Trading Access for Price in Healthcare Exchanges

To add a follow up the the previous post about Independence Blue Cross (IBC) offering state exchange consumers “tiered networks,” Fierce Health News is reporting that hospitals are pushing back on limited health exchange networks.

A story on the FierceHealthcare website notes that Seattle Children’s Hospital has sued Washington state’s Office of the Insurance Commissioner, claiming the health insurance exchange will prevent some patients from receiving care at the hospital,

The article also points out that most plans sold through health insurance exchanges limit patient choice of doctors and hospitals, believing consumers will trade provider choice and access for lower premiums.

The questions is, do the people buying these plans know they are giving up access for a lower price, and do they care?

What do you think? Comment below.

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Employer-Sponsored Health Insurance on Decline for 10 Years

Employer-sponsored health insurance has been in decline for more than 10 years, according to a report from the University of Michigan Center for Healthcare Research & Transformation in Ann Arbor.

“Many people are concerned that employers will drop employee health insurance as the Affordable Care Act fully kicks in, but the fact is, this has been happening for many years already,” said Marianne Udow-Phillips, director of CHRT.

“The bottom line is, consumers have been paying more for health coverage and employers have been dropping health coverage for more than a decade. These trends are happening independent of the Affordable Care Act,” Udow-Phillips said.

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Wellmark and Genesis Health System enter into Accountable Care Organization

Today, Wellmark Blue Cross and Blue Shield of Iowa officially announced a collaboration with Genesis Health System in Davenport to create an Accountable Care Organization (ACO). The new ACO will focus on coordinating patient care to improve quality, provide greater value, and slow increases in health care costs.

Genesis Health System President and CEO, Doug Cropper, said he looks forward to seeing improvements in the quality and reductions in the cost of care, adding, “This collaboration is the next important step of a process that began for Genesis two years ago when we made the commitment to participate in the transformation of health care. Wellmark and Genesis have a long, shared collaboration of serving our customers and patients with a high quality of care and a high level of efficiency.”

In an ACO, providers assume responsibility for managing a population of patients, both who are healthy and those who are in need of care, no matter where in the system the patients receive care. Wellmark offers the providers financial rewards if they reach established quality goals and slow the rate in increase in health care spend in caring for these patients. At the same time, providers will not earn their financial incentive if their quality declines or their costs run higher than expected.

John Forsyth, Wellmark chairman and CEO said, “Wellmark is pleased to enter into this ACO agreement with Genesis Health System, to improve the health care experience, and to help slow the rate of cost increases. This ACO was created to keep healthy people well and improve outcomes for our members when they need care.”

The ACO will enhance Wellmark members’ care in a variety of ways:

  • Providers encouraging their patients to take an active role in their health care.
  • Continued freedom to see the doctors of their choice.
  • Seamless customer experience when setting up an appointment, seeing multiple doctors, and receiving follow up care.
  • A reduction of redundant care and services.

“This has been an extensive and rewarding process,” said William Langley, M.D., executive director of the Genesis Accountable Care Organization. “Since Genesis made the commitment to form an ACO two years ago, we have advanced to the point that it’s now a reality. We are looking forward to collaborating with Wellmark to keep the population we serve healthy.”


About Wellmark

Wellmark, Inc. ( does business as Wellmark Blue Cross and Blue Shield of Iowa. Wellmark and its subsidiaries and affiliated companies, including Wellmark Blue Cross and Blue Shield of South Dakota and Wellmark Health Plan of Iowa, Inc., insure or pay health benefit claims for more than 2 million members in Iowa and South Dakota. Wellmark Blue Cross and Blue Shield of Iowa, Wellmark Blue Cross and Blue Shield of South Dakota, and Wellmark Health Plan of Iowa, Inc. are independent licensees of the Blue Cross and Blue Shield Association.  Contact: Courney Greene, 515-988-0918,


