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Another One Bites the Dust – Haven Ends Healthcare Quest

The medical industrial complex has claimed yet another innocent victim. But this is not just any victim.

Three years ago, an independent company, Haven Health, was formed by three powerhouse forces in the business world: Amazon, JPMorgan Chase and Berkshire Hathaway. Meant to transform healthcare, Haven was a very unique collaboration that put the healthcare industry on notice that a new sheriff would be in town to help clean up a messy and unruly industry dominated by legacy players.

The likes of Jeff Bezos (Amazon), Jamie Dimon (JPMorgan Chase) and Warren Buffett (Berkshire Hathaway) were serving as the newly-assembled sheriff that would instill both fear and respect by industry inhabitants.  When this marriage was announced in 2018, I wrote a blog about the likelihood of having three disruptive ‘outsiders’ force long overdue changes to healthcare practices. I ended this blog with one stark sentence: “Only time will tell.”

Time is Now Here

It appears the healthcare industry is more complex (and unforgiving) than even the sheriff had believed. This most recent development reminds me of what President Trump naively claimed while attempting to repeal and replace Obamacare in 2017: “Nobody knew that healthcare could be so complicated…”

On Monday of this week, Haven announced that it will end its mission of exploring healthcare solutions, such as “piloting new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable.” According to the Wall Street Journal (subscription required), any collaboration between these companies will become less formal in the future.

In addition to impacting their own respective workforces, the collaboration also intended to influence and disrupt the payment and delivery models currently in place. Reading between the lines, however, when their appointed chief executive, Dr. Atul Gawande, stepped down from his role in May of 2020, perhaps the proverbial ‘flywheel’ lost any inertia it may have gained.

Lesson Learned

Going forward, it will take more than three highly-respected leaders and their innovative organizations to mildly disrupt a system that desperately needs disruption, but has largely resisted meaningful changes. Many have tried to reform this massive industry, but up to this point, there has been very limited success.

In healthcare, bold changes may only come after America experiences an unimaginable crisis beyond anything we’ve ever encountered before.  But then again, only time will tell.

–Update on Hospital Price Transparency Requirement

My Tuesday blog on the new hospital price transparency mandate revealed that two major Des Moines hospitals have not posted the required pricing information despite a national mandate to do so – beginning January 1. The penalty for noncompliance is, quite frankly, small potatoes for at least larger hospitals – just $300 a day. To learn more, the CMS issued a FAQ on December 23.

According to POLITICO Pulse just one-third of the top 20 hospitals have posted visible price lists as of New Year’s Day. Politico reports, of those hospitals that have posted, the information is often vague or hard-to-decifer. More to come in future blogs on this subject.

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Hospital Price Transparency Took Effect New Year’s Day
But, Where is it?

Happy 2021!!!

In this brand-new year, imagine that you have found your most desired showroom vehicle at a local dealership. After haggling with the salesperson (and the backroom manager), a process that is similar to playing ‘Let’s Make a Deal,’ you are handed the following purchase agreement that reads (in short):

This negotiated price is an estimate only and is not a quote or a guarantee of the amount that you will eventually owe…

Now wouldn’t that be a twist on the old way of doing things! But in healthcare, this is precisely the norm.

Recent Ruling on Hospital Transparency Pricing

On Tuesday, December 29, the U.S. Court of Appeals for the District of Columbia circuit rebuked the hospital industry’s legal attempt to banish new rules on price transparency from taking effect on New Year’s Day. I have written about the new rules frequently in the past. The price transparency rule, published in November 2019, was pushed by President Trump and HHS Secretary Alex Azar.

As it now stands, barring a President Biden ‘stay of execution’ order to relax these rules, hospitals must post their negotiated rates online beginning January 1, 2021. The online rates must be conveyed in a machine-readable format and also list their negotiated rates for at least 300 shoppable services in a consumer-friendly format – including 70 services picked by the Centers for Medicare and Medicaid Services (CMS).

Starting Jan. 1, 2022, health plans and insurance companies will have to provide a publicly available, updated data file on costs. By January 1, 2023, payers, such as commercial insurance companies and large, self-funded employer health plans will also need to comply with similar price transparency rules demanded of hospitals. This was discussed in my November blog, “Finalized Price Transparency Rules for Insurers.”

Not surprisingly, the American Hospital Association is disappointed by this latest decision and, according to their General Counsel, Melinda Hatton, “…are reviewing the decision carefully to determine (our) next steps.”

It’s Now 2021 – Have These Rates Been Posted?

On January 2, I’m sitting at my computer attempting to discern what actions a few Central Iowa hospitals have taken to comply with this new requirement to inform Iowan’s about specific ‘negotiated’ health prices, not just merely ‘estimated’ prices. Estimations, I might add, are simply playing a game of horseshoes and hand grenades, providing just enough information to check boxes to ‘inform’ an already confused public.

