Healthcare Town Hall

Nebraska recently enacted a chemotherapy parity law requiring insurance companies to insure oral chemotherapy the same as intravenous cancer treatments. This article in the Lincoln Journal Star cites a 2010 study conducted by Kate Fitch, Kosuke Iwasaki, and Bruce Pyenson on the cost-sharing of oral and intravenous cancer drugs.

Here is an excerpt from the article:

Sen. Jeremy Nordquist of Omaha, who spearheaded the legislation in Nebraska, said the lack of parity in coverage between intravenous and oral chemotherapy medications is a growing problem. Some cancer treatments cost $5,000 to $10,000 a month, and some patients are being forced to pay high out-of-pocket costs for chemotherapy taken orally.

“This … will make life-saving cancer treatments more accessible and affordable for cancer patients,” he said. “The decision about the best course of treatment, whether it be IV chemo or chemo in a pill form, will be made between patients and their doctor, not dictated by their insurance company.”

Nordquist said research shows that when confronted with the reality of high out-of-pocket expenses, many cancer patients forgo expensive therapy and discontinue treatment, in part because they do not want to saddle their families with unmanageable debt.

And because oncologists know how expensive oral medications can be, he said, they often do not prescribe them — even when they think that would be the best option.

The actuarial and benefits consulting firm Milliman Inc. did a study in 2010 that estimated that requiring similar coverage for oral chemotherapy would cost less than $6 a year per person in most insurance plans.

To read the entire Milliman study, click here.

Cancer Bruce Pyenson, Cancer, chemotherapy, Kate Fitch, Kosuke Iwasaki

Atrial fibrillation is the most common form of cardiac arrhythmia, better known as an irregular heartbeat. The disorder has significant health and cost concerns for the Medicare population because of its association with an increased risk for stroke and all-cause mortality.

A study published in the May/June issue of American Health & Drug Benefits by Milliman’s Kate Fitch, Jonah Broulette, Bruce Pyenson, and Kosuke Iwasaki used Medicare Part D claims data to assess the use of the anticoagulant drug warfarin in the Medicare population.

Here is an excerpt highlighting key points from the study entitled “Utilization of Anticoagulation Therapy in Medicare Patients with Nonvalvular Atrial Fibrillation:”

• Patients with atrial fibrillation (AF) are at a significant, 5-fold increased risk for stroke and all cause mortality compared with those without AF.

• Oral anticoagulation therapy is recommended by national guidelines as the cornerstone for stroke prevention in patients with AF.

• Warfarin significantly reduces the risk for ischemic stroke; newer anticoagulant agents have shown even greater reduction of stroke risk compared to warfarin.

• Although AF risk increases with age, this present study shows that anticoagulation therapy is underutilized in Medicare beneficiaries who have nonvalvular AF (NVAF), resulting in an increase in ischemic strokes.

• These findings suggest the need to follow guideline-based anticoagulation recommendations in patients with NVAF to prevent strokes and the associated excess in healthcare costs, reduced quality of life, and even death.

• These findings also raise the need to investigate provider compliance with clinical guidelines regarding oral anticoagulation therapy for stroke prevention in older patients (aged >65 years) with NVAF.

A copy of the entire study can be read here.

Winghan Jacqueline Kwong, of Daiichi Sankyo Inc. also co-authored the study.

Medicare, Research anticoagulation, atrial fibrillation, Bruce Pyenson, Jonah Broulette, Kate Fitch, Kosuke Iwasaki, Medicare, Medicare Part D

Yesterday, Health & Human Services announced 89 new accountable care organizations (ACOs), doubling the number of Medicare ACOs.

With this in mind we’ve pulled together all of our ACO research into a single location. Here you go:

• Accountable care organizations: The new provider model
• Controlling healthcare costs the old, new way
• The Medicare Shared Savings Program and the Pioneer Accountable Care Organizations
• Building an accountable care information system
• The nurse’s role in accountable care
• Nuts and bolts of ACO financial and operational success
• Evidence-based guidelines: Essential building blocks for accountable care
• ACO gain/loss sharing
• Patient attribution in ACOs
• ACOs and medical professional liability
• Milliman’s announcement that it has been selected for a Society of Actuaries-sponsored ACO research study

 
Also, this video offers a nice overview of the ACO concept.

Electronic Health Records ACOs, Bill O'Brien, George Berry, Helen Blumen, Kate Fitch, Patty Jones, Rich Moyer, Richard Kipp, Rob Parke, Susan Pantely, Victoria Boyarski

The final post in our “Ten strategic considerations of the Supreme Court upholding PPACA” blog series looks at the perplexing question facing American healthcare: What do we do about increasing healthcare costs?

PPACA focuses on expanding coverage and insurance reform, and in some cases it shifts costs from one party to another, but it does not directly affect the unit costs and utilization that are among the major underlying drivers of healthcare costs.