About Genesis Health System

Genesis Health System, its affiliates and partners offer a full continuum of health care services for a 12-county region of Eastern Iowa and Western Illinois. Genesis hospital affiliates include: Acute and tertiary hospital care at Genesis Medical Center, Davenport and DeWitt, Iowa and at the Illini Campus in Silvis, Illinois. Genesis also manages hospitals in Maquoketa, Iowa and Aledo, Ill.  Genesis also offers home health and hospice services through Genesis VNA and Hospice; Genesis Workplace Services; Clarissa C. Cook Hospice House; senior living facilities offering rehabilitation and long-term care; Genesis Health Group, with more nearly 170 primary care physicians and specialists; the Genesis Quad Cities  Family Practice Residency program. For more information, visit our Web site at www.genesishealth.comContact: Craig Cooper, 563-421-9263,


Capital BlueCross Launches Web Portal to Help People Learn About Health Care Reform

Capital BlueCross has launched a Web portal intended to help people learn about the recently enacted health care reform law. The site features short video clips of Capital BlueCross executives discussing various aspects of the new law, ranging from broader structural issues (such as financial and quality of care implications) to more specific issues of concern to our customers (such as changes in dependent coverage and Medicare-related questions).

The site also includes a Frequently Asked Questions (FAQ) section that will be updated on a regular basis based on questions the company receives from its various stakeholders. Other resources found on the site are executive opinion-editorials and links to other key sources of health care reform information.

The portal can be accessed through the company Web site at Click on “Learn About Health Care Reform” from the homepage. People are encouraged to visit the Web portal often, as it will be updated to reflect questions of interest raised by subscribers, and with new health care reform information as it becomes available.

“The new law is lengthy and, in parts, complex. It is natural for people to have a lot of questions,” said Mike Merenda, executive vice president. “So we looked for a way to guide our subscribers through the changes and to help make this more comprehensible. And we thought at least one way to do this would be to arrange for brief, informal discussions on different topics with the various people at our company. At the same time, we continue to gather questions from our stakeholders and to add written responses to the most frequently asked questions on the site.”

Capital BlueCross is the leading health insurer in its region, providing health insurance coverage to nearly one million people in central Pennsylvania and the Lehigh Valley. Capital BlueCross is committed to making health insurance simple for its customers and members through all the stages of life by offering nationally acclaimed customer service and a full range of innovative benefit programs for group and individual customers at competitive prices.

The company has been providing health security to the people and communities of central Pennsylvania and the Lehigh Valley for more than 70 years and employs about 2,000 people in the region.

Capital BlueCross is an independent licensee of the Blue Cross and Blue Shield Association.

More information about Capital BlueCross and its subsidiaries can be found by going to

Source: Capital BlueCross

Innovative Value-Based Health Insurance Plan Designs Can Improve Member Health at No Added Cost, Study Says.

Value-based insurance design programs — which reduce patient co-payments for highly effective treatments — can break even financially or possibly save money, according to a new study from University of Michigan, Harvard and other researchers.

In an article published today by Health Affairs, the researchers analyzed data from a large corporation that implemented a VBID program in 2005. Co-payment rates were reduced for employees using five classes of drugs used to treat several serious but common chronic conditions, including diabetes, hypertension and heart disease.

In this VBID program, patients using the specified medications were offered at least a 50% co-payment reduction. The study’s authors examined both the amounts spent on the high value services and overall spending by the employer using the VBID plan.

“From a total cost perspective, the VBID program likely broke even, and possibly saved money,” said A. Mark Fendrick, M.D., co-director of the University of Michigan’s Center for Value-Based Insurance Design [].

The financial returns from an employer perspective will be less favorable, but significant savings from reduced use of non-drug services are likely and will substantially offset the added employer spending on prescription drugs, the researchers found.

“But even if the VBID program were to slightly increase employers’ medical costs, our expectation is that as people increase the use of high-value services, their health will not only improve, but overall medical costs will decline.”

Fendrick, who also is a professor in the Department of Internal Medicine and professor of Health Management and Policy, created the VBID concept with Michael Chernew, professor in the Department of Health Care Policy at Harvard Medical School. Both are authors on the new study.

