The Health Plan for the USA: A graded copayment on every level of service

Level A: Hospital

The research from HPUSA has elucidated some important clinical statistics to control health care costs. This data is hard to obtain and cannot be automated. It is labor intensive. At this point it is clinical: one on one. When we see large expenditures in health care, we try to determine if the patient is a candidate to be included in our series. We then indulge in a frank discussion of his or her responses to the questions concerning percentage copayment and its effect on the patient’s utilization of health care benefits.

Health care can be stratified into a number of logical tiers. The most expensive and highly sophisticated care is in the traditional acute care hospital. We won’t get involved in any medical-political redefinitions of this level of care such as the somewhat controversial specialty hospital. We were even opposed to the spinning off of Psychiatric Wards to Psychiatric Hospitals several decades ago inasmuch as this lowered the level of care in these facilities for psychiatric patients.

The traditional hospital is like the mainframe computer industry of the third quarter of the twentieth century. Most of the mainframe companies didn’t adapt and are no longer in existence. IBM was the only one that was able to adapt and survive until the most highly sophisticated demands, such as accessing millions of ATMs simultaneously around the world on an integrated network that includes all financial institutions. IBM would not have survived if they had continued to compete in the laptop industry. When they sold their ThinkPad to Lenovo and refocused, they became the world leader in sophistication and problem solving again. We would expect them to develop Watson and compete with live human beings on Jeopardy.

Starting with the highest and most expensive strata of health care, the acute hospital, or the IBM of health care, what is the appropriate copayment for hospital work? The health care insurance companies have various forms of copayment, such as an 80/20 plan in which the patient pays 20 percent of the hospital charges and the insurance companies pay 80 percent. There are also 90/10 plans and those with fixed deductibles that bear no relationship to hospital charges.

There are two problems with these plans. First, few people can pay twenty percent of a $150,000 hospital bill. Even if it’s linked to a line of credit, the credit requirements are extraordinary.

Second, there is little transparency in hospital billing. Insurance companies have various arrangements with hospitals that the patient cannot see. In fact, hospitals have forced patients to go into hock for the 20 percent copayment (which is $30,000 in our example) and meanwhile the remaining $120,000 is discounted to the hospital, sometimes for even less than the patient is asked to pay on their 80 percent share. It may not be unusual for the hospital to take the patient to the cleaners for the $30,000 (20 percent) and accept the usual discounted hospital portion, which will be far less than the rest of the bill. We understand this has come under litigation and the results are not recalled.

With small or no deductible policies, it is not unusual for patients to show us statements indicating that their insurance company was billed $75,000 and the hospital accepted $7500 as payment in full. For co- payments to work effectively there has to be complete transparency. In other words, a patient knows up front what the hospital charges are and will be. This then allows for a percentage copayment to work effectively in controlling health care costs.

For instance, if a patient checks in for gallbladder surgery, he or she is told the usual charge for this procedure is, say, $20,000. And if your copayment is 10 percent, the patient is asked if he wants to write a check or utilize a credit card for the $2,000 copayment.

At this point in time, the patient can make a further assessment of the pros and cons for the surgery. A discussion with the spouse may remind him that his internist thought since he has had no gallbladder attacks, and his one stone was found on a routine exam for another problem, that he should forgo surgery for the present. In fact, they had agreed to wait, but the patient wanted to see a surgeon “for a second opinion.” Even though his internist advised against surgery, the surgeon was very convincing that he should have the operation. The internist had stated that if he hadn’t had the backache and the x-ray for that, they would not have known that he had a gallstone and the question would not have been raised. Now as they were staring health care costs in the face, they recalled this conversation. They had a number of other pressing financial struggles and so at the registration desk, he decided to put the credit card back in his billfold and sit tight for the present, realizing that an emergency could develop. However, his internist had advised him that given the nature of his stone, an emergency was not likely to occur.

Without going into the pros and cons of delaying any medical care, this simple maneuver has placed health care in the Medical MarketPlace and in competition with other finances. The Medical MarketPlace would have prevented the current catastrophic Medicare and Medicaid over utilization and our current health care crises. This further prevents utilization of our children’s finances, which obviously is very unethical. If this weren’t across generation lines, it would easily have been seen as Grand Theft because of the magnitude of the crime.
In our efforts to determine the best copayment that would control health care costs but not prevent necessary health care, we would sit down with the patient in a neutral time and make a determination: If you had a five percent copayment, would you have proceeded with the operation? If 7.5 percent? If 10 percent? If 15 percent? If 20 percent? If 25 percent? If 30 percent? Etc, et al.

