Tag: risk

Not Really Insurance: The Pre-Existing Condition Debate

May 6, 2017• 32

By DAVID DRANOVE and CRAIG GARTHWAITE

The recent debate over the potential repeal and replacement of the ACA, with the current focus on coverage for preexisting conditions, has drawn a great deal of attention to the concept of health insurance. While our political leaders are constantly talking about it, few of them seem to understand the “insurance” component of health insurance. As a result, much of what they say about preexisting condition coverage is gibberish. We are here to set the record straight.

At its most basic level, insurance provides protection against the risk of unexpected financial losses. We focus on the term risk because if we were risk neutral (i.e., we were indifferent between sure things and actuarially equivalent gambles), then we would not value this protection. But nearly all of us are risk averse, meaning that we would rather not face having to dramatically reduce consumption of everything we enjoy in the event we are hit with an astronomical medical bill. Because we are risk averse, health insurance improves our collective well-being by helping us collectively smooth our consumption. Everyone who purchases insurance consumes somewhat less of everything else when healthy, but does not have to consume dramatically less when sick.

All Risk is Local

Jun 16, 2016• 11

By JEFF GOLDSMITH and BRUCE HENDERSON

flying cadeucii We all knew how this was going to go, or thought we did. Fee-for-service payment for health services was going to disappear, and be replaced by population health risk-based payment (or as some term it, “capitation”- fixed payment for each enrolled life). Hospitals and care systems invested substantial time and dollars building capacity to manage the health of populations, yet many are discovering a shortage of actual revenues for this complex new activity. Was population health a mirage, or an actual opportunity for hospitals, physicians and health systems?

The historic health reform law passed by Congress and signed by President Obama in March, 2010 was widely expected to catalyze a shift in healthcare payment from “volume to value” through multiple policy changes. The Affordable Care Act’s new health exchanges were going to double or triple the individual health insurance market, channeling tens of millions of new lives into new “narrow network” insurance products expected to evolve rapidly into full risk contracts.

In addition, the Medicare Accountable Care Organization (ACO) program created by ACA would succeed in reducing costs and quickly scale up to cover the entire non-Medicare Advantage population of beneficiaries (currently about 70% of current enrollees) and transition provider payment from one-sided to global/population based risk. Finally, seeking to avoid the looming “Cadillac tax” created by ACA, larger employers would convert their group health plans to defined contribution models to cap their health cost liability, and channel tens of millions of their employees into private exchanges which would, in turn, push them into at-risk narrow networks organized around specific provider systems.

Three Surprising Developments

Well, guess what? It is entirely possible that none of these things may actually come to pass or at least not to the degree and pace predicted. At the end of 2015, a grand total of 8.8 million people had actually paid the premiums for public exchange products, far short of the expected 21 million lives for 2016. As few as half this number may have been previously uninsured. It remains to be seen how many of the 12.7 million who enrolled in 2016’s enrollment cycle will actually pay their premiums, but the likely answer is around ten million. Public exchange enrollment has been a disappointment thus far, largely because the plans have been unattractive to those not eligible for federal subsidy.

Could mHealth Apps Be a Reprise of the EHR? The Need For Clinician Input

Feb 13, 2015• 5

By JAAN SIDOROV, MD

While your humble correspondent continues to delight in the emerging science of “mHealth” as a newly minted start-up Chief Medical Officer, he ran across this interesting article on risk and patient safety.

Authors Thomas Lewis and Jeremy Wyatt worry that “apps” can lead to patient harm.

They posit that the likelihood of harm is mainly a function of 1) the nature of the mistake itself (miscalculating a body mass index is far less problematic than miscalculating a drug dose) and 2) its severity (overdosing on a cupcake versus a narcotic). When you include other “inherent and external variables,” including the display, the user interface, network issues, information storage, informational complexity and the number of patients using it, the risks can grow from a simple case of developer embarrassment to catastrophic patient loss of life.

In response, they propose that app developers think about this “two dimensional app space” that relies on a risk assessment coupled to a staggered regulation model. That regulation can range from simple clinical self assessment to a more complex and formal approval process.

