Archives: October 2005

Mon Oct 17, 2005

California Employers Offer Cross-Border Healthcare in Mexico

Southern California employees travel to Mexico, where they receive healthcare that is less expensive and reportedly better, according to the San Diego Union-Tribune.

Posted by: Duncan Kinder on Oct 17, 05 | 3:07 pm | Profile

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Boston Globe: Employer-Hased Health Insurance is an Idea Whose Time Had Come and Gone

Employer-based health insurance is an idea whose time had come and gone, according to the Boston Globe, which explores potential alternatives.

Posted by: Duncan Kinder on Oct 17, 05 | 2:05 pm | Profile

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GM UAW Reach Tentative Health Care Agreement

General Motors and the United Auto Workers have reached a tentative health care agreement, according to the New York Times.

Posted by: Duncan Kinder on Oct 17, 05 | 2:01 pm | Profile

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Thu Oct 13, 2005

Physician-Owned Hospitals Skim Patients With Better Insurance

Physicians who self-refer patients to their own specialty hospitals are reaping financial benefits by "cherry-picking" less severe patients and "cream-skimming& patients with better insurance, a Georgetown University economist said Wednesday at a Wichita health care seminar, according to the Wichita Eagle.

Posted by: Duncan Kinder on Oct 13, 05 | 7:33 pm | Profile

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Wed Oct 12, 2005

Survey: American Public Wants Electronic Medical Records But Only With Privacy Safeguards

The American public believes strongly that electronic medical records can make the difference between life and death in emergencies, new research being released today shows. Nearly three out of four Americans (72%) say they favor the establishment of a nationwide electronic information exchange that would allow a patient's health information to be shared with authorized individuals quickly, privately, and securely via the Internet. However, ensuring patient privacy and control over their own records is essential to full consumer acceptance of such an exchange. More than three out of four Americans (79%) say making sure their records could be shared only after they provide permission is a priority.

The survey results will be presented Oct. 11 at the first national conference to focus on the needs and concerns of consumers, including privacy, in the rapidly growing field of health information technology. Conference organizers also will present seven consumer and patient principles, which have been endorsed by a wide range of consumer, business, and other organizations involved in health care. The principles are designed to protect privacy and ensure that personal health information is used appropriately in health information exchange. Sponsored by the Markle Foundation, the Robert Wood Johnson Foundation (RWJF), and the Agency for Healthcare Research and Quality (AHRQ), the conference will focus on advances in personal health technology and the core principles for creating a health information environment in which consumers can use information technology to participate more fully in managing their health and health care. More than 700 individuals registered to take part in the conference, including consumer advocates, business leaders, entrepreneurs, medical professionals, and government officials.

"Americans use digital information technology to manage their finances, pay bills, book flights, and customize the music they listen to, and our research shows they now want to use health information technology to get the best care possible for themselves and be better able to manage their own health," said Zo� Baird, president of the Markle Foundation, which funded the research. "People realize that if they or those they love are in an accident or disaster, having their medical records available at a moment's notice through secure, electronic information exchange could mean the difference between life and death."

"We are on the cusp of a technological revolution in health care, as more personal digital health products are developed, and consumers in the 'iPod generation' are more receptive to using them," said David Lansky, senior director of the health program at the Markle Foundation. "Each device that is developed should meet consumers' needs for privacy and security, as should the entire nationwide health information environment in which consumers and health professionals will be using these digital tools. That is why these new patient and consumer principles are being proposed."

The number and types of personal digital health technologies is growing rapidly, and a bipartisan group of national leaders is keenly interested in how information technology can transform health care. Business leaders, including Andy Grove of Intel, and national leaders, including President Bush, Senate Majority Leader Bill Frist (R-Tenn.), Sen. Hillary Clinton (D-N.Y.), Rep. Nancy Johnson (R-Conn.), Rep. Patrick Kennedy (D-R.I.), and former House Speaker Newt Gingrich, are advocating the use of information technology to improve the quality of health care, reduce medical errors, and increase efficiency. President Bush has called for all Americans to have an electronic personal health record within 10 years.

The survey released at today's conference shows that four in five Americans (80%) believe that if physicians kept electronic medical records on their patients, health care quality would improve and medical errors would be reduced, because authorized doctors would be able to retrieve a patient's medical history in a matter of seconds. An equal number (81%) believe that the ability of researchers to review millions of records anonymously to determine best treatment practices would help all doctors improve the quality of medical care.