Certain aspects of PPACA have the potential to affect costs. The option to implement an accountable care organization (ACO)13 reprises the managed care movement of the ’80s and ’90s, but with better technology and information, and by transferring the financial risk onto the provider to create an incentive for efficiency. With many potential ACOs already establishing the tools required to succeed,14 this reinvigorated movement is already in motion. The nuts and bolts of an ACO are still the parts needed for a more efficient system.

Most of PPACA’s explicit ACO efforts center on Medicare, and while the Medicare Shared Savings Program (MSSP) and Pioneer Programs will continue, the potential for commercial ACOs15 may prove just as significant.

Accountable care is not a solution to everything that ails the entire healthcare system, but it offers some hope and, to the extent it can meaningfully control unit costs and utilization, it just may work.

Rob Parke and Kate Fitch discuss accountable care organizations here. For more on ACOs, consider reading “ACOs Beyond Medicare” and “Nuts and Bolts of ACO Financial and Operational Success: Calculating and Managing to Actuarial Utilization Targets.” You may also be interested in the Milliman Medical Index.

Reform ACOs, Cathy Murphy-Barron, Cost, Kate Fitch, Rob Parke

The Washington Post looks at oral oncology and the way insurers pay for such drugs. Here is an excerpt:

People who get traditional IV chemotherapy on an outpatient basis often pay a flat co-payment that covers the drug as well as the cost of administering it. Annual out-of-pocket costs are also typically capped.

Oral anti-cancer medications, on the other hand, are generally considered a pharmacy benefit. Instead of a co-payment, plan members often pay a percentage of the drugs’ cost — up to 50 percent, in some cases — with no annual out-of-pocket limit. And these drugs are expensive, often costing tens of thousands of dollars a year.

In recent years, states have stepped in to address the problem. Since 2007,
19 states and the District have passed laws requiring insurers to provide coverage for oral cancer drugs that is equivalent to infusion drugs, according to the National Patient Advocate Foundation. Five states, including Virginia and Maryland, have passed laws in 2012 alone, and others are considering proposals, according to advocacy groups.

Is oral chemotherapy a cost-effective way to treat cancer? The article addresses this question:

But oral oncology parity laws don’t necessarily drive up costs. According to a 2010 study by benefits consultants Milliman, the estimated cost to most health plans for complying with oral oncology parity laws would be less than 50 cents per member per month.

Cancer Cancer, chemotherapy, Kate Fitch

In July 2012, New York state is scheduled to roll out a mandate that individuals receiving community-based long-term care services funded by Medicaid must enroll in managed long-term care (MLTC) plans. This mandate will be implemented gradually, starting with the five boroughs of New York City.

Provider organizations need to be aware that under this mandate managed long-term care plans are funded using a capitation mechanism in which they receive a lump sum per member from which they must pay most long-term care and other ancillary expenses. The risk shifts from the Medicaid program to the plan. Running a successful managed long-term care plan therefore requires significantly more investment in risk management, financial management, and strategic planning than do fee-for-service arrangements.

Health plans and home healthcare agencies that were successful under fee-for-service reimbursement need to understand and plan for these changes, which will ultimately result in reduced utilization per long-term care patient.

This paper discusses these and other issues pertaining to MLTC plans in New York.

Long Term Care Cathy Murphy-Barron, Kate Fitch, LTC, Managed long-term care

With accountable care organizations (ACOs) soon to serve more than a million Medicare patients, it is clear that this model of care delivery is receiving an unprecedented test of its viability, and, if it works as intended, may reshape how healthcare is paid for on a larger scale. Cigna alone plans to have more than a million people enrolled in ACOs by 2014, and says it believes that ACOs are going to be important regardless of the Supreme Court’s ruling on the Patient Protection and Affordable Care Act (PPACA).

With so much focus on the topic, it’s worth taking a look back at some of the research and analysis on ACOs published by Milliman on the topic over the past couple of years.

First, for a good summary of ACOs—what they are and how they work—start with this overview video featuring a number of Milliman experts.

For many observers, the key question about ACOs is whether they represent a financially viable model compared to fee-for-service. Effective financial management will be key to success. Milliman has produced a number of relevant papers:

• “Nuts and Bolts of ACO Financial and Operational Success: Calculating and Managing to Actuarial Utilization Targets” provides significant operational detail on dealing with utilization in an ACO context.
• “ACO Gain/Loss Sharing” proposes a framework for allocating savings within an ACO that emphasizes rewards for an ACO’s component entities based on their relative contributions to the organization’s total shared savings and quality performance. Such a framework is required when applying as a Medicare ACO, but the Centers for Medicare and Medicaid Services (CMS) has not provided a detailed procedure for creating one. This paper tries to help fill that gap.
• “A First Look at ACO’s Risky Business: Quality Is Not Enough” discusses downside risk faced by Medicare ACOs; while somewhat dated at this point it still contains some useful concepts.
• “Pioneer ACOs: Quantifying Risks and Identifying Opportunities” focuses on how Pioneer ACOs can control costs and identify savings opportunities given the additional risks they face.

