Health insurance premium increases in Massachusetts: More ways it can happen

Last week (ACA rollout hits some Massachusetts businesses harder than expected) I described how the implementation of Obamacare caused one small businesses’s Blue Cross Blue Shield of Massachusetts premium to jump by 29 percent for the upcoming renewal. The main issue was family size –previously only the first two kids were counted when calculating premiums, now it’s the first three kids. This group, with lots of kids, is paying the price.

After that I heard from two other BCBS MA customers who were experiencing big premium hikes. One is a two-family partnership where one family has two kids and the other has none. Their premium is up 17%. The second is a non-profit organization where the number of kids also shouldn’t be a deciding factor. Their premium increase is 26%.

Here’s what BCBS MA told me about these two:

The first group was a new customer entering its first renewal year. Initially, BCBS rated the company based on the expected –rather than actual– number of dependents. The rate was based on ~1.5 kids for one family and 0 for the other. (Something tells me they probably knew 1.5 was either too high or too low and not right on!) In any case, in a small group that is enough to make a significant difference in rates. With the ACA, health plans have to gather the dependent info even for new customers.

For the non-profit organization, the number of members covered declined from 12 to 7, which pushed them into a more expensive rate per member. (Even though rating based on group size is being phased out, it’s still a significant factor.) In addition, the group’s prior year increase had been tempered under a state law that limited the rates of increase for renewals. The ACA overrides the state’s rule and BCBS tells me they are unable to cap this year’s rate increase.

For what it’s worth, BCBS tells me that the median rate increase in the merged (individual + small group market) this year is 5-6%, which means these three examples are outliers. They also tell me that rate increases a year from now should be in the low single digits for all three of these customers and others like them.

I’d be interested in hearing from other Massachusetts customers of Blue Cross and other plans. Have your rates jumped? Are they steady? Did they fall? Do the explanations above seem to account for what’s happened to you?

Leave a note in the comments or mention on Twitter @HealthBizBlog.

By healthcare business consultant David E. Williams of the Health Business Group

Actually, there are clinical trials for health information technology

HIT research: Has to be in there somewhere!

HIT research: Has to be in there somewhere!

The New York Times Bits blog (The Lessons Thus Far From the Transition to Digital Patient Records) concludes its post on the ups and downs of health information technology by asserting the following:

In health information technology, there are no clinical trials or tests with randomized controls, as there are for drugs, for example. True, digital data does not go into the body, but it can increasingly guide what does.

Actually, high-quality studies of medical decision support tools are quite common. For example, here’s the abstract of a recent study (Evidence-Based Decision Support for Neurological Diagnosis Reduces Errors and Unnecessary Workup) published in the Journal of Child Neurology:

Using vignettes of real cases and the SimulConsult diagnostic decision support software, neurologists listed a differential diagnosis and workup before and after using the decision support. Using the software, there was a significant reduction in error, up to 75% for diagnosis and 56% for workup. This error reduction occurred despite the baseline being one in which testers were allowed to use narrative resources and Web searching. A key factor that improved performance was taking enough time (>2 minutes) to enter clinical findings into the software accurately. Under these conditions and for instances in which the diagnoses changed based on using the software, diagnostic accuracy improved in 96% of instances. There was a 6% decrease in the number of workup items accompanied by a 34% increase in relevance. The authors conclude that decision support for a neurological diagnosis can reduce errors and save on unnecessary testing.

The government and healthcare providers are investing a fortune in health information technology. A lot of time, effort and cash has been spent on installing EHRs and getting the initial data into them. But the real clinical and financial value will come from using the information in electronic health records for better communication and clinical decision making.

The Times does readers a disservice by asserting that high quality clinical trials aren’t and can’t be done.

photo credit: dullhunk via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group

Narrow networks: Get used to it

Narrow but workable

Narrow but workable

Many health plans unveiled “narrow network” plans recently as part of the Affordable Care Act. These plans cover a limited number of doctors, hospitals and other providers and often pay nothing for out-of-network coverage. Predictably, some members are upset as documented today by Kaiser Health News (Limitations of New Health Plans Rankle Some Enrollees.)  Some consumers are upset that they can’t see specific doctors who they may have seen in the past and that the list of available providers isn’t terribly long.

Insurance commissioners and lawmakers are hearing complaints and some are considering taking action. And while it definitely makes sense for regulators to take an interest in network adequacy and to prevent abuses, in my view narrow networks have become a crucial part of healthcare affordability and need to be maintained.

Here’s why they’ve become prevalent: The Affordable Care Act prevents health plans from using many of their traditional tools for limiting costs. They can’t reject sick or high-risk patients, can’t charge them more, can’t cap annual or lifetime benefits, and have to provide a set of proscribed services. At the same time, the plans are subjected to apples-to-apples comparisons on health insurance exchanges by price-sensitive buyers. The result is that plans take the main remaining step they can to be control costs: limiting their networks to providers willing to accept lower reimbursement rates.

Most shoppers care mainly about price so this is a very sensible approach for the health plans. And for many customers it’s a way to afford insurance that provides a wide array of benefits. In some markets (including Massachusetts) narrow network products that exclude the highest priced, largest healthcare systems provide very substantial discounts while still delivering high quality providers.

