of specificity, inconsistency in terminology, and apparent contradictions among the documents.

In this report, Michael Weilant addresses 15 key questions surrounding statutory PDRs.

Liability Healthcare, Michael Weilant, premium deficiency reserves

Federal agencies have issued several pieces of guidance for employee health benefit plan sponsors moving forward on implementing changes required under the health reform law (Patient Protection and Affordable Care Act, or PPACA). The agencies also released guidance for other entities (insurance companies, primarily) that will be involved in health insurance offerings to individuals and small employers when the new exchanges become operational beginning in 2014.

This Client Action Bulletin discusses Patient-Centered Outcomes Research Institute (PCORI) funding, a Medicare Part A payroll tax increase, guidance on transitional reinsurance fees and wellness programs, as well as other regulations related to healthcare reform. The bulletin also provides guidance on actions employers should undertake.

Reform, Regulation Healthcare, Medicare, Regulations

Healthcare reform will provide employers several cost-saving measures without requiring adjustments to their current utilization or provider access. The potential savings, or discounts, will vary based on the group’s mix of markets and services, so a medical repricing study can help quantify the differences.

In a new paper, Liz Myers covers the most frequently asked questions about the calculation and evaluation of medical discounts, highlights various methods for estimating discount differences, and discusses how discount differences impact the overall medical cost to the employer.

To read the entire paper, click here.

Cost, Reform cost reduction, discounts, Healthcare, Liz Myers

Milliman is hosting an Actuarial and Underwriting Training Program for Blue Cross/Blue Shield plans, health maintenance organizations (HMOs), and insurance companies, scheduled for January 7-10, 2013, at Disney’s BoardWalk Resort in Lake Buena Vista, Florida.

The event will feature distinguished speakers with considerable experience in the topics they will be presenting. Attendees will also have time to engage each instructor during question and answer sessions.

The seminar is intended to be an organized activity as defined by the American Academy of Actuaries Qualifications Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States.

Seats are going fast, so register now!

For more information about the seminar, including a list of presenters, see the brochure. Please contact Christina Carlin via email or at +1 952 820 2480 if you have any additional questions.

Symposium, Underwriting Actuarial & Underwriting Training Seminar, Healthcare, Underwriting

A recent report by the U.S. Government Accountability Office (GAO) evaluated variations in states’ use of Medicaid managed care. The report clustered states into four groups that shared similarities in how services were provided and how participants were enrolled.

Here is an excerpt summarizing the GAO’s findings:

In summary, we identified four groups of states that differed in their use of Medicaid managed care on the basis of the 12 indicators we included in our analysis. A handful of these indicators—namely Medicaid enrollment in MCOs (managed care organizations) and PCCM (primary care case management) programs, HMO (health maintenance organization) penetration rates, and the concentration of low-income individuals that lived in urban areas—had significant influence on how states grouped. In contrast, within the four groups, considerable variation existed among the other indicators we examined, such as states’ primary care capacity and commercial HMO market index. For labeling purposes, we typically describe the four groups on the basis of states’ enrollment of Medicaid beneficiaries in MCOs and PCCM programs—generally the predominant similarity among the states within each group:

• Group 1 states were PCCM predominant, enrolling a high percentage of beneficiaries in PCCM programs, but typically not in MCOs;

• Group 2 states typically enrolled beneficiaries in both MCOs and PCCM programs;

• Group 3 states were MCO predominant, enrolling a high percentage of beneficiaries in MCOs, but typically not in PCCM programs; and

• Group 4 states were considered “other” states in that although their enrollment of beneficiaries was similar to Group 3, they were outliers on other indicators, which differentiated them from states in the other groups we identified.

The study was conducted to gauge states’ use of Medicaid managed care as enrollment is expected to increase, which is due to the Medicaid expansion provision in the Patient Protection and Affordability Care Act (PPACA). The policy decision that states make on Medicaid may directly affect health exchanges.

For more information on state health exchanges, click here. For more on Medicaid, click here.

Medicaid Healthcare, Healthcare Reform, managed care, state exchange

Employers face a challenge communicating how changes brought about by healthcare reform will affect employee health benefits. Denise Foster and Heidi tenBroek provide advice to help employers explain plan changes to employees in their new article.

Here is an excerpt from the article:

Employers who take a proactive approach to addressing [employee] questions can help guide choices in ways that are best for both employer and employee.

The role of personalized communication

What role will personalized communication play in future healthcare communications, if any? It may be a logical solution depending on the situation. Employers will need to determine if they will incur a penalty related to employee exchange subsidies, and to do that, they will need to know who is likely to be eligible for a subsidy. We can take that same information and create individual statements that clarify the subsidy amount for the individual, lay out the decision points, and clearly identify the options available to the employee.

Set the right course

We’re not entirely sure how employers will respond down the road. A number of our clients are working with our Milliman consultants to conduct a Healthcare Reform Strategic Impact Study, which determines how healthcare reform will affect their population.” The results of these discussions will influence the direction that their communication should take.

Employers will need to make strategic decisions about whether or not they want to offer employees affordable health insurance. If they do not offer affordable health insurance, they would be subject to a penalty if any employees receive a subsidy in the exchange.

Independent of the strategy that employers choose, they are best served by taking a proactive approach. It will be important to set a strategy to communicate healthcare reform changes and do it in a way that ensures employees have the right information at the right time and the overarching benefit program goals are met.

Communications communications, Healthcare, Healthcare Reform