Our results indicated that in the majority of cases, a 5 percent copayment did not control costs and allowed over utilization. A 15 percent or greater copayment controlled costs very well, but we felt it prevented some necessary hospitalizations or operations. For the vast majority of patients, a 10 percent copayment controlled over utilization of hospital care rather well but did not prevent necessary health care that would reduce the quality of care.

Hence, in our research so far, a ten percent copayment on hospitalizations was the ideal amount to prevent over utilization and not cause under utilization.

If the health care insurance is further tied to a line of credit at a favorable interest rate appropriate for sick people, that could be administrated by one of the credit card companies, everyone would have access to the highest level of health care.

To read about Level B etc, stay tuned. To purchase a copy of the Business Plan, go to www.healthplanusa.net/bookstore/.

Misdirection in HealthCare: Reducing rather than increasing spending and taxes

Reader's Digest had a poll some time ago. What was truly amazing was that the rich and the poor agreed that no one should have to pay more than one-fourth of their earnings in taxes. The following proposal does not quite get us down to that level, but it would be a good start for our country. It would be especially good for implementing personal and private health care.

The financial crisis in this country is causing local and state governments to scale back. Only the federal government is spending more money because they have the ability to print money, which unfortunately then loses value every time they roll the printing presses. The root cause of the crises is the graduated income tax authorized by the 16^th Amendment, which has no limits on taxes. So Congress has the SPEND MORE and then TAX MORE philosophy!

What this country needs before we can have any control of our finances, whether it's our healthcare or welfare costs, is a tax limitation amendment. The previous 16^th Income Tax Amendment was passed in the days when people understood one could not spend more than one makes. This unlimited income tax on individuals and a duplicate tax on corporations, also owned by individuals, place no limits on Congress. Not only do they feel free to spend our money, but also the money of our children and grandchildren, because of the ease in raising the income and other innovative taxes. All of these come out of one pocket - the taxpaying citizens.

A sailor’s letter to the editor summed it up rather succinctly. I object and take exception to every saying that Obama and the Congress are spending money like a drunken sailor. As a former drunken sailor, I quit when I ran out of money.

It should be apparent that in these times of reduced income, the government should have reduced its outlays. The social security tax should have been indexed since inception in the 1930s when America's average life expectancy was 62, rising to the current life expectancy of 75. Our country cannot afford to have individuals live on Social Security benefits an extra 10 to 15 years when most of us are capable of working and earning our own keep. Most physicians now work past age 75 and some into their 80s and 90s. If you check the obituary columns, one finds a high percentage of people who lived into their ninth and tenth decade of life and worked into their eighth decade, some into their ninth. An initial attempt to index Social Security increased the Social Security retirement age to 67. It should have included a proposal to index the benefits gradually to the present average life expectance of 75.

Medicare is in a negative cash flow and is scheduled to go broke in the next decade. The Medicare age should also be immediately indexed to age 67 and gradually further indexed to match the Social Security indexing schedule. Only someone with a paretic brain could even think of lowering the Social Security and Medicare ages to 55. That would be total fiscal irresponsibility, meaning economic collapse for the United States, with possible loss of the world's highest credit rating.

By Constitutional Amendment, the 16^th Amendment should be revised to limit all taxes. The three levels of government, federal, state and local or county, should each be limited in the number and the size of the taxes they can implement. The federal government should be limited to the following two taxes: a maximum income tax of 15 percent on the citizens and an excise tax limited to 10 percent on interstate commerce and imports. The state government should be limited to a 5 percent income tax on its residents and a 5 percent sales tax on items purchased in the state. The local government should be limited to a one percent tax on property held within the state and a one percent sales tax on items purchased in the county. No other taxes would be allowed. The property assessment should not increase more than two percent maximum for inflation per year to prevent citizens from losing their homes as they get older due to increasing property values and diminishing incomes. There should not be a corporate income tax since corporations are owned by the citizens and double taxation should not be allowed. There should never be a tax or surtax on any tax.

The citizens of our country could then manage their own health care with stability and protection from the government, which has confiscated their income in increasing fashion from year to year.

They could manage their own retirement also. But that is a subject for another day.

Poll Test

The Case Against the Electronic Medical Record

The Case Against the Electronic Medical Record
By David J. Gibson, MD and Jennifer Shaw Gibson

PRESIDENT BARACK OBAMA convened a healthcare summit in Washington on March 5 to identify programs that would improve quality and restrain burgeoning costs.