Despite these high levels of support for health information technology, keeping electronic medical information private and secure remains a top concern for consumers. Today's research shows that people are much more likely to support online medical records if they have control over their own information and safeguards to protect privacy are in place. Public Opinion Strategies, Alexandria, VA, conducted the survey Sept. 20-22, 2005. The survey of 800 adults has a margin of error of +/- 3.46 percent. According to the poll:

Individuals want to review who has seen their medical information.
Eighty-one percent of respondents say reviewing who has had access to their personal health information is a "top" or "high" priority.
Patients want to be asked before their information is shared.
Seventy-nine percent of respondents say it is a "top" or "high" priority that their medical information be shared electronically only with their permission.
Consumers want the identity of anyone who sees their records to be carefully confirmed.
Ninety-one percent of respondents say carefully confirming the identity of anyone using the system to prevent unauthorized access or cases of mistaken identify is a "top" or "high" priority.
The public does not want employers to have access to workers' health information.
Sixty-eight percent of respondents say it is a "top" or "high" priority that employers not have access to secure health information networks.

A separate study, conducted by Public Opinion Strategies on Sept. 28-Oct. 2, 2005, (800 adults; margin of error +/- 3.46%) showed that consumers would use their own secure, online "personal health record" account to better manage their health care. Nearly seven out of 10 respondents (69%) said they would use this online service to check for mistakes in their medical records, as well as to check and refill prescriptions (68%). Nearly six in 10 respondents said they would like to get medical results over the Internet (58%) or conduct secure and private email communications with their doctors (57%). Taken together, these results show a strong interest among consumers in using health information technology to more fully participate in their own health care.

The new consumer and patient principles to guide the development of online health information exchange were developed by the Personal Health Technology Council, a group of 44 leading consumer and privacy advocates, medical professionals, informatics experts, payers, technologists, federal policymakers, bio-ethicists, and researchers. The group believes these principles should guide developments in the private and public sectors, including several pieces of legislation that have already been introduced in Congress and would increase the use of electronic health records within any new nationwide health information exchange.

The seven patient and consumer principles endorsed by the Personal Health Technology Council are:

1. Individuals should be able to access their health and medical data conveniently and affordably.
2. Individuals should be able to authorize when and with whom their health data are shared. Individuals should be able to refuse to make their health data available for sharing by opting out of nationwide information exchange.
3. Individuals should be able to designate someone else, such as a loved one, to have access to and exercise control over how their records are shared.
4. Individuals should receive easily understood information about all the ways that their health data may be used or shared.
5. Individuals should be able to review which entities have had access to their personal health data.
6. Electronic health data exchanges must protect the integrity, security, privacy, and confidentiality of an individual's information.
7. Independent bodies, accountable to the public, should oversee local and nationwide electronic health data exchanges. No single stakeholder group should dominate these oversight bodies, and consumer representatives selected by their peers should participate as full voting members.

"When all Americans have the ability to review their own medical records online, we then will begin to see a health care system that reduces disparities in medical care, and increases the quality of care for all Americans," said John R. Lumpkin, M.D., M.P.H., senior vice president and the director of the Health Care Group for RWJF. "People want to take advantage of health information technology, but they need to trust that the new information environment respects their privacy and ensures the security of their information. Therefore, the new health information technologies that are being created, as well as the health information environment itself, must focus on consumers' concerns about privacy, security, and personal control."

"Consumers have clearly understood how electronic records can improve quality of care, and the recent experience of lost medical records in hurricane Katrina has made this lesson even more vivid," said AHRQ Director Carolyn Clancy, M.D. "But access and control for the patient must be built in from the beginning. Under HHS Secretary Mike Leavitt's leadership, AHRQ will help lay the groundwork for privacy and security as an integral part of building the technical foundation for electronic health records."

To view today's research, read the draft consumer principles, or locate information on today's conference, go to or

Posted by: Duncan Kinder on Oct 12, 05 | 8:24 pm | Profile

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Tue Oct 11, 2005

JAMA: Physician Pay-for-Performance Programs May Produce Little Gain in Quality

Paying clinicians to reach a common, fixed performance target may produce little gain in overall quality, and may largely reward those with higher performance at baseline, according to a study in the October 12 issue of JAMA.

The number of health plans and purchasers in the United States that have adopted pay-for-performance mechanisms for quality improvement is growing rapidly, according to background information in the article. However, most of these programs are in the early stages of trial, evaluation, and adjustment. Although there is intense interest in and optimism about pay-for-performance programs among many policy makers and payers, there is little published research on pay-for-performance in health care. There have been a few studies demonstrating that pay-for-performance leads to improved quality of care.