Below is a rather quick assessment of three Des Moines-area hospitals – in addition to the Iowa Hospital Association – and what they have listed on their websites as of January 2, 2021. Since that date, any changes made by the following organizations have not been reflected in my comments found below.

MercyOne – Des Moines

As I understand the requirements, MercyOne’s ‘Estimate Your Costs’ webpage does not conform with the new regulations on hospital price transparency. This webpage allows one to download a list of their ‘standard charges’ (in Excel format), but does not provide the ‘negotiated’ rates by payer. MercyOne cautions that this information is only a ‘partial estimate,’ as it does not include other fees beyond hospitals charges, such as “physician fees, charges for your emergency room physician, radiologist or anesthesiologist”.

Before an interested patient can gain access to “generate the most accurate estimate for your health care procedure,” one must click “Estimate Your Costs” and agree to the ‘Disclaimer’ before providing your name, DOB, type of desired medical procedure and your insurance vendor. I attempted to complete this exercise but was met with ‘an error’ both times.

Just as troubling to me is this disclaimer: “Benefits and eligibility are subject to change at any time. This estimate may contain private information that is protected by law. If you are not the patient, patient representative or guarantor, sharing, copying or using this information in any way is against the law.

Frankly, I thought this regulation was all about ‘transparency’ of negotiated medical prices. If I want to publish what MercyOne has negotiated with any particular payer, I should be able to do so. I will assume this site has not been adequately updated and, consequently, this language requires a revision.

UnityPoint Health – Des Moines

The Patient Charges and Costs webpage for UnityPoint Health appears to be helpful, but when looking more closely, it has not changed to reflect the new regulation. The UnityPoint site refers to the January 1, 2019 requirement that hospitals list their ‘standard charges’ of Diagnostic-Related Group (DRG) charges. This information should be deleted from the website as it no longer is compliant with the new regulations. UnityPoint Health cautions the patient to ‘first contact your insurance provider’ who may provide their own ‘estimates’ for out-of-pocket costs based on the insurance plan of the patient. But doing so will likely invite the patient to enter a new labyrinth of confusion that is full of disclaimers, etc.

UnityPoint’s ‘Financial Estimate‘ webpage requires completion and submission before releasing prices. I did so, but when it was submitted, I received the following message: “Thank you for your request.  We’re striving to provide an easier and more personal way for you to plan your health care. A UnityPoint Health financial representative will reach out to you within 2 business days to provide your estimate information.

This website is both confusing and non-compliant – based on my review date (January 2).

Iowa Hospital Association (IHA)

After a cursory review of the IHA website, there are no specific updates that provide revised information about this latest regulation.

Broadlawns Medical Center – Des Moines

With Broadlawns, we actually have a BINGO!

Two days before the required posting of negotiated rates, Broadlawns posted their ‘Pricing Directory’. Broadlawns provides this information in two formats: PDF file and CVS file. The 450-page PDF has the following disclaimer at the top of the first page:

This is an estimate only and is not a quote or a guarantee of the amount that you will owe or what the charges for services will be. The actual charges may be lower or higher than the estimates depending upon many factors – including actual services rendered, complications, your particular health care needs, and your actual insurance policy coverage.

The 450-page PDF includes 15 health insurance products offered by eight insurance companies: Aetna, CIGNA, Coventry, Health Partners, Medica, United Healthcare and Wellmark. Many shoppable services are broken down by professional (physician) and hospital services. You will find the procedure code, gross amount of the service, cash discount offered, negotiated rate with that particular insurer, and the minimum and maximum charge.

Out of sheer curiosity, I did a quick price comparison between Wellmark PPO and United Healthcare PPO for a few random procedures at Broadlawns (found below). Please note, this comparison does not suggest that these negotiated prices are the same at other hospitals. This information is only specific to Broadlawns Medical Center.In lieu of searching for the correct procedure code and shoppable services at Broadlawns, the patient can request a ‘Personalized Price Estimate’ from Broadlawns using the web-based Cost Estimator Request Form (or by calling a Broadlawns financial representative).

Conclusion

Because each patient encounter is so unique and may require various procedures, caveats by hospitals are certainly understandable when quoting specific procedure code prices. There are MANY hurdles to full-blown price transparency that cannot be categorically described in this particular blog. One obvious hiccup is – just how much the patient has remaining on his/her deductible and out-of-pocket maximum to determine their personal liability for the procedure(s). The patient will need to toggle between the health provider for specific prices and with their insurance vendor on whether the service is covered by their plan and, if so, how much the patient will be liable to pay. Transparency in medical prices help, but clarity on how to use this transparency will be problematic until a new world of simplicity evolves.

Many experts agree that price transparency in healthcare will eventually be a valuable thing to have, but this particular requirement is merely a first step toward a ‘Marie Kondo’ approach that will hopefully clean up a very messy industry when it comes to pricing. Kaiser Health News just published an article about the implications of having transparent medical pricing for consumers.

