Healthcare stakeholders shared their thoughts and experiences regarding the opportunities and challenges of the healthcare industry under the Affordable Care Act.
On March 5-7, America’s Health Insurance Plans (AHIP) held its 2014 National Health Policy and Health Insurance Exchanges Forum conferences. Both events highlighted the opportunities, challenges, and trends of the healthcare marketplace under the Affordable Care Act (ACA).
ACA Implementation in the States
Three state representatives shared their unique experiences with Medicaid expansion, approaches to health insurance exchanges, and the other efforts they are making to promote choice and competition in the healthcare marketplace. Their experiences are important to reflect upon as state representatives throughout the nation are implementing health reform in various ways.
Michael Bousselot, policy advisor, Office of the Governor for the state of Iowa, said that Iowa is all about making people healthier. A healthier population is the best reformed population, he argued. In 2013, Iowa became the 10th-healthiest state in the United States. This was a merit worth celebrating, especially because the state ranked only 19th healthiest in 2010. The state aspires to reach the number 1 position by 2016, and plans to do this by encouraging lifestyle changes among Iowa residents through programs that promote smoking cessation and healthier eating habits.
Mr Bousselot also described Iowa’s Health and Wellness Plan, which intends to improve the health outcomes of Iowa residents. The wellness plan will replace IowaCare, the state’s limited benefit program.
Following Mr Bousselot’s lead-in, Emily Whelan Parento, executive director, Office of Health Policy, Cabinet for Health and Family Services in Kentucky, described Kentucky’s healthcare landscape. She said Kynect, Kentucky’s health benefit exchange, opened insurance to an estimated 640,000 people. She also noted that 308,000 individuals were eligible for Medicaid under the new rules, and that over 330,000 individuals became eligible for premium assistance. This success was due in part to Kentucky governor Steve Beshear’s initiative to sign an order which customized the exchange, as well as his decision to establish an advisory board to guide the rollout.
Ms Parento also discussed kyhealthnow, a program that focuses on advancing wellness for Kentucky residents. Like Iowa, the states’ administration seeks to increase its ranking among the healthiest states in the nation. Some of their strategies include reducing Kentucky’s rate of uninsured to less than 15%, reducing the smoking rate by 10%, and reducing the rate of obesity by 10%. Tobacco use/smoking is by far the biggest priority, Ms Parento noted. All of these initiatives are not just for health’s sake, but for controlling state costs related to health expenditures.
To wrap up the discussion, Greg Moody, director at the Governor’s Office of Health Transformation, State of Ohio, described Ohio’s Health and Human Services Innovation Plan, or the state’s “innovation framework.” The 3 main strategies of this plan include modernizing Medicaid, streamlining Ohio’s health and human services, and paying only for value-based services. Mr Moody noted that these particular aims became necessary when the state’s health spending began to increase at an unsustainable rate during 2011, after a 9% increase in Medicaid spending coupled with an $8 billion state budget shortfall.
To address the problem, officials competitively rebid managed care contracts in 2012. Currently, the state has rebalanced its health budget, has $1.5 billion in “rainy day” funding (it had $0.89 in this fund at the end of 2011), and boasts that Medicaid underspending has topped $950 million. Ohio also has uniquely eliminated the coverage gap for childless adults, and for those who did not qualify for subsidies even with the expansion of the federal poverty level under the ACA.
ACA’s Future: The Good, the Bad, and the Ugly
Avik Roy, senior fellow, Manhattan Institute for Policy Research, and Jonathan Cohn, senior editor of The New Republic, discussed how the future of the ACA will require a more bipartisan approach. They also noted that it will need more positive stories from the media to frame the highlights of health reform.
In fact, according to Mr Roy, one of the most difficult aspects of healthcare reform is the reservations of some conservative parties. He said that reform will likely never go back to “what was,” and suggested there are myriad pathways to what the future of healthcare could look like. However, while the ACA improves access for many consumers, it still does not address the underlying costs of healthcare in the United States. Mr Avik suggested that a “superior” form of coverage would involve alternative legislation, not a repeal.