Meredith B. Rosenthal, Ph.D., of the Harvard School of Public Health, Boston, and colleagues conducted a study on the impact of a prototypical physician pay-for-performance on quality of care within one of the nation's largest health plans, PacifiCare Health Systems. In 2003, PacifiCare began paying its California medical groups bonuses according to meeting or exceeding 10 clinical and service quality targets. The researchers examined the performance of California medical groups that were subject to pay-for-performance, and a comparison group in the Pacific Northwest (Oregon and Washington). Quality improvement reports were included from October 2001 through April 2004 issued to approximately 300 large physician organizations. There were three process measures of clinical quality: cervical cancer screening, mammography, and hemoglobin A1c testing.

The researchers found that clinical quality scores improved as follows: for cervical cancer screening, 5.3 percent for California vs. 1.7 percent for Pacific Northwest; for mammography, 1.9 percent vs. 0.2 percent; and for hemoglobin A1c testing, 2.1 percent vs. 2.1 percent. Compared with physician groups in the Pacific Northwest, the California network demonstrated greater quality improvement after the pay-for-performance intervention only in cervical cancer screening (a 3.6 percent difference in improvement). For all 3 measures, physician groups with baseline performance at or above the performance threshold for receipt of a bonus improved the least but garnered the largest share of the bonus payments.

"In the first year of its quality incentive program (QIP), the plan paid $3.4 million of a potential bonus pool of $12.9 million. Three quarters of the 172 physician groups eligible at some point during the year for the program received some funds from the bonus pool. We also observed that few groups reached a majority of targets, consistent with the low correlation in performance across clinical areas that has been observed in other studies. Physician groups whose performance was initially lowest improved the most, whereas physician groups that had previously achieved the targeted level of performance improved the least. Unlike quality improvement, which followed an inverse relationship to baseline performance, bonus dollars were garnered in direct proportion to baseline performance. Physician groups whose performance was above the bonus threshold at baseline captured 75 percent of bonus payments on average across the 3 quality domains we examined, despite their limited improvement," the authors write.

"Our findings give rise to a number of speculations about the effects of pay-for-performance. First, groups with baseline performance already above the targeted threshold appeared to understand that they needed only to maintain the status quo to receive the bonus payments. More surprising, perhaps, is that low-performing groups improved as much as they did, given that their short-run chances of receiving a bonus were likely to be low. One possibility is that the groups viewed the QIP as a larger signal of a changing environment in which they would face increasing pressure to improve their care systems and decided to begin moving in that direction. Paying explicitly for quality improvement might alter the incentives for high-performing and low-performing groups, distribute bonus dollars more toward the latter group, and possibly increase the overall impact of pay-for-performance."

The authors add that one possible reason that the QIP failed to yield a greater response is that the financial rewards for quality were too low to motivate substantial departures from the underlying trend in quality improvement. Per enrollee, the maximum annual bonus was a relatively modest $27, or about 5 percent of the professional capitation amount. Moreover, PacifiCare accounts for only about 15 percent of the average group's revenue.

"PacifiCare's QIP, like most current pay-for-performance programs, should be viewed as a first step in the direction of aligning payment incentives with health system quality goals. Realization of the full potential of pay-for-performance to reduce the persistent gap between evidence-based and actual practice will require that payers adapt their incentive strategies as evidence to support best practices accumulates. The principal lesson we derive from this experience is that incentive design matters. The accumulating evidence from the continuing experimentation with pay-for-performance in the market will highlight these initial findings and other potential design lessons," the researchers conclude.

Posted by: Duncan Kinder on Oct 11, 05 | 11:51 pm | Profile

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JAMA: Liability Insurance Obstacles Cause Florida Physicisans to Decrease or Eliminate Health Services

Florida physicians reportedly continued to decrease or eliminate important health services in 2004 in response to difficulties in finding or paying for professional liability insurance, according to a study in the October 10 issue of Archives of Internal Medicine, one of the JAMA/Archives journals.

Despite growing concern about possible effects of instability in the professional liability insurance (PLI) market on patient access to health care, there has been little formal, systematic assessment of how physicians may be changing their services to adapt, according to background information in the article. Understanding the impact of professional liability insurance market instability on health service delivery is important to clinicians and policymakers concerned with patients' access to needed medical care, the authors suggest.

Robert G. Brooks, M.D., of Florida State University, Tallahassee, and colleagues surveyed rural and urban/suburban physicians in Florida in 2004 to determine recent changes in services offered, professional liability insurance premium changes, satisfaction with practice and future practice plans.

