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Regulatory Capture:

Regulatory Capture: Why Only Non-Health Care Business Can Save America From The Health Care Industry. Brian Klepper, PhD. Mis -Aligned Incentives.

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Regulatory Capture:

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  1. Regulatory Capture: Why Only Non-Health Care Business Can Save America From The Health Care Industry Brian Klepper, PhD

  2. Mis-Aligned Incentives When an employer sits down with his health care relationships – broker, health plan, doctor, hospital, drug and device company – everyone else in the room wants health care to cost more, and they’re all positioned to make that happen. Lynn Jennings, CEO WeCare TLC, LLC

  3. Health Care Cost Growth and the Potential for Structural Failure

  4. Average Annual Health Insurance Premiums and Worker Contributions for Family Coverage, 2009-2011 $15,073 $13,770 $13,375 Employer Contribution Worker Contribution Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2009-2011.

  5. Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings, 1999-2011 Premium has grown 4x inflation for more than a decade. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2011; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2011 (April to April).

  6. 5% Drop in Employer Coverage 3 Years 11/11/11 – Gallup/Healthways Survey of 90,000 American Adults

  7. Projected Annual Total Household Compensation and Compensation Net of Health insurance Premiums

  8. Health Care’s Growing Burden on Federal Budget Crowds Out Other Needs, Like Education and Infrastructure Replacement

  9. Here’s Health Care’s Percentage of the Larger Economy Over Time

  10. US Health Care Unit Pricing Is Much Higher Source: International Federation of Health Plans, Cited in NYTimes, 1/22/12

  11. And Lucrative Pricing Drives Higher Utilization

  12. And Lucrative Pricing Drives Higher Utilization

  13. An Inconvenient Truth

  14. Unnecessary/Inappropriate Care & Cost “Our research found that wasteful spending in the health system has been calculated at up to $1.2 trillion of the $2.2 trillion (54.5%) spent in the United States. [R]edundant, inappropriate or unnecessary tests and procedures [were] identified as the biggest area of excess, followed by inefficient healthcare administration and the cost of care necessitated by conditions such as obesity, which can be considered preventable by lifestyle changes.” The Price of Excess PricewaterhouseCoopers, 2008

  15. Perspective • In 2012 dollars, 54.5% of health care spending providing no value would equal almost $1.5 trillion annually. • Congressional Super Committee was charged with identifying/saving $1.2 trillion over 10 years. (They failed.)

  16. The Inescapable Conclusion Health Care’s Excesses Threaten the Stability of Our Industry and the Larger US Economy

  17. Regulatory Capture Health Industry Lobbying & The AMA’s RUC

  18. Lobbying & Health Care Policy • In 2009 (during the reform proceedings), health care organizations spent $1.3 billion to lobby Congress.* • 3,330 lobbyists participated: 6 for every member of Congress.* • In other words, policy is developed to favor the special rather than the public interest. • *Open Secrets. The Center for Responsive Politics

  19. Lobbying & Health Care Policy A person can reach no other conclusion than this is a quid pro quo [this for that] activity. Lobbyist for Public Citizen They cut it. They chopped it. They reconstructed it. They didn’t bury it. I don’t think they wanted to. Julian Zelizer Princeton Professor of Public Affairs

  20. The AMA’s Relative Value Scale Update Committee (RUC) • 29 physicians - 27 specialists & 2 PCPs • CMS’ sole advisors on medical services valuation • Secret proceedings, sham survey methods, composition unrepresentative of physicians in market, financially conflicted • CMS has historically accepted 90+% of recommendations • Commercial health plans typically follow Medicare’s payment lead

  21. Real World Impacts of RUC Influence Over-values specialty services while under-valuing PC Inhibits PC’s moderating influence and accountability function over specialty services. Creates systemic incentives to perform more services, and more expensive services. (Specialists “practicing to the codes.”) Payment disparities between PC and specialties. Crisis-level PC shortage now.

  22. Payment Disparities • Compare Primary Care Office Visit (99214) and Cataract Extraction with Intra-Ocular Lens Implant • 99214 – 25 Minutes and 3 Different Problems. Could be anything. Palette is all medical knowledge. Medicare pays $111.36 • Cataract Extraction & Intra-Ocular Lens Implant – 15 minutes. Restores sight! 50 year old, low risk, repetitive procedure. Medicare pays $836.36. • Hourly rate of Ophthalmologist pay is 12.5x PCP pay. • PCP’s job is arguably more complex/challenging. Klepper & Kibbe, Rethinking the Value of Medical Services, Health Affairs Blog, 8/1/11.

  23. Pt. Volumes – Primary vs. Specialty Care • Typical 2012 established primary care office visit duration = 7.5-12 min. 30 years ago, it was 20-25 • PCPs paid by visit, so may refer time-consuming problems • Most specialists profit from procedures • Result: huge increases in specialty visits, Outptdiagnostics, procedures

  24. Procedural Volumes • Lucrative procedures encourage specialists • To “practice to the codes.” • Physicians who own advanced imagers order them up to 6x more than those who don’t • Stents are no more effective than “optimal drug therapy” and lifestyle changes, and they introduce significant risk/cost. Medicare spends $1.6 billion annually on drug-eluting stents. • Endless examples.

  25. Procedural Volumes Medicare spends a fortune each year on procedures that have no proven benefit and should not be covered. When a procedure…is not supported by evidence, …taxpayers should have no obligation to pay for it. Rita Redberg, MD Editor, Annals of Internal Medicine “Squandering Medicare’s Money” NY Times, 5/25/11

  26. Health Plans & Primary Care • Question • If Empowered Primary Care Has BeenProven To Save Money, Why Don’t Health Plans Pay PCPs To Practice That Way?

