HHA Workers get OT and Minimum Wage

I recently came across an interesting article regarding proposed regulations for home health workers. Sometimes, it is the little things that are not dramatic that can affect our clients’ plans.

As described in more detail in the article below, On Thursday December 11, the Obama administration proposed regulations to give the nation’s nearly two million home care workers minimum wage and overtime protections. Those workers have long been exempted from coverage.  Home healthcare aides are not protected under the Fair Labor Standards Act.  Therefore, their employers are not subject to minimum wage or overtime regulations.

NY Times Article

As home healthcare aides are a rapidly growing work force, raising their wages and providing for overtime could represent a significant increase in financial responsibility for their employers.  One result might be that home health agencies may be forced to cut hours for their workers.  Also, the agencies may not have the financial resources to hire additional aides. In a slowly recovering economy, this would be an unfortunate result for both home healthcare agencies and their workers.

Another result might be that fewer patients may receive home health services or patients may not receive all of the care they need.  Patients might be required to pay more for the home health services they do receive.  Another result might be that home health workers might not be able to make as much as they do now as overtime hours are cut.

            Requiring an increase in wages could slow the growth of the industry, despite the projected significant increase in the need for home healthcare over the next 15-20 years. Slowing the growth of the home healthcare industry could lead to a decelerating rate of growth in the demand for many home healthcare products. If the availability of home healthcare services is curtailed, might that lead to an increase in direct and indirect healthcare costs?  For example, limiting access to home healthcare could encourage the use of more costly providers or an increase in negative outcomes as patients go without the care they need.

Now, what are your thoughts? 

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Woes of a Disjointed Healthcare System

As we all know, the cost of healthcare in the United States is high and growing.  Expenditures surpassed $2.3 trillion in 2008, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980. Stemming this growth has become a major policy priority, as the government, employers, and consumers increasingly struggle to keep up with health care costs. (Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, National Health Care Expenditures Data, January 2010.)

The healthcare industry, patient advocates and governmental bodies are pursuing many solutions.  These include, but are not limited to:

• Investment in information technology
• Improving quality and efficiency (e.g., encouraging evidence-based medicine, reducing unnecessary variations in care) – Some experts estimate that up to 30% of health care is unnecessary, emphasizing the need to streamline the health care system and eliminate this needless spending.
• Adjusting provider compensation (e.g., sharing cost savings)
• Government regulation (e.g., recent Medicare initiatives to control costs)
• Encouraging prevention
• Increasing consumer involvement in purchasing
• Altering the tax preference for employer-sponsored insurance

One of the strengths of our current healthcare system, as well as one of its weaknesses, is that it is a market-based system.  We have multiple providers competing against each other.  The strength is that competition leads to innovation if not the low cost we might expect.  However, a market-based, competitive system also leads to a system that can make it difficult for providers to work together.  The resulting lack of coordination can have a negative impact on patient care and lost opportunities for reducing costs.

For example, MedSpan has a client that provides patient care in all 50 states.  They considered developing a unique program that could extend the reach of physicians’ care between visits, enhance patient-physician relationships, encourage therapy compliance and afford the opportunity for earlier identification of disease progression.  However, one of the challenges the program faces is that without coverage of the program by all health plans in a geographic region, physicians do not easily know which patients they can refer to the program.

Assume that only a few health plans provided coverage for our client’s program.  A physician would need to 1) determine that a patient would benefit from the program, 2) determine if the patient’s health plan provides coverage for the program and 3) refer the patient to the provider (my client), 4) develop a relationship with the provider and 5) exchange information to monitor progress, thereby ensuring a benefit for the patient and physician.

That’s a lot of work for physicians who, typically, do not have the time available.  This is especially true if only 5 or 10 patients might benefit from the program and only a few might have coverage.  As a result, a potentially beneficial program falls through the cracks due to a disjointed healthcare system.

A system integrated through better information systems would address some of the challenges the above program faces, but not all.  An extreme solution would be a single-payer system.  While facilitating coordination of care, a single payer system would engender a host of other issues.  For example, the innovation that competition generates may diminish.  Therefore, the question to address is how close should we move to a single payer system while maintaining the competitive, free market that is the foundation of the American economy?