Overall, 727 (54.4 percent) of the 1,346 responding physicians (380/685 rural and 347/661 urban/suburban physicians) stated that they had decreased or eliminated the delivery of patient services in the previous year, the researchers report. "The most common services eliminated were nursing home coverage (42.1 percent), vaginal deliveries (29.1 percent) cesarean deliveries (26.0 percent), emergency department coverage (22.8 percent) and mental health services (21.2 percent). In addition to outright elimination, a number of physicians responded that they had decreased services in these areas as well. . Surgical specialists (70.2 percent) and general surgeons (68.5 percent) respectively, had the highest number of decreased or eliminated services. Obstetricians/gynecologists (63.6 percent) and family medicine physicians (60.2 percent) were also commonly represented in this group."

"Changes in health care services seemed to be related to changes in PLI premiums," the authors write. "Overall, physicians who had premium changes in the highest quartile (increase > 50 percent) (61.1 percent) were more likely to indicate that they had decreased or eliminated services compared with those in the lowest quartile (increase < 15 percent) (51.4 percent). . Similarly, we noted statistically significant relationships between increases in PLI premiums and decrease in or elimination of services for rural physicians (66.2 percent vs. 48.1 percent) and for actual premiums for urban/suburban physicians (64.7 percent vs. 43.0 percent.)"

The authors conclude that the findings presented in the study "strongly suggest that physicians across Florida have continued to decrease or eliminate important health care services. This trend seems to be affecting a broad array of services and types of physicians, both generalists and specialists. Given the importance of access to health care for vulnerable populations, these statewide trends suggest the need for additional attention by physician leaders and policy-makers to the ongoing effects of the PLI market."

Posted by: Duncan Kinder on Oct 11, 05 | 11:47 pm | Profile

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Employers and Employees Struggle With Health Care Costs; Rate Hikes Continue to Outpace Inflation and Salary Increases

U.S. companies continue to face significant health care cost increases, but 2005�s is the lowest rate increase in six years, according to global human resources services firm Hewitt Associates (NYSE: HEW). For 2006, Hewitt is projecting a 9.9 percent average increase for employers, following 2005�s 9.2 percent increase.

Employees� contributions for health care have steadily increased, nearly doubling since 2002. Hewitt projects that the average employee contribution1 for 2006 will be $1,612, representing 20 percent of the overall health care premium, and up from $1,444 in 2005.

In addition to significant employee contribution increases, employees also have experienced increased out-of-pocket costs, such as copayments, coinsurance and deductibles. The average employee out-of-pocket costs are expected to increase from $1,366 in 2005 to $1,524 in 2006. Overall, employees� total health care costs -- including employee contribution and out-of-pocket costs -- are projected to be $3,136 in 2006, up 12 percent from $2,810 in 2005.

With relatively flat pay increases -- Hewitt projects salaried exempt employees can expect a base salary increase of 3.6 percent2 in 2006 -- rising health care costs are offsetting salary gains for many workers. For example, an employee making $40,000 today who receives the average salary increase ($1,440) will use 23 percent of that increase to pay for the increase in health care costs next year.

�While it is encouraging to see cost increases stabilizing, the rate of growth remains unsustainable and the magnitude of health care costs continue to be a major concern for employers� bottom lines and employees� wallets,� said Craig Dolezal, national health care practice leader at Hewitt Associates. �These slightly lower cost increases are due to a variety of factors, including increased consumer awareness and financial responsibility, continued consolidation of health plans and providers, and lower overall inflationary demands. However, health care is still growing almost three times faster than wages and general inflation.�

Cost Increases by Major Metropolitan Area

While Hewitt�s data shows a moderation in costs, a few major U.S. markets continued to experience double-digit increases. Hewitt�s 2005 data reveals that the following markets recorded the highest rate increases: Cleveland/Akron (12.2 percent), Boston (11.1 percent), Atlanta (11.1 percent), Houston (10.6 percent), Orlando (10.4 percent), Kansas City (10.4 percent), Orange County (10.4 percent), Sacramento (10.4 percent) and Tampa Bay Area (10.3 percent).

�Health care remains a very local issue driven by demographics, regional health issues, and the market dynamics of the providers and health plans competing for patients and members. The current efforts for more consistent treatment protocols, better health risk management, and price and quality transparency will narrow, not eliminate, these regional differences over time,� said Dolezal.

2006 Cost Increases by Plan Type

On average, Hewitt forecasts that companies will experience 2006 cost increases of 9.5 percent for preferred provider organizations (PPOs), 10 percent for health maintenance organization plans (HMOs), and 10.5 percent for both traditional indemnity and point-of-service (POS) plans.

