In a recent blog, we wrote about our colleagues from MEDecision and DC Chartered Health Plan presenting a case study at the AHIP Medicaid Conference in which they analyzed Chartered’s successful implementation of our Alineo technology. On Wednesday, October 21, we conducted a webinar that, in essence, was the same presentation but intended to enable a even broader audience engagement. For those of you interested in having a look, the webinar is archived here.

Chartered’s situation is one of the more compelling we’ve come across in recent years (hence its being the subject of a presentation and webinar). In order to have its Medicaid contract renewed, the insurer was given a 90-day deadline to comply with certain disease management requirements, particularly HEDIS and NCQA. Chartered’s dated legacy system wasn’t up to the task and, in fact, was the reason the company was facing being out of compliance in the first place. 

At the same time Chartered was experiencing a significant influx of new members attributed to growing unemployment rates. And as we all know, Medicaid populations are among the most complex. The insurer decided it was time for a comprehensive new care management technology, so it carefully explored options and selected Alineo. The solution is a perfect match because it was specifically designed to do the things Chartered identified as its biggest needs: it streamlines operational efficiencies, reduces waste and improves care quality through enhanced business agility, controlled costs and better risk and compliance management.

But I suppose this is stealing thunder from the webinar. I encourage you to take a look at it for all the details. It really is a great story and one that can be replicated for others.

Aside from the health care reform bill being passed by the Senate Finance Committee, the other big story on the reform front last week may have been the report AHIP released finding, among other things, that the legislation in its current form would significantly raise the price of premiums for most consumers. (I discussed the AHIP report and a more comprehensive one from Oliver Wyman, Inc., in another blog.)

It was very disheartening to see the Obama administration almost immediately discredit the reports as nothing more than insurance industry propaganda (“lies”) intended to disrupt Tuesday’s Senate Finance Committee vote. For me it reprised a most unfortunate if-you’re-not-with-us-you’re-against-us attitude I sensed from the Obama team earlier in the reform debate, one that had seemed to be fading in recent weeks. As I have stated previously in this space, just because a certain entity, in this case the health insurance industry, doesn’t agree with every last detail of the proposed reform measures doesn’t mean it is against reform altogether. In fact, I believe the insurance industry is being very unfairly characterized as obstructionist when, actually, it has eagerly endorsed reform for quite some time. AHIP president Karen Ignagni rather eloquently makes this point, along with a number of other worthwhile ones, in an October 20 Washington Post article. 

To say that the AHIP report was an attempt to derail Tuesday’s vote is rather shortsighted. If the insurance industry really wanted to obstruct reform, it would hardly wait until two days before a subcommittee’s vote on proposed legislation. It would have launched a far more organized and intense offensive many months ago, one that in all likelihood would have been successful by this point. Instead, the insurance industry has been seated quietly at the table, working closely with Senator Max Baucus and other reformers without fiat. In exchange, the industry receives public vilification as reform’s arch enemy any time it voices opposition to certain aspects of the plan.

As I’ve said numerous times, the insurance industry has no interest in blocking the reform effort. It has had its own positive agenda for changing the system for quite some time. Insurers merely want reform to be fair, equitable and amenable for all of the parties it will inevitably impact. That doesn’t seem like much to ask, yet it seems more and more likely that it’s not going to happen.

On an unrelated note, congratulations to the Philadelphia Phillies on winning the National League pennant and making a second consecutive trip to the World Series! 

I felt the health care reform news out of Washington last week was decidedly mixed. For those of us who have advocated reform for many, many years, the mere fact that legislation made it past the Senate Finance Committee and one step closer to becoming reality is quite historic. A lot of folks never thought we’d even get this close, so it is indeed something that gives one great pause.

The legislation itself is another matter.

The iteration of the bill that the committee passed needs a lot of work to make it affordable before it goes up for a final vote in Congress. By now, most people are aware of the report AHIP released concluding that the current legislation would raise insurance premiums for a family of four by about $1,500. Although its authors admitted having to make simplifying assumptions that made the analysis less than comprehensive, I found it very troubling that the White House was so quick to dismiss the findings simply as insurance industry propaganda timed to derail last Tuesday’s vote. In fact, the existence of a second report that somehow flew much further under the radar not only corroborates the results of the AHIP study, it almost makes the $1,500 premium increase seem acceptable in comparison.

Oliver Wyman, Inc., the renowned actuarial consulting firm, released a more inclusive study saying that the legislation in its current form could ultimately raise rates upwards of 48 percent for approximately 94 percent of the population. Among other things, the Wyman report called for the bill to include market stabilizers to help offset such drastic cost increases. For example, it said, if the proposal calls for the elimination of pre-existing conditions, it should then also make health insurance mandatory for all. As it stands, the bill calls for the elimination of pre-existing condition rules immediately while taking a few years to implement penalties for not having coverage. And even then, the penalties are minimal. This will enable a large number of young and otherwise healthy people to wait until they’re sick to buy insurance, driving up the cost of premiums for the remaining population. No proponent of the currently proposed legislation has been able to undermine the analysis, so they’ve chosen to simply lump it in with the AHIP report as “lies.”

This is just one challenge with the legislation. There are other instances in which the bill doesn’t properly address affordability and that’s why it needs to be amended significantly before making its way to Congress. It is very important that the folks on Capitol Hill recognize that affordability goes far beyond what people pay for health insurance. It extends into what we as a society can afford to pay and, if the legislation passes as-is, the price may be very steep.

One of the things that struck me after taking a quick look at Senator Baucus’s health reform bill is that it doesn’t seem to contain a lot of detail around cost control. Obviously one of the most discussed issues in the entire reform debate is that of containing costs. For many people, the “cost of health care” simply means the amount of money consumers pay for insurance. Their reasoning is that the best way to control the price of insurance premiums is to implement a government-run insurer or a single payer system. 

While this theory is logical, it’s not very plausible. Simply by virtue of the fact that a single insurer could set rates and fees at whatever levels it chooses, insurance rates would in fact go down in the short term. But they won’t stay down unless we address the most problematic costs in the health care system which are those associated with care itself – the expense of tests, medications, hospitalization, procedures, devices and so on. It’s really our insatiable demand for health care services, drugs and devices – paid for by “other people’s money” – that creates the inexorable climb in health care costs. This is where the real cost is and the primary reason insurance rates have gotten so high in the first place. We must each focus more on wellness. Healthier consumers require less health care which, obviously, saves money. Regulation also plays into the equation. If we revise medical malpractice laws so that physicians aren’t overusing tests and treatment methods simply to avoid being sued, we can save millions.

These are just a few examples; there are myriad other factors that contribute to the rising cost of health care and this where we need to focus our attention in order to legitimately change the system. It’s not simply a matter of what we pay for coverage. It’s far more complex than that. Attempting to simply lower the cost of insurance is a band aid for an ailment that requires major reconstructive surgery.