VBID intervention is a least cost neutral

“It seems reasonable to conclude that the financial effects of this VBID intervention were at least cost neutral – if not cost saving – from a total cost perspective. Value-based insurance designs could be an important component of a broader cost containment strategy,” says Chernew about the study.

Fendrick stresses that VBID programs focus on removing barriers for treatments that are proven to be effective. When costs are reduced, patients are more likely to use high value services. For those with lower co-payments, the percentage of patients not taking their medication declined by about 10 percent in 4 of the 5 drug classes.

The financial impact of behaviors resulting in improved health can be measured in terms of savings on both medical [such as fewer emergency room visits and hospitalizations] and non-medical [such as fewer disability days, less absenteeism and greater worker productivity] spending, Fendrick says.

Fendrick and Chernew currently are working with Congressional leaders on incorporating VBID concepts in health care reform. Language encouraging the use of VBID concepts is in the bill being negotiated in conference committee.

“The clinical benefits of removing barriers to high value services were clear, but before this paper, the economic ramifications of VBID programs were uncertain. We can now say, at worst, VBID programs are cost neutral from a total cost perspective,” Fendrick says.

Chernew adds. “Payers are facing tremendous pressure to reign in health care costs. Compared to the status quo, we are confident that, if carefully designed, VBID programs can produce more health at any price. We believe that VBID should remain an integral part of ongoing health care reform discussions.”

Source: University of Michigan Health System

CBO Double Counts Medicare Savings in the Patient Protection and Affordable Care Act.

The CBO today admitted that it had double counted the savings that would results from the cuts to Medicare included in the Patient Protection and Affordable Care Act (PPACA).

Essentially, the CBO had credited the savings to the Health Insurance Trust Fund (HI) extending the amount of benefits that can be paid out. At the same time, the cuts were also being used to offset the additional costs of providing subsidies to low income uninsureds to all them to buy coverage.

What impact this will have on the passage of the healthcare bill is yet to be determined, but there is already speculation that the healthcare legislation will not be finalized in time for President Obama’s State of the Union Address.

Here is the letter that was posted today on the CBO website:

CBO has been asked for additional information about the projected effects of the Patient Protection and Affordable Care Act (PPACA), the pending health care reform legislation, on the federal budget and on the balance in the Hospital Insurance (HI) trust fund, from which Medicare Part A benefits are paid. Specifically, CBO has been asked whether the reductions in projected Part A outlays and increases in projected HI revenues under the legislation can provide additional resources to pay future Medicare benefits while simultaneously providing resources to pay for new programs outside of Medicare. Our answer is basically no.

How the HI Trust Fund Works

The HI trust fund, like other federal trust funds, is essentially an accounting mechanism. In a given year, the sum of specified HI receipts and the interest that is credited on the previous trust fund balance, less spending for Medicare Part A benefits, represents the surplus (or deficit, if the latter is greater) in the trust fund for that year. Any cash generated when there is an excess of receipts over spending is not retained by the trust fund; rather, it is turned over to the Treasury, which provides government bonds to the trust fund in exchange and uses the cash to finance the governments ongoing activities. The resources to redeem government bonds in the HI trust fund and thereby pay for Medicare benefits in some future year will have to be generated from taxes, other government income, or government borrowing in that year.

The balance in the trust fund represents the accumulated difference between the funds receipts and outlays over time, including interest credited to the fund. Reports on HI trust fund balances from the Medicare trustees and others show the extent of prefunding of benefits that theoretically is occurring in the trust fund. However, because the government has used the cash from the trust fund surpluses to finance other current activities rather than saving the cash by running unified budget surpluses, the government as a whole has not been truly prefunding Medicare benefits.