I envision that enterprising third parties will take this newly-released public data and morph it into usable consumer-centric information that can be easily accessed through a smart phone app for the patient. In addition, innovative clinician tools can help health providers perform real-time cost/value trade-offs with the patient while ordering procedures and diagnostic tests that impact the cost.

Simplifying a complex system will take patience, time and a general willingness to invoke needed change.

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Would Having More ‘Blues’ Make Us Happier?

Many of you residing in Iowa reading this post are probably covered by a Blue Cross and Blue Shield health insurance policy. Most likely your health plan is insured by Iowa-based Wellmark, Inc. or Wellmark Health Plan of Iowa.

Using data from the Iowa Insurance Division, a recent Des Moines Business Record article reported that both Wellmark plans “account for roughly 78 percent of the large group market in Iowa and 81 percent of the (Iowa) small group market.” Additionally, the individual market in Iowa has Wellmark companies accounting for 45 percent of individual health policies in the state.

Overview

For decades, Blue Cross and Blue Shield (BCBS) plans located in each state, Iowa included, did not compete with ‘sister’ BCBS plans in other states. Wellmark BCBS was, in essence, protected from competing with other Blue plans for Iowa business.

However, there was one large exception to this friendly competitive arrangement. Other Blue insurers can compete for large national-account business ONLY if the home state Blue plan chose to “cede” the client to them. As an example, if Hy-Vee, headquartered in Iowa, wished to use a larger BCBS plan, such as Anthem, Inc. – the largest of all BCBS plans – Wellmark would need to ‘cede’ this Iowa-based business to the desired Blue plan. Employers really had little recourse on fighting this arrangement, other than threaten to choose a non-Blue plan such as United Healthcare, Cigna, Aetna, etc.

It is important to mention that within the Blues system, if a large, Iowa-based organization is enrolled with Wellmark, they gain access to the BlueCard® PPO for their out-of-state employees – which offers any additional negotiated arrangements made by each state’s Blue plan. This is a big advantage to large national accounts, and has worked reasonably well for decades. However, if the employer was, for some reason, unhappy with the services provided by that ‘home’ Blues plan, they would need to apply leverage to move to another desired Blue plan outside that state. As a result, the pursuit for seamless customer service was rather ‘clunky.’

In 2012, a national class-action lawsuit was brought on behalf of employers and individual policyholders with Blue coverage. The lawsuit alleged that anticompetitive behavior among BCBS plans who conspired to divvy up markets and avoid competing against one another, consequently drove up customers’ prices.

Tentative Antitrust Settlement on Blues

In September, a tentative deal was reached whereby the BCBS Association agreed to pay $2.7 billion to settle the claims and curtail competitive practices that limited competition among all 36 BCBS insurers – which includes Wellmark, Inc. According to the Wall Street Journal, the deal is not yet final, as U.S. District Judge R. David Proctor of Birmingham, AL, who presides over the case, must approve the arrangement. Additionally, the boards from each of the 36 BCBS plans must endorse the settlement.

Under the draft settlement, each of the 36 BCBS insurers can no longer be restricted to a little-known rule that required two-thirds of each Blue plan’s national net revenue from health plans and related services come from Blue-branded business. This rule limited each company’s ability to expand and open new growth pathways for each insurer. Theoretically, each Blue plan could maximize profits both in and out of their assigned service areas, causing greater competition in new territories, if desired.

As for the $2.7 billion settlement, the BCBS Association and all 36 independent Blue plans have agreed to chip in money to settle antitrust charges. Presumably, the amount will be apportioned based on the size of each Blue plan.

What Will This Mean to Iowa and Elsewhere?

Assuming the settlement is approved by Judge Proctor and all 36 Blue plans, there could eventually be more consolidations between Blue plans and non-Blue companies. Additionally, the largest of Blue plans, Anthem and Chicago-based Health Care Services Corp., would likely expand into other territories that were otherwise off-limits to them in the past.

In addition to having access to Wellmark products, eligible Iowa-based employers would have access to other Blue plans desiring to enter Iowa. Wellmark, on the other hand, could expand into other states, hoping to grow new members and revenue. Conceivably, Wellmark could purchase other smaller Blue or non-Blue organizations, or possibly be acquired by a suitor.

With this settlement allowing more Blue plans to enter new territories or states, insurance premiums in those markets could possibly fall. But it’s unclear whether increased competition will push larger discounts from local hospitals and health systems. Over time, this settlement may prompt enough consolidations that some geographical markets could become less competitive, not more.

Healthcare providers, specifically the American Hospital Association and American Medical Association, will have keen interest in how this settlement will eventually affect the revenues and practices of their own respective members at the local level. Additionally, how will state and federal exchanges be affected by this settlement?

In the end, will having additional Blue plans competing in Iowa make us happier because of increased competition? I’m not quite sure. Any unintended consequences will need to be thoroughly assessed as this settlement plays out over time.

With that said, this will be one interesting situation to follow in the months (and years) ahead.

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