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Calif. exchange threatens to fire hospitals

fired

By CHAD TERHUNE

For Kaiser Health News

California’s insurance exchange is threatening to cut hospitals from its networks for poor performance or high costs, a novel proposal that is drawing heavy fire from medical providers and insurers.

The goal is to boost the overall quality of patient care and make coverage more affordable, said Peter Lee, executive director of the Covered California exchange.

“The first few years were about getting people in the door for coverage,” said Lee, a key figure in the rollout of the Accountable Care Act. “We are now shifting our attention to changing the underlying delivery system to make it more cost effective and higher quality. We don’t want to throw anyone out, but we don’t want to pay for bad quality care either.”

It appears to be the first proposal of its kind in the country. The exchange’s five-member board is slated to vote on it next month. If approved, insurers would need to identify hospital “outliers” on cost and quality starting in 2018. Medical groups and doctors would be rated after that.

Providers who don’t measure up stand to lose insured patients and suffer a black eye that could sully their reputations with employers and other big customers.

By 2019, health plans would be expected to expel poor performers from their exchange networks.

The idea has already sparked fierce opposition. Doctors and hospitals accuse the exchange of overstepping its authority and failing to spell out the specific measures they would be judged on.

Health insurers, normally at odds with providers, have joined them in the fight. The insurers are balking at the prospect of disclosing their negotiated rates with providers. Health plans have long resisted efforts that would let competitors or the public see the deals they make with doctors and hospitals.

But scrutinizing the negotiated rates would help the exchange identify high-cost providers and allow policyholders with high deductibles to see the differences in price before undergoing a surgery or imaging test.

Lee said it’s time for the exchange to move beyond enrollment and flex its market power on behalf of its 1.5 million members. He said insurers haven’t been tough enough on hospitals and doctors.

Other public exchanges or large employers could try to replicate the idea, putting more pressure on providers and insurers. Lee has shared his proposal with other state marketplaces, government officials and employer groups to promote similar efforts.

Still, there are limits to the strategy. Exceptions would be granted if excluding a hospital or doctor from a network meant an area wouldn’t have a sufficient number of providers. Insurers could appeal and offer other reasons for keeping a provider in the network.

“California is definitely ahead of the pack when it comes to taking an active purchasing role, and exclusion is a pretty big threat,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms. “There may be a dominant hospital system that’s charging through the nose, but without them you don’t have an adequate network. It will be interesting to see how Covered California threads that needle.”

The composition of networks has typically been left up to insurers. Until now, most of the discussion has centered on the proliferation of narrow networks, with a limited range of providers, sold under the Affordable Care Act as a way to hold down rates. A study last year found that 75 percent of Covered California plans had narrow physician networks, with more restricted choices than all but three other states.

“I don’t know of anyone even close to trying this,” said Dan Polsky, the study’s author and executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania. “I applaud Covered California for being bold to improve quality and reduce costs, but I worry about the implementation.”

Polsky said measuring quality can be complicated, and steps must be taken to ensure hospitals and doctors aren’t penalized for treating sicker patients or serving lower-income areas. Most quality-boosting efforts use financial bonuses and penalties rather than exclusion.

Under the Covered California plan, hospitals would be judged on a wide range of performance and safety measures, from rates of readmission and hospital-acquired infections to adverse drug events. The exchange said it will draw on existing measures already tracked by Medicare and other groups, and it will work with hospitals, consumer advocates and other experts over the next 18 months to finalize the details.

The California Hospital Association said the exchange is moving too fast and acting too much like a regulator.

“The devil is in the details, and the rapidity of this concerns us,” said Dr. David Perrott, chief medical officer at the state hospital trade group. “We understand value-based purchasing is here in some form and we do not oppose that. But Covered California is charging ahead with this assessment and trying to figure out the answers when it hasn’t been worked out.”

California physicians warn that the exchange’s proposal could further reduce networks that are already too thin for patients.

“Right now, one of the biggest problems in health care is limited access to specialty care. This allows more narrowing of the networks under spurious guidelines,” said Dr. Ted Mazer, a board member of the California Medical Association and a head and neck surgeon in San Diego.

Charles Bacchi, chief executive of the California Association of Health Plans, predicted that Covered California’s idea will backfire, discouraging hospitals and doctors from participating in the exchange and driving up premiums as a result.

“It’s the right goal but the wrong approach,” Bacchi said. “Covered California is proposing a top-down, arbitrary measurement system that carries a big stick. This can make it difficult for health plans and providers to work together constructively.”


And now, concierge care for the masses

 

spa

By SHEFALI LUTHRA

For Kaiser Health News

A growing number of primary-care physicians, spurred by the Accountable Care Act and frustrations with insurance requirements, are bringing a service that generally has been considered “health care for billionaires” to middle-income, Medicaid and Medicare populations.

It’s called “direct primary care,” modeled after “concierge” practices that have gained prominence in the past two decades. Those feature doctors generally bypassing insurance companies to provide personalized healthcare while charging a flat fee on a monthly or yearly basis. Patients can shell out anywhere from thousands to tens of thousands of dollars annually, getting care with an air of exclusivity.

In direct primary care, patients pay about $100 a month or less directly to the physician for comprehensive primary care, including basic medication, lab tests and follow-up visits in person, over email and by phone. The idea is that physicians, who no longer have to wade through heaps of insurance paperwork, can focus on treating patients. They spend less on overhead, driving costs down. In turn, physicians say they can give care that’s more personal and convenient than in traditional practices.