Mr Cohn added that the media has skewed the ACA picture, and that all too often, the more harrowing stories of individuals’ challenges with the ACA overshadow the good news that happens because of reform. He, like Mr Roy, suggested that the “now versus the past” discussions about healthcare are irrelevant and fruitless. He stressed the importance of a stronger focus on the future and what “could be” through legislative reform.
Mr Avik and Mr Cohn also conversed about implications of the individual mandate, which has been delayed 1 year; essential health benefits; and the advantage of private payers in insurance exchanges.
Simplifying the Complex: Educating and Engaging Consumers
Cass R. Sunstein, professor, Robert Walmsley University, Harvard Law School, presented a session that had 1 concept in mind: think simple. He suggested that patients require both freedom of choice and steering. He said that greater access to information can empower consumers with the knowledge they need to make informed decisions about their healthcare.
How to make that simple, he said, is through “nudges and nudging.” This is because every person operates with 2 systems in mind: the first is automatic, such as when we navigate the halls of our dark homes late at night without thinking about it; and the second is more deliberate and slow, such as when we try to compute complicated math problems in our heads.
It’s important to think about those simple solutions that speak to the “first system” of people’s minds. For instance, if a physician is seeking to improve medication adherence with a patient, using a text messaging program to send reminders has been found to be effective. He also offered the example of the FDA’s ChooseMyPlate initiative. In an effort to promote better nutrition and reduce national obesity rates, the FDA now uses a plate with colored portions instead of a pyramid to demonstrate food serving sizes. Overall, Mr Sunstein said “nudges” should be automatic, simple and easy, intuitive, and meaningful. The goal is to incite engagement that does not strain “system 2.”
Nudges are also important because many patients are much too “present biased,” and experience some form of realistic optimism (meaning they believe bad things can’t happen to them, that they only happen to other people). He added that time and patience are essential to improving patient outcomes. Mr Sunstein concluded that the future is bright if we are willing to consider ways to save money, simplify the system, and improve patient engagement.
Healthcare Cost Containment and Its Impact on US Economic Competitiveness
Paul Howard, PhD, senior fellow and director, Center for Medical Progress, Manhattan Institute for Policy Research, said that the question in healthcare, especially when comparing the United States with other countries, is whether our spending is giving us good value for the dollars spent. He said stakeholders broadly agree that spending in the United States does not currently buy great value. Dr Howard also said that despite much criticism, the United States actually ranks in the middle of the pack globally when it comes to health outcomes. Still, it’s difficult to determine or blame specific systems for specific outcomes, especially when issues such as a patient lifestyle or behaviors are factored into the equation.
He also added that the United States isn’t the only country that faces challenges with spending and outcomes. Anywhere from 20% to 30% of Organization for Economic Cooperation and Development (OECD) countries waste healthcare dollars on inappropriate care, ineffective drugs, and fraud. He suggested that if OECD countries could cut their wasteful spending by between 10% and 15%, it would raise longevity at birth by 1 year. If you estimate each person’s life worth at $150,000, that would save trillions of dollars in spending, and it would have an enormous effect on an economy of 300 million people. “The healthcare system can obviously become more efficient in that, but also have benefits for us in terms for outcomes and our longevity,” Dr Howard said. “So it’s a win-win situation if you can find the right way to reduce spending.”
As US healthcare spending levels rise, other spending and investments in areas such as infrastructure and education are crowded out. The same is true for state spending—including Medicaid programs. “Healthcare spending squeezes out other priorities,” he said. Effects of reduced spending, increased efficiency, and improved productivity are necessary to improve costs/wage compensation and out-of-pocket costs. He also suggested that consumer education, public purchasing services, and retail clinics or telehealth have a role in controlling US healthcare spending.
Paul Van de Water, PhD, senior fellow, Center on Budget and Policy Priorities, said that healthcare containment is not just about competitiveness. He started by saying that in recent years, the rate of healthcare spending has slowed, and that national health expenditure growth reported by CMS or total spending data demonstrates this trend. He also said that Medicare cost growth for beneficiaries has been as small as 0% to 1% between 2013 and 2014. However, this is not a total victory—there have been other periods in which cost growth has slowed and then ramped back up.