 
With all the attention on Medicare ACOs, it’s easy to forget that they exist in the private market, as well. For more on such entities, look at “ACOs Beyond Medicare,” which describes the potential advantages for providers who partner with a private insurer rather than with CMS. A 2011 Managed Healthcare Executive roundtable featuring Milliman consultant Rob Parke also discussed ACOs in the private market.

A number of other papers have also been published discussing various aspects of ACOs such as:

• The use of care management guidelines in managing ACOs
• Patient attribution
• The role of nurses in accountable care

Reform Bruce Pyenson, Cathy Murphy-Barron, David Mirkin, Helen Blumen, Howard Kahn, Kate Fitch, Patty Jones, Rob Parke, Susan Pantely, Tiffanie Lenderman, Victoria Boyarski; ACOs

Bloomberg recently reported on one of the less-discussed elements of the Patient Protection and Affordable Care Act (PPACA): the way the law increases the ceiling on incentives and penalties employers can use to encourage participation in wellness programs. The incentives and penalties come in the form of premium increases or discounts. Formerly limited by HIPAA to 20% of premium, the PPACA raises the limit to 30% and leaves the door open to 50% in the future. Financial incentives and penalties can be used in both participation-based (join the gym) and outcomes-based (meet a BMI target) programs.

In the article, a pair of researchers from Georgetown University claim that these incentives, if poorly designed, could end up costing less-healthy workers more and potentially even driving them out of employer-sponsored plans. On the other hand, wellness plan administrators say they make sense as they reduce risk to employers. In any case, employers will want to weigh the implementation of these incentives carefully against the return on investment (ROI) from wellness programs. If less-healthy employees are discouraged from using their health benefits because of high deductibles or a switch to less benefit-rich plans because of high premiums, they may be more likely to let health issues linger until they become more critical and costly.

Milliman consultants have examined the issue of wellness programs from a number of perspectives. Kathryn Fitch and Bruce Pennyson published an article in Benefits Quarterly that covers the breadth of wellness programs, the evidence base for them, how employers should target candidates, and reasonable success criteria. In an interview, Fitch also talked about lessons learned from wellness programs in the private sector. And, Scott Weltz discussed how companies can use evidence-based measures to look at wellness program effectiveness in the early years of implementation when ROI data are very hard to come by.

Reform, Wellness Bruce Pyenson, Kate Fitch, Scott Weltz, Wellness

A new article in Forbes uses a Milliman report to highlight the highest-cost common medical conditions. Here is an excerpt:

The ten events or conditions that are most commonly expensive are as follows. These are average costs, so many patients even with these conditions will not reach the $100,000 per year mark:

1. HIV $25,000
2. Cancer $49,000
3. Transplant $51,00
4. Stroke $61,000
5. Hemophilia $62,000
6. Heart Attack including Cardiac Revascularization (Angioplasty with or without Stent) $72,000
7. Coronary Artery Disease $75,000
8. Neonate (premature baby) with extreme problems $101,000
9. End-Stage Renal Disease $173,000
10. Respiratory Failure on Ventilator $314,000

The most expensive condition, respiratory failure on a ventilator, is another way of describing the intensive care that patients receive at the end of life for a variety of conditions. Kidney failure may be from diabetes or hypertension, both of which could have been preventable.

Hemophilia is obviously congenital. Cancer is not always preventable. Being born early can sometimes be the result of insufficient prenatal care, or just bad luck. Heart disease, as the number one killer in the country, is expensive to treat, though not the most expensive.

I was surprised how low cancer was on the list. The report provides a bit more detail. If you have cancer that’s not being intensively treated (no chemotherapy, no surgery) it costs only $14,000 a year. This would apply to 40% of total cancer patients. However, cancer patients who receive surgery or chemotherapy (15% of the total) cost $123,000 on average. It wasn’t clear how the other 35% are classified.

Cost Bruce Pyenson, high-cost patients, Kate Fitch

A new bill before the Nebraska legislature seeks to achieve parity between how insurance policies handle chemotherapy administered by IV versus chemotherapy administered via oral medications. Here are some details from an Association Press article:

The measure by Omaha Sen. Jeremy Nordquist seeks to address what supporters see as a disparity between how the two cancer treatments are classified: Insurance policies usually cover the cost of IV chemotherapy as a medical benefit, while oral medications are viewed as prescription drug benefits with much larger copayments.

Nordquist said the idea for the bill came from his brother, an Omaha oncologist, who reported encounters with roughly half a dozen patients who could not afford the preferred cancer treatment in pill form. He pointed to a study by Milliman Inc., a national health care consulting firm, which found that the per-payer increase ranged from 5 cents to $1.50.

To see the full Milliman report on oral chemotherapy, go here.

Cancer Bruce Pyenson, Cancer, chemotherapy, Kate Fitch