The 2010 health law, which requires that most people have insurance, identifies direct primary care as an acceptable option. Because it doesn’t cover specialists or emergencies, consumers need a high-deductible health plan as well. Still, the combined cost of the monthly fee and that plan is often still cheaper than traditional insurance.

The health law’s language was “sort of [an] ‘open-for-business’ sign,” said Jay Keese, a lobbyist who heads the Direct Primary Care Coalition. Before 2010, between six and 20 direct primary care practices existed across the country. Now, there are more than 400 group practices.

The total number of physicians participating doctors may exceed 1,300. The American Academy of Family Physicians estimates 2 percent of its 68,000 members offer direct care.

“This is a movement — I would say it’s in its early phase,” said AAFP President Wanda Filer, a doctor in Pennsylvania. “But when I go out to chapter meetings, I hear a lot more interest.”

But questions persist about feasibility. The lower fees could still be a non-starter for people earning minimum wage or on a limited budget, said Robert Berenson, a senior fellow at the Urban Institute. “Can people afford this? Or is it [still] just for well-off people?”

The American College of Physicians advises doctors to consider whether direct primary care can work within their practices, but also urges physicians to recognize how it could affect poorer patients and look for ways to keep care affordable.

Direct primary-care doctors say they see patients across incomes. Dr. Stanford Owen, of Gulfport, Miss., treats “waitresses and shrimpers, as well as doctors and lawyers.” He charges $225 for initial visits, $125 for a follow-up, if needed, and then about $50 per month after.

Owen and other physicians report positive experiences, triggering other efforts to apply direct care more broadly. Although most of these doctors eschew dealing with insurance, some have been trying the model with Medicaid and Medicare patients.

If those experiments work — and save money and improve health — they could mitigate concerns about who can afford direct primary care. Berenson pointed out that partnering with insurance or public programs is key to making direct care affordable for lower-income people.

“The idea of setting up stronger primary care services for patients is very exciting and very much needed,” said Ann Hwang, director of the Center for Consumer Engagement in Health Innovation, an outpost of the consumer advocacy group Community Catalyst. But, she added, “This is so new that I think the jury is still really out on whether this will be successful.”

In Seattle, a company called Qliance, which operates a network of primary-care physicians, has been testing how to blend direct primary care with the state’s Medicaid program. They started taking Medicaid patients in 2014. So far, about 15,000 have signed up. They get a Qliance doctor and the unlimited visits and virtual access that are hallmarks of the model.

“Medicaid patients are made to feel like they’re a burden on the system,” said Dr. Erika Bliss, Qliance’s CEO. “For them, it was a breath of fresh air to be able to get such personalized care — to be able to talk to doctors over phone and email.”

Qliance has a contract with Centene, an insurance company in the state’s Medicaid program. That Medicaid coverage pays for the monthly fee, which covers primary and preventive care, and for other specialty and emergency services. If patients need a specialist, they’ll get referred to one who accepts Medicaid. Advocates in other states — such as North Carolina, Idaho and Texas — are watching the outcomes and costs while considering rolling out similar programs.

There’s little data so far. Bliss estimated participants will cost Washington state 15  to 20 percent less than traditional Medicaid. Before launching the Medicaid pilot, Qliance contracted with some companies that provide insurance to their employees — in those cases, employees who opted for Qliance cost about 20 percent less than employees in traditional health insurance. Because patients get better care upfront, the theory goes, they’re less likely to develop expensive chronic illnesses.

Still, expanding this approach is tricky. The number of participating physicians is low. There’s already a nationwide shortage of primary-care doctors. In this model, physicians see fewer patients, potentially exacerbating that shortage’s impact. Also, Medicaid negotiates the monthly payment rate, which could be less than what doctors might set independently.

In New Jersey, a pilot program using direct primary care is launching in 2016 for state employees, like firefighters and teachers. It’s a hybrid: When consumers pick a primary doctor, they can choose a direct primary care-style practice, which gives around-the-clock access to preventive and primary care services. The monthly fee is undetermined.

Participants will get benefits such as same-day appointments for non-emergency visits. But when they pick this plan — which will be administered by Aetna and Horizon — they will have access to specialists that participate in the insurers’ plan networks.

In New Jersey, about 800,000 people will be eligible to enroll in the direct primary care program. The state’s hoping to attract and accommodate at least 10,000 in the first year.

That’s appealing, said Mark Blum, executive director of America’s Agenda, an advocacy group that helped develop the project. He cited interest in California, Texas, Pennsylvania and Nebraska. “There are a lot of eyes on New Jersey right now.”

Meanwhile, direct primary care is finding traction with Medicare Advantage, the private health plan alternatives to traditional Medicare. Iora Health, a direct primary-care system that contracts with unions and employers, a year ago launched clinics in Washington and Arizona catering to Medicare Advantage patients.

Iora’s setting up similar clinics in Colorado and Massachusetts.

Despite its potential, the direct-care model faces the challenges of integration into existing payment systems and attracting more participating doctors. And navigating Medicare and Medicaid rules can deter physicians.

“It’s not for the faint of heart,” said Dr. Rushika Fernandopulle, Iora’s CEO.

How it evolves from here will vary across the country, said Filer, the AAFP president.

“There are some parts of the country where it is working very well,” she said. “But there are other reasons a physician might decide, ‘This is not for my patient base.’”


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