That’s an issue we’ll address in a future entry into our blog.

What are Accountable Care Organizations (ACOs)?

Hello again!

Since our last blog post, the leaves have turned green, the summer months have passed, and we have just begun to enjoy the crisp autumn air.

Lately there has been much debate surrounding the launch of Accountable Care Organizations (ACOs) under President Obama’s Patient Protection and Affordable Care Act. ACOs are one of the key provisions in the 2010 health reform law designed to help reduce the cost of medical care. There is so much talk about this concept, but what exactly are ACOs?

An ACO is a network of providers and hospitals that share responsibility for delivering healthcare to a minimum of 5,000 Medicare beneficiaries for at least three years. It is based on the idea that hospitals, doctors, and other health care providers should work together to coordinate care for their patients. By coordinating care, the ACO will reduce costs by avoiding unnecessary tests and procedures. Those organizations that produce better outcomes will be rewarded, and for those that don’t, financial penalties will be incurred. In a recent study of ours, we found that with the development of ACOs, providers will take on responsibility for not only delivering actual medical care, but also providing some level of medical management between appointments.

Sounds like a great idea however, a lot skepticism has surrounded the development and launching of ACOs. First, there are very few providers that truly understand the ACO concept. In a recent survey conducted by Beacon Partners, only 15% of 200 provider organizations are “very familiar” with ACOs. Of those 200 surveyed, 92% are in the development stages for an ACO, and nearly all respondents’ budgets are not yet established.

Second, the Centers for Medicare and Medicaid (CMS) have yet to issue the final rules, which will affect the application process that prospective participants have to go through. Prospective participants will need to review the final rules before entering the application process in order to demonstrate their ability to comply with the eligibility requirements. Then, CMS will need to review all applications and offer contracts before the January 2012 launch deadline.

Lastly, the systems that were considered to be the models for a new health care delivery system, namely the Mayo Clinic, the Cleveland Clinic, Geisinger Health System and Intermountain Healthcare, have all declined to apply for the ACO program. Hospital and physician groups complained that the program created more financial risks than rewards and imposed burdensome reporting requirements.

Given the series of events surrounding the development of ACOs, it is no wonder that there is skepticism and doubt. Too much confusion and too many barriers surround the development of ACOs, including high start-up costs and regulatory issues. Add to that the refusal by health system role models to apply to the ACO program and you have a complicated situation.

Referring to our last post, this is one way to reduce the cost of care, a much needed move in our unstable economy. As prices for healthcare keep increasing over the year (health insurance is expected to rise 5.4% in 2012), patients deserve access to affordable healthcare. We urge ACO development leaders to address the barriers that health systems are encountering in order to aid in launching a successful ACO program.

Author:  Nicole Victoria

Editors:  Ken Chiang and Robert Kaminksy

 

Trends in Provider Networks

Sometimes it seems that the more things change, the more they stay the same.  One of the trends in the 1990s was to narrow provider networks.  The objective was to drive up quality and reduce the cost of care.  This was achieved by limiting member choice to the physicians and hospitals most willing to negotiate favorable rates and able to achieve quality outcomes.

Insurers quickly learned that members preferred choice to lower premiums.  Therefore, the PPO with its broader provider networks but high premiums grew in popularity compared to the HMO.  Today, 60% of workers are enrolled in a PPO, 20% in an HMO.  10% of employees are enrolled in a POS plan, 8% in a high-deductible plan and 2% in a fee for service (FFS) plan.  In contrast, ni 1993, 46% of employees were enrolled in a FFS plan, 21% in an HMO, 26% in a PPO and 7% in a POS plan.

However, premiums for commercial plans have increased significantly.  Premiums increased from $2,196/$5,791 (single/family) in 1999 to $4,824/$13,375 (single/family) in 2009 (per KFF http://facts.kff.org/chart.aspx?ch=1023 accessed July 18, 2010).  This represents a 120%/130% increase over a 10-year period.  Premiums are expected to increase another 10% this year. (http://www.mcareol.com/factshts/factnati.htm accessed July 18, 2010).