His flagship proposal was national adoption of the electronic medical record (EMR). This, he said, would save some $80 billion a year, safeguard against medical errors, reduce malpractice lawsuits, and greatly facilitate both preventive care and ongoing therapy of the chronically ill.

The point of this article is to discuss the value of the EMR itself. But it must be pointed out that none of the President's assertions is true.

Obama has based his proposal on a now discredited 2005 RAND study on EHRs. From the time of its publication to the present, there has been no compelling evidence to support the study's theoretical benefits.

If, as RAND asserts, the EMR improves efficiency, enhances productivity, decreases overhead cost and improves the quality of health care, why are only 4 percent of doctors using functional electronic records that can provide any kind of clinical recommendations, and why are only 1.5 percent of nearly 3,000 hospitals currently equipped with comprehensive electronic records?

As a group, health care professionals have been on the forefront in embracing information technology, including beepers, fax machines, cellular phones, desk top computing, data mining and the use of the Internet for both personal and business use.

Yet there is a gap between information technology's deployments in health care as opposed to most other industries. There are several reasons for this.

The Technology Issue.
EMR systems are difficult to maintain in the small practice setting.

Furthermore, most studies document a reduction in physician productivity following installation of EMRs. These systems generally add a half-hour or more to a physician's day for tasks such as electronic ordering, and responding to the false alerts that all of these EMR systems generate.

Physicians need an EMR that does not yet exist. They need a mobile, voice-activated, heuristic, architecture-based system rather than a keyboard and mouse-based interface with the EMR. A friend of ours once made the observation that "information technology does not require subsidization unless it is not ready for deployment."

The Business Model Issue.
For hospitals, declining revenues and deteriorating investment returns, coupled with accelerating capital costs, make investing in EMRs problematic. . .

A new report by Avalere Health, an information company serving government and the health care industry, found it would cost about $124,000 for a single doctor or small practice to upgrade to electronic health records over the five-year period (2011-2015) during which the stimulus bill offers incentive payments of up to $44,000.

In 2015, Medicare penalties start to kick in for doctors who haven't switched to electronic record-keeping. The projected starting penalty will be $5,100 a year - far less than the cost, less the incentive, to install and maintain an electronic health system.

EMR Veracity is Compromised.
The secret generally unknown outside the health care industry is that the only real business model case that resonates for the EMR in medical practices is the support for documenting (and occasionally up-coding) billed charges. Interest in the EMR was generated by the threat from the Centers for Medicare & Medicaid Services (CMS) that physicians needed to adequately document patient visits.

Remember the Evaluation & Management (E&M) Code controversy that arose with the 1996 passage of the Kassebaum-Kennedy Bill? The purpose of the bill, which criminalizes any miscoding of medical services, was to control fraud and abuse in the Medicare program. To no one's surprise, the documentation to satisfy E&M coding requirements fit neatly into a computer coding system - the EMR was born.

A decade later, another reason for adopting electronic recording of clinical information developed. In 2005, "Pay for Performance" (P4P) was introduced by the health insurance industry. These P4P plans - which pay doctors, hospitals and other providers more meet certain goals - were seen as a way of boosting health quality. Recent evidence is that P4P plans are ineffective in achieving any of their original goals.

Researchers at the RAND Corporation studied a P4P program started in 2003, involving seven major California health plans and 225 physician groups caring for 6.2 million people. The study found that the programs appear to be speeding adoption of information technology such as electronic medical records, but these changes have not improved quality.

There are now rather unpleasant consequences emerging as a direct result of E&M codes, P4P and the evolving deployment of EMRs: The veracity of the medical record is being compromised.
An associate who teaches at a medical school told us that he observed frequent EMR chart entries using macros (one or two key strokes that perform a series of actions) for components of the physical exam that have not been performed.

"Mary, it says here you did a neurological exam and it was normal. I was there with you and didn't see you do a neuro-exam."

The student's response, "I inserted a macro for my physical exam."

Another associate who practices in a large medical group relates that padding of the chart with superfluous, macro-based information is rendering the chart irrelevant.

As this checklist, cut-and-paste, or macro-insertion behavior spreads, the veracity of the medical chart becomes profoundly compromised. How can an attending physician finding neurological deficits ever rely on the recorded clinical findings six months before if there is a possibility the reported data are compromised or, worse, "dry-labbed"?

The answer is they cannot. So the only believable data in these EMRs will be derived from the lab and the objectively recorded diagnostic studies.

Quality of Care.
There is also no evidence that the EMRs improve the quality of health care. A 2008 study published in Circulation assessed the influence of electronic medical records on the quality of care of more than 15,000 patients with heart failure. It concluded that "current use of electronic health records results in little improvement in the quality of heart failure care compared with paper-based systems."