That means, from 2005 to 2006, the average cost per person for major companies will increase from $7,048 to $7,752 for HMOs; $7,374 to $8,075 for PPOs; $7,322 to $8,091 for indemnity plans; and $7,849 to $8,673 for POS plans.

Employer Reaction to Rate Increases

Companies continue to evaluate and implement substantial changes -- both traditional and leading-edge strategies -- to manage increasing health care costs. Hewitt Associates is currently working with many large employers to develop new strategies to reduce costs and assist employees with managing their heath care decisions and financial responsibilities, including:

* Offering consumer-directed health plans. Hewitt has found that companies with significant enrollment in consumer-directed health plans, such as account based plans and customized �build-your-own� designs that allow employees to tailor a plan based on their individual health and financial needs, are experiencing rate increases well below the national trend or, in some cases, even decreased costs. �To date, Hewitt has helped more than 100 organizations introduce consumer-directed plans and we�re starting to see positive results,� said Dolezal. �We�re continuing to see a lot of interest in these plans and expect even more companies will offer them in the next few years, maybe as many as 25 to 30 percent of all large employers.�

* Contracting with plans that offer specialized or health risk management programs and focus on wellness and prevention. In an effort to enhance or maintain the health of their workforce, more employers are offering specialized or health risk management programs that can help manage employees� chronic health conditions. More companies are offering wellness and health promotion programs, as well as providing financial incentives for employees to participate in these programs. �In the end, we need to continue to help people better manage their health risks and the care they receive if we have any real hope of reducing health care cost increases,� said Dolezal.

* Requiring more quality data and price transparency. Employers have increased their focus on quality. Many are choosing to work only with plans and hospitals that have solid track records in terms of efficiency, quality, outcomes and cost. Quality information is becoming more detailed and widely available, and employers have begun to require greater cost transparency, especially in the area of prescription drugs.

* Changing prescription drug coverage. Prescription drug costs continue to be a major driver behind insurance hikes, and employers are actively evaluating new strategies to contain these costs. For next year, companies are implementing higher copayments and coinsurance models, mandating low-cost substitution provisions and mail-order for certain therapeutic drug classes, and offering generous generic programs and designs.

�The American public will continue to demand the highest level of health care in the world, and the health care industry will continue to strive to deliver that level of service. Our challenge and obligation then is to satisfy those demands in the most efficient manner possible by identifying and promoting consistent quality care at affordable costs for both employers and patients,� said Dolezal.

About Hewitt's Data

Hewitt�s health care cost data is derived from the Hewitt Health Value Initiative, a cost and performance analysis database of more than 2,000 health plans throughout the U.S., including 400 major employers and more than 18 million health plan participants.

Posted by: Duncan Kinder on Oct 11, 05 | 1:08 pm | Profile

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Tue Oct 04, 2005

Commonwealth Fund: U.S. Health System Fraught With Waste and Inefficiency

Despite spending more per capita on health care than any other country, the U.S. health system is fraught with waste and inefficiency, according to a new chartbook released today by the Commonwealth Fund Commission on a High Performance Health System. The chartbook, discussed at a Capitol Hill briefing sponsored by the Fund and the Alliance for Health Reform, paints a stark picture of a fragmented system beset by widespread disparities in access to and quality of care.

A Need to Transform the U.S. Health Care System: Improving Access, Quality, and Efficiency also points to promising opportunities for reforming the health system. These include management of high-cost care, enhancements in care coordination, disease management, and developing networks of high performing providers under Medicare, Medicaid, and private insurance. The Commission on a High Performance Health System will be exploring such opportunities as part of its mission to move the nation toward a health care system providing better access, quality, and efficiency.

Commission chair James J. Mongan, M.D., president and CEO of Partners HealthCare, in his remarks at the Alliance briefing, noted that "the disconnect between people wanting the new things that medical science can produce, yet not being sure that they are willing or able to pay for them." In his presentation, A Tale of Two Health Systems Mongan said this disconnect "will lead to more of a focus on the value equation in health care, and to more of a focus on a high-performing health system."

The commission's goals are outlined in an essay by Fund president Karen Davis, Ph.D., Toward a High Performance Health System: New Commonwealth Fund Commission, which was published last month in Health Affairs.

A webcast of the commission event, provided by, will be available Tuesday, October 4, on the Alliance for Health Reform Web site.

Posted by: Duncan Kinder on Oct 04, 05 | 10:51 am | Profile

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