“What I think we need is what I call the ‘all-of-the-above strategy,’” he said. “All too often, advocates with particular approaches like to, from my point of view, exaggerate the likely benefits of their particular approach to cost control and by the same token, perhaps exaggerate or downsize the other approaches. There are many tools available, and my suggestion is that to be properly used, we really need to be making use of all of them. There are very few approaches we can rule out.”
Dr Van de Water also said that cost control will not be painless. It may require a balancing act of making hard choices and sacrifices, and as we manage a mixture of approaches to reducing costs, tradeoffs will have to be made.
Championing Innovation: Partnering With Providers to Reward Quality and Reduce Costs
Andrew Dreyfus, president and CEO, Blue Cross Blue Shield of Massachusetts, discussed how next-generation network strategies could be designed to encourage value and affordability. In particular, he addressed the 2006 Massachusetts health insurance reform law known as An Act Providing Access to Affordable, Quality, Accountable Healthcare. Most industry stakeholders are no strangers to the fact that this policy gave way to what has become the ACA. Mr Dreyfus said that rather than making the ideological case for health reform, Massachusetts made the business case for reform.
“We have a bill [the 2006 bill] in which all stakeholders—business and labor, and hospitals and health plans, and consumer advocates, and those who pay for the market—came together,” he said.
Mr Dreyfus said that other concepts within the Act, including individual mandates and Medicaid expansion, also later became cornerstones of the ACA. As well, Mr Dreyfus said the bill resulted in 97% of adults and 100% of children having health insurance in Massachusetts. He said that the bill maintains its effect in the state, even as the national policy lags in popularity. However, the policy has not been without challenges. Expanding coverage in the absence of cost containment didn’t work because Massachusetts is one of the “most expensive places to get healthcare in the world.”
In addition, the state faced pressure from cities and small businesses watching their premiums grow by 10% to 15% per year. The governor even lost his patience and initiated the “great healthcare standoff” in which he rejected rates from payers until they were affordable. But, thanks to the strength of reform coalitions and the persistence of bill supporters, differences were worked out and the resulting health models were much stronger.
Mr Dreyfus added that while they had a few early adopters that agreed to the model at the very beginning, they faced their fair share of opposition. So they had to quickly build momentum by demonstrating success, publically declaring that fee-for-service increases would no longer be funded, and by encouraging the public sector to make alternative payment models the norm (eg, the Alternative Quality Contract, or AQCs). As a result, 85% of doctors and specialists are actively participating in the state’s health model. It’s working across the state in a variety of practice types and businesses.
He also mentioned that a team of researchers at Harvard Medical School, led by Michael Chernew, PhD, have been publishing independent results about the ACA annually, and they are finding that AQCs improve quality and slow spending growth.
“On health outcomes, which are kind of the gold standard of quality measurement, you can see enormous progress,” Mr Dreyfus said. “For example, some of our AQC groups have 9 out of 10 of their diabetes patients with their blood sugar under good control. The national average is about 70%. That means less renal illness and fewer overall complications.”
Best of all, he said, is that physicians are embracing the model. This is leading to better and more efficient engagement, and improved health outcomes. He added that it will never be politicians who make reform effective—it will be physicians taking accountability and starting to change how they practice. The problem must be solved from within.
“We’re all part of the problem—health plans, employers, hospitals, physicians, patients—and we’re the ones who can solve this problem. We can initiate this model of better care and lower costs for all,” he said.
The ACA’s Unintended Consequences for Medicare
Katherine Baicker, PhD, professor of health economics, department of health policy and management, Harvard School of Public Health, and Mark E. Miller, PhD, executive director, MedPAC, discussed several of the ACA’s effects on Medicare. Both speakers reflected on how Medicare Advantage payment cuts, new reimbursement models, and the influx of baby boomers might affect future change in the Medicare program.
Dr Miller said that professionals should pay attention to Medicare accountable care organizations (ACOs). He described them as “organized fee-for-service models” in which providers are given incentives for meeting certain benchmarks. A variety of models have been established throughout the country, covering around 5.5 million beneficiaries. Many ACOs view themselves as an alternative to managed medical assistance programs because they believe they have strong patient engagement and lower overhead, which removes a need to recruit. Some may even begin to assume risk, even though this technically questions the fee-for-service model.