Narrow networks are becoming increasingly important. In 2010, before the Affordable Care Act, I wrote Narrow networks. Nice idea but no panacea. I listed six reasons why such networks were having a limited impact. Some of these factors are still present, but others are less prominent. For example, the development of integrated delivery networks mean that health plans can contract with these larger entities and get essentially all the providers they need, the emergence of risk-sharing through ACOs and similar arrangements aligns incentives, and in general there is more price sensitivity. At least a few provider organizations are now positioning themselves as value players, ready to address an emerging market segment.

 

photo credit: coolmonfrere via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group

ACA rollout hits some Massachusetts businesses harder than expected

Like many, I’ve been surprised that the rollout of the Affordable Care Act has had such an impact on Massachusetts. After all we already had near universal coverage, an exchange/marketplace, lots of mandates, guaranteed issue and community rating. Obamacare is based on Romneycare. But somehow Massachusetts screwed up the rollout of the Obamacare exchange, which is costing $100 million to fix, and at least some Massachusetts small businesses are getting hit with big rate hikes as they renew.

One small business I know got hit with a 29 percent premium jump, almost all due to the ACA. Here’s how a Blue Cross actuary explained it:

  • Blue Cross has alway developed its rates for the merged individual/small group market by rating each member based on age and location. Industry and company size have also factored in
  • However, prior to 2014 Blue Cross only counted the first 2 kids plus adults when doing the rating
  • The ACA mandates a similar approach, but now Blue Cross has to count the first 3 kids in the family. In addition, if a son or daughter aged 21-26 remains on the plan, that individual is counted as an adult along with up to 3 kids
  • For this particular business with the 29 percent jump, the shift in the counting of number of kids boosted the premium by about 25 percent
  • The other 4 percent was mostly related to aging of the members plus the inclusion of pediatric dental benefits in the medical benefit, again as required under the ACA
  • The ACA requires Blue Cross to phase out its reliance on company size and industry rating factors over time. That effect was basically neutral for this customer, whose premium rose about 3 percent based on the phase out of the industry factor and went down 2.5 percent based on phasing out of the company size factor

The silver lining, if any? There shouldn’t be any serious changes in premium for next year’s renewal.

I’d heard about similar premium increases for other small businesses and non-profit organizations, including those that I don’t think are facing the family size issue. But maybe I’ve just heard from those who’ve been hit hard and others are not seeing increases.

Is your Massachussetts small business healthcare premium skyrocketing next year? Is it staying flat? I’d love to hear from you in the comments or via Twitter @HealthBizBlog.

By healthcare business consultant David E. Williams of the Health Business Group

 

Medicaid: Program for the poor should not impoverish doctors and hospitals

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Medicaid beneficiaries deserve the same access to healthcare services and products as people with commercial insurance or Medicare. But since Medicaid pays doctors and hospitals 27 to 65 percent less than commercial health plans (according to a new GAO report), it makes it awfully difficult for providers to be payer agnostic. Sure enough, we see even supposedly mission-driven non-profit healthcare systems looking to maximize their share of the commercial population by catering to that group.

That’s a real public policy problem as the proportion of patients with Medicaid increases, and it presents providers with an unreasonable dilemma.  In many states, doctors or hospitals that take care of a high proportion of Medicaid patients will find themselves in financial distress. That’s not fair to them or the Medicaid recipients. Frankly it’s also unfair to the commercial customers who may be overpaying to compensate for Medicaid underpayments.

Compare Medicaid with the Supplemental Nutrition Assistance Program (SNAP), aka Food Stamps. SNAP recipients don’t bankrupt supermarkets. That’s because the government pays the same price for groceries as any other customer. The SNAP program doesn’t demand that the grocery store sell products below cost, nor should it. SNAP recipients have to be savvy about how they use their benefit, seeking out high value products and retailers to stretch their dollar.

Realistically we won’t see the disparity between Medicaid and commercial payment rates erased any time soon. It would be just too expensive. But there are steps that can and should be taken:

  • Narrow the gap over time from the current 27 to 65 percent to something more like 10 to 15 percent
  • Introduce more progressive payment mechanisms –like Medicaid Accountable Care Organizations– that provide health systems with incentives to contain costs and improve quality. Healthcare systems that figure out how to help Medicaid members become healthier for a lower cost will prosper –analogous to what Walmart does with SNAP payments
  • Provide incentives for Medicaid beneficiaries to seek lower cost, higher quality care. Let’s not be paternalistic and assume that people on Medicaid aren’t capable of identifying high quality, low cost services.. I’ll venture to say that many lower income Americans are savvier shoppers than average consumers, if only due to necessity

The GAO report should be a wakeup call. It’s time to do something about these disparities beyond simply shrugging our shoulders.

photo credit: nffcnnr via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group

Health Business TV: Cash for specialists, eVisits again, nursing shortage mythology

https://www.youtube.com/edit?o=U&video_id=SqEf7ry112cIn this fifth episode of Health Business TV, I discuss my interview with HelloMD about cash payments to specialists, the long and slow evolution of eVisits, more on the nursing shortage myth, the United Independent Party in Massachusetts, and an update on the proposed 29% health insurance premium hike for our business..

Please subscribe to the YouTube channel and tell your friends!

 

By healthcare business consultant David E. Williams of the Health Business Group