The Impact of the PPACA on the HI Trust Fund and on the Budget as a Whole

In a report released this afternoon, CBO and the staff of the Joint Committee on Taxation (JCT) estimated that the PPACA, incorporating the managers amendment, would reduce Part A outlays by $245 billion and increase HI revenues by $113 billion during the 2010-2019 period. Those changes would increase the trust funds balances sufficiently to postpone exhaustion for several years. However, the improvement in Medicares finances would not be matched by a corresponding improvement in the federal governments overall finances. CBO and JCT estimated that the PPACA as amended would add more than $400 billion ($245 billion + $113 billion + interest) to the balance of the HI trust fund by 2019, while reducing federal budget deficits by a total of $132 billion by 2019.

The reductions in projected Part A outlays and increases in projected HI revenues would significantly raise balances in the HI trust fund and create the appearance that significant additional resources had been set aside to pay for future Medicare benefits. However, the additional savings by the government as a wholewhich represent the true increase in the ability to pay for future Medicare benefits or other programswould be a good deal smaller.

The key point is that the savings to the HI trust fund under the PPACA would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs. Trust fund accounting shows the magnitude of the savings within the trust fund, and those savings indeed improve the solvency of that fund; however, that accounting ignores the burden that would be faced by the rest of the government later in redeeming the bonds held by the trust fund. Unified budget accounting shows that the majority of the HI trust fund savings would be used to pay for other spending under the PPACA and would not enhance the ability of the government to redeem the bonds credited to the trust fund to pay for future Medicare benefits. To describe the full amount of HI trust fund savings as both improving the governments ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the governments fiscal position.

Aon Says a Majority of Employers with Consumer-Driven Health Plans Prefer Health Savings Accounts.

Of employers who offer a consumer-driven health plan, Health Savings Accounts (HSAs) continue to be the preferred funding choice among organizations, according to a survey released today by Aon Consulting, the global human capital consulting organization.

Of the 370 survey respondents, 44 percent of employers currently offer a consumer-driven health (CDH) plan to employees, which is similar to last year but significantly higher than in 2006 when only 28 percent of employers offered this type of plan to their workforce. Of those offering CDH plans this year, 56 percent are now using the HSA model, 35 percent of organizations are using the Health Reimbursement Arrangements (HRA) model, and 9 percent use both.
Aon reports that over the last three years, the gap has widened between HSAs and HRAs, as the number of employers offering HSAs has gone from 48 percent to 56 percent, and the number offering HRAs has dropped from 43 percent to 35 percent. The following chart reflects this trend:

Percentage of employers offering HSA and HRA plans
Year�������������������� HSA����������������� HRA
—-�������������������� —����������������� —
2009�������������������� 56%����������������� 35%
2008�������������������� 49%����������������� 38%
2007�������������������� 48%����������������� 42%
2006�������������������� 48%����������������� 43%

“HSAs have grown in popularity relative to HRAs since HSAs are considered more advantageous to the employee than an HRA,” said John Zern, U.S. Health & Benefits Practice Director with Aon Consulting. “With an HSA, employees can contribute their own money, the account is owned by the employee and is portable at termination of employment. HSAs also have great tax advantages.”

Additionally, the survey found the majority of employers (83 percent) offer the HSA or HRA as an optional plan, while the remaining 17 percent have implemented a total replacement CDH program where the only plan choices offered to employees are CDH plans.

“Although only 17 percent of employers offer a total replacement CDH program, we expect that number to increase next year,” said Bill Sharon, National Consumer Driven Health Care Practice leader with Aon Consulting. “In response to the economic downturn and double digit health care cost increases, employers are becoming more aggressive in managing their health care costs. Implementing a total replacement CDH program is one of the leading health care strategies available to employers.”

The survey also found that more employers who offer the HSA plan are contributing money to the plan (66 percent versus 60 percent last year). The breakdown of this group is as follows: a flat dollar amount of less than $500 per person (15 percent), a flat dollar amount of $500 or more (45 percent), and a matching employer contribution (6 percent).

Meanwhile, employers offering an HRA plan make a wide variety of contributions to the account for a single employee: 4 percent provide less than $300; 11 percent provide between $300 and $499; 49 percent provide between $500 and $799; 1 percent provide between $800 and $999; and 34 percent provide $1,000 or more.