“You now have these 3 delivery systems: FFS, ACO, MMA; they’re paid differently. The benchmarks, if they have them, are different; the quality measurement is different; if they beat the benchmark, what they can do with the money is different; their regulatory burdens are different; how the beneficiary is engaged is different,” he said. “The commission, at the macro level, is starting to look across all 3 of these. We have to think about rationalizing payment, risk adjustment, quality measurement, how the patient is engaged, and regulatory burden. And that is a good way to think about our agenda going forward.”
Dr Baicker discussed what Medicare is doing in terms of helping to slow the spending growth. She noted 2 goals of healthcare reform, including expanding the access of care to cover uninsured, which she suggested is “easy,” and slowing the healthcare spending growth, which she said is a more difficult task.
“The goal is not just to spend less on healthcare. That’s actually a pretty easy goal to achieve. If we just wanted to spend less on healthcare, we would eliminate Medicare. Problem solved, we’d spend billions less every year,” she quipped. “That’s clearly not desirable public policy. Healthcare provides much-needed benefits to beneficiaries—eliminating health insurance or public subsidies is terrible policy.”
Dr Baicker further suggested that the goal is to slow spending growth while promoting high-value care. How we do that, she said, is the “billion-dollar question.” She said that while it would be nice if healthcare services came with a label that determined value, very few people in the system currently face the true cost of the healthcare they’re using.
Next-Generation Data Analytics to Transform Healthcare
Keith R. Dunleavy, MD, president, CEO, and chairman of the board, Inovalon, Inc, discussed the 4 vertical components of capitated managed care. They include Medicare Advantage, managed Medicaid, commercial health insurance exchanges, and accountable care organizations (ACOs). He suggested that the 4 components have common cornerstones that make them relevant to the “data picture.” Those cornerstones are risk/accuracy, clinical and quality outcomes, utilization efficiency, complexity/ compliance reporting, and consumerism. He suggested that consumerism is particularly critical to success.
“Data is, at the core, something that healthcare has as an industry underleveraged compared to its peer industries [like] financial services or retail,” he said. “We see that now rapidly changing.”
He said “accelerated Darwinism” is forcing healthcare to change. This term is used because the theorist Charles Darwin suggested that only the strongest survive. Those who are succeeding in achieving the aforementioned cornerstones are more likely to succeed over those who do not.
“The future is data being able to predict what you should be doing with your patient population,” Dr Dunleavy said. “Big data is not just large sets of data, big data is the total set of tool capabilities that allow for advancements in extracting value out of large data environments.”
Marcus D. Wilson, PharmD, president, HealthCore, Inc, added that analytics are all about improving quality and affordability through empowering patients in the decision-making process with physicians. He suggested that this is possible through complete evidence development and improving the depth of understanding we have of an individual.
“It’s not just about Dr Jones understanding the therapeutic condition that Ms Atkins has, but also now understanding everything about Ms Atkins, where she fits within that evidence,” Dr Wilson said. He cited a study suggesting that decisions were guided by sufficient evidence only about 11% of the time.
Charles D. Kennedy, MD, MBA, CEO, Accountable Care Solutions at Aetna Inc, said he believes the underlying business model in healthcare is changing. Value-based care, he said, helps to support this transformation.
Dr Kennedy said the first thing you have to do to make value-based contracting successful is “define value.” He defined it as quality over cost. The challenge is to then get all the clinical data in place, as well as to address the lack on interoperability.
Second, value-based decisions must be made on an individual level. If you don’t have a way to individualize information so that people can make value-based decisions upon that information, it can limit the value of analytics. You have to find ways to capture and share information in an effective way, among different systems. Only a few companies have managed this. He also cited timeliness as another challenge for professionals.
“You’re looking at populations of patients trying to glean understandings and new knowledge, but the ability to actually apply that knowledge at the point of care in real time and with appropriate context still remains something that we have a bit of development to get to.” However, he suggested that the expansion of big data analytics will be valuable to clinical value-based decision making.Author Affiliations: Katie Sullivan is the assistant editor of The American Journal of Managed Care.
Address Correspondence to: Assistant editor Katie Sullivan: email@example.com.