Similarly, researchers from Brigham and Women's Hospital and Harvard Medical School, with colleagues from Stanford University, published an analysis in 2007 of some 1.8 billion ambulatory care visits. They concluded, "As implemented, electronic health records were not associated with better quality ambulatory care.". . .

One of the oldest of computer problems - "garbage in, garbage out" - exacerbates liability exposure. Once a misdiagnosis enters into the electronic record, it is rapidly and virally propagated. A study of orthopedic surgeons, comparing handheld PDA electronic records to paper records, showed an increase in wrong and redundant diagnoses using the computer - 48 compared to seven in the paper-based cohort.

Propagation of mistakes is not limited to misdiagnoses. Once data are keyed in, they are rarely rechecked for accuracy. Entering a patient's weight incorrectly will result in a drug dose that is too low or too high, and the computer has no way to correct such human error.

Recent studies suggest that adopting computerized systems has not helped but harmed patients. After the Children's Hospital of Pittsburgh added automated prescribing recommendations to a commercial electronic records system, it documented more than a threefold increase in the death rate of child patients. Another leading system contributed to more than 20 different types of medical errors.

Individual Privacy
Once the medical record is in digital form, a couple of mouse clicks on a computer that is connected to the internet can propagate the most private of information to a worldwide audience.
Furthermore, not every health care professional with access to the EMR system should have access to every record within the system. Once cleared for record access, not every professional should have access to every part of the record. This conundrum of layered security level setting has not been resolved.

Current concern over confidentiality of data is not spurious for providers. The liability relating to disclosing personal health Information (PHI) now stands at up to $1,500,000 per occurrence.

A Tool for Rationing.
A new concern has arisen with the administration's EMR initiative. Some have speculated that patient data collected in national electronic health records will be mined to assess cost effectiveness of different treatments.

This analysis could then be used to dictate which drugs and devices doctors can provide to patients in federal programs like Medicare. Private insurers often follow the lead of the government in such payments.

Conclusion.
The fact is there is no objective peer reviewed and published evidence that EMRs improve quality or reduce costs.

What lessons can we learn from all of the above? One is that public policy should not drive market development before thorough pre-deployment testing has determined effectiveness and detected unintended consequences.

It should be noted that though we are critical, we are not opposed to the EMR - in fact, we recognize clear benefits from deploying an EMR in the clinical setting. Today, patients are frequently seen without physicians having access to the patient's paper records.

With EMR, health professionals can readily access all information on their patients from a single site. Particularly helpful are alerts in the system that warn of potential toxicity in prescribing certain drugs for a patient already on other therapies.

Rather, our objection is to the opportunistic and abusive use of discredited data and bogus projections for political purposes. The cynical presentation of unsubstantiated or, worse, known inaccurate cost savings and improved quality of care data being used to justify breathtaking increases in taxpayer funding for increased health care spending by the government is patently disingenuous.

To read the entire OpEd article including all the references, go to
www.ssvms.org/articles/0902-gibson.asp

Jennifer Gibson traded energy commodity futures on the Chicago Mercantile Exchange. She is also an economist who trained at the London School of Economics and now specializes in evolving health care markets. David Gibson is the C.E.O. of Reflective Medical Information Systems, a software development and consulting firm.

www.medicaltuesday.net/archives/May1209.htm#Featured

Smoke or be fined.

The Ultimate Result of Cigarette Taxes: Smoke or be Fined

China has 350 million smokers, of whom a million die of smoking-related diseases every year.

BEIJING - OFFICIALS in a county in central China have been told to smoke nearly a quarter million packs of locally made cigarettes annually or risk being fined, state media reported on Monday.

The Gong'an county government in Hubei province has ordered its staff to puff their way through 230,000 packs of Hubei-produced cigarette brands a year, the Global Times said.
Departments that fail to meet their targets will be fined, according to the report.

'The regulation will boost the local economy via the cigarette tax,' said Chen Nianzu, a member of the Gong'an cigarette market supervision team, according to the paper.

The measure could also be a ploy to aid local cigarette brands such as Huanghelou, which are under severe pressure from competitors in neighbouring Hunan province, according to the paper.
China has 350 million smokers, of whom a million die of smoking-related diseases every year.

More than half of all male doctors in China smoke, but the government is now trying harder to get them to kick the habit in order to set an example for others, state media reported recently. -- AFP

www.straitstimes.com/Breaking%2BNews/Asia/Story/STIStory_372199.html

http://www.medicaltuesday.net/archives/May1209.htm#News