Employer opinions on the future of the CDH concept are still split, but opinions have improved in the past three years. The survey found 45 percent believe CDH plans will be successful in controlling employers’ health care costs in five years, compared to 39 percent of employers in 2006; 26 percent do not believe they will be successful, down from 30 percent in 2006; and 29 percent don’t know the impact it will have on health care costs, down from 31 percent who had that perception three years ago.

“The outcome of national health reform could influence the future of CDH plans,” said Tom Lerche, U.S. Health Care Practice Leader with Aon Consulting. “In particular, the proposed minimum plan design requirements could impact CDH plans offered through the proposed Insurance Exchanges, and could over time, impact CDH plans offered outside the Exchanges.

For more information on Aon, log onto

New Poll Finds 71 Percent of Americans Favor Investing More in Disease Prevention as Central to Health Reform.

At least one aspect of the healthcare reform package making its way through Congress seems to be very popular with voters. A new public opinion survey released today says that 71 percent of Americans would favor an increased investment in disease prevention.

The poll was conducted by Greenberg Quinlan Rosner Research and Public Opinion Strategies on behalf of Trust for America’s Health (TFAH) and the Robert Wood Johnson Foundation (RWJF). It found that, by nearly a three-to-one margin (70 percent to 24 percent), people think prevention will save money rather than cost money. Sixty percent of Americans believe investing in prevention is worth it at a cost of $34 billion out of the $900 billion total proposed health reform spending proposals. Sixty-five percent of Americans say they would either be more likely to support a member of Congress who votes for the proposal to invest in prevention or that it would make no difference to their vote.

“Prevention is clearly one of the most popular parts of health reform,” said Al Quinlan, President of Greenberg Quinlan Rosner Research. “Americans see a real payoff for investing in disease prevention in terms of lowering disease rates and reducing health care costs.”

Bill McInturff, Partner and Co-Founder of Public Opinion Strategies points out, Even when people learn the price tag in the context of health reform, Americans are supportive of increasing the nation’s investment in prevention and believe it will have a positive impact on improving health and lowering health costs down the road.”

Prevention was the second highest proposal tested in the survey placing right behind prohibiting insurance companies from denying coverage because of age, medical history, or pre-existing conditions. Other proposals tested included providing tax credits to small businesses and requiring all businesses to provide health care for their employees or contribute to a fund to help pay for their coverage.

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Accenture Launches Innovation Center for Health.

Accenture, the big global management consulting, technology services and outsourcing company based in Chicago and London, has announced the launch of the Accenture Innovation Center for Health.

The company says that through the center they will address critical dimensions of improving the performance of healthcare systems, including the impact of healthcare reform in multiple countries, health information exchanges, electronic medical records, using data to drive clinical transformation and integrated health management, and other payer and provider issues and solutions, including ICD-10 compliance.

Accenture said in a press release that the center will identify and develop innovative ideas and solutions to help clients achieve high performance in the healthcare industry by producing comprehensive, fact-based research reports, organizing client workshops, and facilitating industry forums.

State Lawmakers Push for Health Care Opt-out.

The Kansas City Star has picked up on a story that could begin the shape the healthcare reform process. Apparently, three Republican lawmakers in Kansas want to give the state an opt-out should Congress pass health reforms that mandate individual health insurance. The amendment would say no law can require individuals or employers to buy health insurance.

The Star goes on to say that their proposal, which would alter the Kansas Constitution, is similar to efforts under way in more than half the states. Its a pointed attempt to get President Barack Obama and Congress to back off efforts to retool the nations health care system.

These state initiated efforts may be more of an attempt to influence policy in Washington than they are legitimate effort s to block legislation that may get passed by Congress.

To be added to the state constitution in Kansas, the legislation must be passed by a two-thirds majority of the Kansas House and Senate and then be approved by voters next year.

Still, it will be interesting to see if any of these state level push-backs build any traction.