  27. Winners & Losers • Winners • Nearly Everyone in the Health Industry (Except Primary Care) • Losers • Patients – Unnecessary Care and Risk of Harm • Purchasers (Employers, Taxpayers, Individuals) – Immense Unnecessary Cost • Primary Care Physicians

  28. Major Health Care Structural Flaws • Fee-For-Service Reimbursement • Lack of Pricing/Quality/Safety Transparency • Subjugation of Primary Care

  29. Will Non-Health Care Business Save Us? (They’re Our Best Bet, But It Doesn’t Seem Promising)

  30. The Prospects Aren’t Good • They haven’t meaningfully mobilized to date • Many seem resigned or are fleeing • Appears to be no larger sense of enlightened self-interest

  31. The Employer’s Dilemma We decided as a group to stop letting the health care industry take advantage of us. Jane Wolfe Benefits Manager Fairfield Manufacturing Lafayette, IN

  32. Collaboration in Lafayette, IN • Relatively small community with concentration of mid-sized/large employers (e.g., Subaru, Purdue University). • 2nd highest health care costs in IN • Employers came together 6 years ago, pursued clinics, changed the market. • This can work anywhere.

  33. Market-Based Reforms • Over the past 20 years, employers (& health plans) have: • Significantly increased co-pays for “steerage.” • Introduced generic drugs and mail-order. • Introduced wellness, disease mgmt, lifestyle coachingprograms • Introduced incentives • Renegotiated network discounts. • Given employees “more skin in the game.”

  34. Market-Based Reforms But we mostly haven’t Managed the care process, like businesses would.

  35. Market-Based Approaches That Work • Empowering Primary Care • Large Case Management • Dynamic Pricing • Data Collaboratives • Medical Destinations • New Technologies (e.g., Minimally Invasive Procedures, Genomics) • Incentives/Patient Engagement • Rx Step Therapies • Lifestyle Management/Obesity Step Therapies • Employer Leadership

  36. Case Studies • Lowes & Cleveland Clinic • Pepsico & Johns Hopkins • Hannaford Grocers & Singapore Hospital • Intel & Providence Health • CalPERS, BSC, Hill and Catholic HC West

  37. Effective Onsite/Near-site Clinic Characteristics • Outside FFS, So No Financial Conflicts, Incentive is for Appropriateness • Comprehensive Medical Management Platforms That Incorporate Other Key Mgmt Approaches and Influence Care Throughout The Continuum. • Strong Incentives For Participation. Free Visits, Drugs, Labs. Capture Them, Engage Them, So You Can Manage Anywhere In The System. • Provable, Significant Savings. Based on hard data, not soft, productivity estimates.

  38. Onsite/Nearsite Clinics – Financial Impact

  39. Onsite/Nearsite Clinics – Competitive Advantage Savings Grow Over Time, and Create Competitive Advantage Illustrative Only

  40. Acting In All Our Interests • Health Care Organizations Comprise 1/6 of the US Economy and 1/11 of US Jobs. • Only One Group is Larger, With the Influence to Overpower Health Care in Policy: • The Non-Health Care Business Community

  41. What Employers Must Do • Re-Assess Your Health Care Relationships.Stop assuming that health care organizations put your interests first. • Follow The Evidence. Institute value-based approaches that are proven to reduce cost while improving quality/population health status. • Collaboratewith other employers on health management approaches that work so that you change the market. • Advocate.With other employers, pressure policy makers to develop health policies that are in the interests of you, your employees and their families. • Payment Reform Is Paramount!

  42. Brian R. Klepper, PhD is a health care analyst and commentator. He is Chief Development Officer for WeCare TLC, LLC, an onsite primary care clinic and medical management firm based in Longwood, FL, and Managing Principal of Healthcare Performance Inc., a consulting practice based in Atlantic Beach, FL. An active author and speaker, Dr. Klepper has provided health care commentary to CBS Evening News, the Wall Street Journal, the New York Times, and the Washington Post. He has published articles on Kaiser Health News, Medscape, Healthleaders, The New England Journal of Medicine, Modern Healthcare, Business Insurance and newspapers nationally. In December 2010, he founded and now edits Care & Cost, an online professional health care magazine. He is a regular contributor to the Health Affairs Blogand other expert health care blogs. With his wife, he also maintains Elaine’s Journey, which details their struggle against Primary Peritoneal (Ovarian) Cancer. Brian serves on the American Academy of Family Physicians’ Primary Care Services Valuation Task Force, and is a reviewer for Health Affairs and The Journal of Ambulatory Care Management. He serves on the Board of the Consortium for Southeast Hypertension Control (COSEHC), dedicated to translational medicine for vascular disease.  He is an Advisor to the Lundberg Institute, the Patient-Centered Primary Care Collaborative, which advocates for medical homes, and the Center for Value Health Innovation, which helps business identify and implement approaches proven to improve quality while reducing cost. In January 2011, with David Kibbe MD, he began a campaign, Replace the RUC!, that focuses on the most important driver of inappropriate health care cost. That effort has resulted in a lawsuit by six Augusta, GA primary care physicians against the US Centers for Medicare and Medicaid Services (CMS) over its longstanding inappropriate relationship with the AMA’s Relative Value Scale Update Committee (RUC). Contact Brian at 904.395.5530 (o), 904.343.2921 (c), bklepper@gmail.com.

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