Now, it seems like the pendulum is swinging back.  The significant increase in premiums and the generally-accepted need to rein in healthcare costs has encouraged insurers to offer plans that limit choice of providers in exchange for reductions in premiums.  Typically, insurers are offering plans that reduce the size of the physician network by half and the hospital network by one third.  In exchange, premiums are lowered by 15%.

These plans are being tested in places like San Diego, New York and Chicago.  While small employers are especially interested, even large employers are offering these plans.   National carriers like Aetna, Cigna, the UnitedHealth Group and WellPoint are desgning and offering  plans with limited networks.

The new health care law offers some protection against plans offering overly restrictive networks, said Nancy-Ann DeParle, head of the office of health reform for the White House. Any plan sold in the exchanges will have to meet standards developed to make sure patients have enough choice of doctors and hospitals, she said.

Ms. DeParle said the goal of health reform was to make sure people retained a choice of doctors and hospitals, but also to create an environment where insurers would offer coverage that was both high quality and affordable. “What the Congress and the president tried to accomplish through reform is to transform the marketplace by building on the existing system,” she said.

This approach is not a long-term fix to the high cost of care.  First, these plans only can be offered in geographic regions with enough providers available for insurers to choose between high-quality and low-quality, high-cost and low-cost physicians and hospitals.  With today’s physician shortages, there are not enough physicians available outside of urban areas to support plans with narrow networks comprised solely of high-quality/lower-cost providers.

Second, even in urban areas, there are not enough high-quality/low-cost physicians to serve all local employees.  Competition might encourage high-cost physicians to lower their fees to gain access to narrow-network plans.  However, many physicians do not have the resources or training to improve the quality of the care they provide. 

Finally, not all employees and employers will select narrow-network plans.  There always will be a portion of employees and employers willing to pay for broad networks, no matter how high premiums rise.  Perhaps labor unions and government plans and other organizations that tend to prefer or offer rich benefits will fall into this group.

Therefore, plans with narrower networks that emphasize higher-quality care are one solution to eliminating long-term costs in the healthcare system.  Other solutions are required to achieve true efficiencies in our healthcare system; efficiencies that eliminate unnecessary care through better clinical outcomes and administrative procedures.  Other solutions include, but are not limited to, value-based insurance design, patient centered medical homes, electronic health records and increased use of preventive care. 

I look forward to watching this trend.  Especially as a small employer in an urban area, I am excited by any option that enables me to offer cost-effective benefits to my employees.  I appreciate any opportunity to reduce the cost of benefits while they continue to enable me to attract a strong workforce and maintain an effective and productive workforce.

An update to yesterday’s post about obesity and covering preventive services

Yesterday we discussed the positive step forward with payers being required to cover preventive services that are supported by “strong” clinical evidence.  However, we can lead a horse to water but not make them drink.  Without self-discipline and a willingness to take responsibility for our own health, such as losing weight, coverage of these services will not help significantly.  In addition, we all would rather pop a pill than change our lifestyle.

Unfortunately, it is likely to become more difficult to pop a pill to lose weight.  An FDA panel came out against a diet drug called Qnexa Thursday July 15.   The vote — 10 to 6 against Food and Drug Administration approval — dealt a blow to Vivus, maker of the medicine, and many overweight people looking for a new tool to help them shed pounds. It’s also an ominous sign for two other weight-management pills that are likely to be evaluated later this year.

What was the problem with Qnexa? Risks ranging from birth defects for babies conceived when women were taking the drug to an increased heart rate common among people taking Qnexa.

Even though people taking the highest doses of Qnexa had lost more than 10 percent of their weight a year after starting the medicine, the risks were too high, the federal panel concluded.

Qnexa is a combination of two old drugs: the epilepsy medicine topiramate and phentermine, the half of the fen-phen cocktail that didn’t cause heart problems.

The FDA is expected to make a decision on Qnexa by the end of October. The agency usually follows the advice of advisory panels, but not always.

For its part, Vivus said it will work with the FDA to address the questions raised during the hearing. In the next few months, the company expects to have additional safety data from longer-term study of the medicine. It’s unclear if that information will be enough to support approval of Qnexa.