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Comparative Effectiveness Research? It’s About Time!

David P. Lind BenchmarkI’m all for it.

An earlier blog of mine described the dysfunctional health care delivery “system” that we have in this country. The intent of my blogs is not to point fingers, as assessment of blame does little to solve the problems we have within our own state and country.

A recent California study was published about the associated cost to remove an appendix. As typical, the cost for this procedure could be as little as the price for a refrigerator – or a house! The cost disparities were alarming, ranging from $1,500 (refrigerator) to $180,000 (house). How can this happen?  Why is this allowed? Are the outcomes of the procedures better at a higher price?

Don’t know. That’s part of our problem.

That is why I see a glimmer of hope for a new initiative (generated by the health reform law) called, Comparative Effectiveness Research (CER). In a nutshell, CER includes research to evaluate risks and benefits of medical treatments, services, procedures, and drugs that treat, manage, diagnose or prevent illness or injury. Too often we have extreme variations on how procedures are performed, both by region and by health providers. CER will attempt to help bridge this gap of extreme variation using sound research when comparing health outcomes. Reducing variation chasms can save lives AND potentially big bucks.

Don’t take my word on this subject. The  Dartmouth Atlas of Health Care does a good job of documenting the variations of health care that is delivered in this country.

CER will be funded through a fee that will be assessed to plan sponsors and issuers of individual and group policies. Plan sponsors will be required to pay $1 per member per year beginning with policy or plan years ending after September 30, 2012. The fee increases to $2 per member annually for policy years ending after September 30, 2013. The fee will discontinue after September 30, 2019. See the published Federal Register on this fee.

I admit, paying additional fees within your insurance premium does not sound good – especially when premiums have increased by over 141 percent during the last 13 years in Iowa* (about the same nationally). But perhaps CER will more than pay for itself by providing a sound practice of comparing the risks and benefits of two or more medical treatments based on health outcomes and clinical effectiveness.

We can only hope.

*2011 Iowa Employer Benefits Study©

New Beginnings for Benchmarking Benefits in Iowa

David P. Lind BenchmarkSince 1999, my firm has surveyed Iowa employers to learn about the benefits they offer to their employees. The “Iowa Employer Benefits Study” has revealed many key facts that allow employers, regardless of size and industry, to determine annually how competitive their benefits are when attempting to attract and retain employees. After all, to be successful, employers MUST have the right employees when competing locally, nationally and globally. This is a fact of business life!

Prior to 2012, our surveys have randomly-selected Iowa employers once a year. Annual surveys are really a “snap-shot” in time, allowing us to sample a particular population for that time period and compare the results to previous years’ results.  Doing this has provided a wealth of data on employee benefit trends that provides meaningful information for employers, policy-makers, the media, etc. This work also allows us to compare different industries within Iowa to one another. All industries, by the way, are NOT created equal! There are inherent issues within each industry that impacts the type of benefits offered to employees…and the costs can be considerably different when comparing industries.

Beginning in 2012, we have updated our survey process to make it even more fresh, relevant, local and customized for the Iowa employer. Instead of surveying all industries at the same time each year, we are staggering the survey process to allow a greater likelihood of observing trends sooner, rather than later.

Here’s how it will work:

Every two months, beginning in January and February of 2012, we will survey just one major Iowa industry. For example, we just finished surveying the Manufacturing industry in Jan/Feb, and we are now “interviewing” the Retail sector for March and April. The other survey periods for 2012 include:

  • May/June – Finance and Insurance
  • July/August – Healthcare & Social Services
  • September/October – All Other Sectors not interviewed in the other five periods
  • November/December – All State & Local Governments

In 2013 and beyond, the process will be repeated as mentioned above. During any given survey period, new questions can be added once new trends and developments have been identified, including new questions about health reform issues, wellness initiatives, and employer attitudes on various subject matter, to name a few.

In addition to having on-going “fresh” data, we will seek a higher number of respondents for each industry than we have in the past, making our already credible survey even more robust! Our studies have consistently interviewed over 900 employers in each of the last several years…and we will now add to this number under the new survey process.

If your organization is randomly selected to participate in this new and improved study, I highly encourage you to participate (if you already have, we thank you!). By participating in this important research, you will receive an overall summary of the survey results that will help your organization compare itself to other Iowa employers. If your organization has not been randomly selected to be surveyed, don’t despair, you still have access to this information. Should you wish to have an easily customized benchmark analysis with other Iowa employers both within and outside your industry, you can perform this anytime here. New and improved benchmark programs will also be developed within the near future! Many changes are being made to this landmark study, but its’ integrity remains unchanged. You have my word on that!

Here’s to a new beginning – for all of us!  

 

Health Care – Competing at the Right Level

David P. Lind BenchmarkThanks to the health reform law, Iowa and Nebraska just received a new health plan to compete with the other insurance companies doing business in both states.

Owned by its’ members and led by a board they elect, Midwest Members Health Inc. is a nonprofit consumer operated and oriented plan (CO-OP) that will be up and running by January, 2014. This is the same date that Iowa will have either a new state-based insurance exchange or a federal exchange. This new carrier will receive around $112 million in loans over 15 years, giving it enough money to cover claims and maintain financial solvency. A great start for an organization just approved in February.

But will this new competition create lower premiums for consumers and employers?

Hard to say.  

I must admit, I’m a skeptic whenever there is talk about how important it is to have “more competition” between health insurance carriers. Competition is important, but competition at the RIGHT LEVEL is even more important—if not critical. Health premiums are nothing more than a derivative of health costs, so having more carriers compete for our business will not meaningfully change the premiums if we can’t FIRST fix our health delivery system, one of the biggest cost drivers.

True competition must begin at the level where care is delivered—at the provider and patient level.

It is also extremely important to have transparency in cost and medical outcomes measurements. If carriers and providers don’t provide this transparency, I fear we will see more of the same—uncontrolled costs.

Knowing up front what the cost is for a given procedure and the most likely outcome for that cost (by medical provider) is absolutely necessary. This is not currently happening in Iowa or across the country. And it MUST happen if we have any glimmer of hope of containing costs in the future.

Harvard competition guru Michael E. Porter may be on to something when assessing the competitive environment in the health care industry.

Why is competition in health care not focused on value? The most fundamental, unrecognized problem with the U.S. health care system is that competition operates at the wrong level. Competition is both too broad and too narrow. Competition is too broad because much competition now takes place at the level of health plans, networks, hospital groups, physician groups, and clinics. It should occur in addressing particular medical conditions. Competition is too narrow because it now takes place at the level of discrete interventions or services. It should take place for addressing medical conditions over the full cycle of care, including monitoring and prevention, diagnosis, treatment, and the ongoing management of the condition.

Sounds reasonable to me … how about you? I hope this new health plan is a success. But real, meaningful success will only come when we have true competition in the right places.