An Outbreak of Outbreaks

Jun 11, 2014• 2

By Melinda Moore, Andrew M. Parker, and Courtney Gidengil

Lately, stories about outbreaks seem to be spreading faster than the diseases themselves. An outbreak of measles in Ohio is just part of an 18-year high of U.S. cases. Meanwhile, polio continues to circulate in Pakistan, Afghanistan, and Nigeria, while spreading to other countries, like Cameroon, Equatorial Guinea, and Syria, leading the World Health Organization to declare a “Public Health Emergency of International Concern” last month.

The Role of Globalization

As recent threats of H5N1, H1N1, and MERS attest, the increasingly global nature of infectious diseases presents serious risks. Foreign tourists, Americans returning home from international travel, immigrants, and refugees can all expose countries to disease.

With modern transportation shuttling people and products to nearly any part of the world in a matter of hours, the volume of these comings and goings is unprecedented. In 2008, approximately 360 million travelers entered the United States, which also takes in about 50,000 refugees annually.

It should be unsurprising, then, that the Ohio measles outbreak started when unvaccinated Amish missionaries visited the Philippines, then returned home. Infected persons spread the disease to others within their largely unvaccinated communities. The last naturally occurring U.S. outbreak of polio occurred in similar fashion: An outbreak in the Netherlands spread to Canada in 1978, then to the United States the following year, all among unvaccinated Amish populations across four states.

Compared to the United States, nations experiencing social unrest and political conflict face even more serious obstacles to preventing infectious disease.

Strife can interrupt routine vaccination campaigns, as is largely happening with polio. For example, the largest numbers of polio cases last year were in Somalia and Pakistan. Refugees and other displaced populations without health care access can create fertile settings for disease spread, especially if they’re not protected by vaccination. Health workers involved in vaccination campaigns can become targets of violence. And in some areas—Nigeria, for example—religious leaders haveconvinced their followers that the polio vaccine is a biological weaponpromulgated by the West.

For the most part, the United States doesn’t face these barriers. In America, vaccination is more of a choice. Unfortunately, some Americans are putting themselves, their families, and their communities at risk by choosing not to get vaccinated. If those who opt out of vaccination travel to areas where diseases are more common or come in contact with individuals arriving from such areas, they’ll be at risk of becoming ill from otherwise preventable diseases.Continue reading…

Why a Majority of Readmission Risk Tools Fail in Practice

Apr 28, 2014• 8

By Eric Heil

Potentially preventable readmissions are a scourge on the US healthcare system.

Each year millions of patients are discharged from the hospital, only to return within 30, 60, or 90 days.

Not only do patients, their families, and their caregivers suffer as a result, but hospitals, insurers, and the government waste billions of dollars that could be spent on other public health priorities. Many if not most of these readmissions could have been avoided if clinicians had effective, scalable, and timely methods for identifying not only which patients were the highest risk, but what steps should have been taken to mitigate that risk.

In recent years there has been a proliferation of readmission risk assessment models, yet readmission rates have barely budged. Fundamental flaws exist in most approaches in the areas of Data, Model Adaptability and Clinical Workflow Integration.

Many tools rely solely on historical patient data mined from the EHR or are disease-specific models that cannot be scaled to address all readmissions challenges. Models that rely on data collected at discharge are not timely enough to enable clinicians to take meaningful action, and ones that are not well-integrated into clinical workflow are not easily adopted.

For a readmission risk assessment tool to achieve a meaningful and long-lasting impact, these common pitfalls must be avoided at all costs. Today, I’m going to address some of the many data challenges faced when trying to risk assess patients.

Historical Data does not Predict Future Readmissions

Anybody who has ever invested in the stock market, rooted for a local sports team, or stuck with a television show past its tenth season knows that past performance gives you no guarantee on future returns. Factors beyond our control and beyond our ability to predict may cause our fortunes to turn on a dime.

Consider the Dow Jones Industrial Average: Those who had any investments around July of 2007 remember the feelings of unabashed optimism and certainty inspired by the great bull run of the early 2000s. Unfortunately, those same investors also most assuredly remember what happened shortly thereafter, when the financial crisis of 2008 erased trillions of dollars’ worth of wealth.

A recent systematic review of readmission risk models concluded that many hospitals still model their approach to identifying high-risk patients based on historical admissions, claims data, and outdated information on patient populations [1].

Using these old data to model and predict readmissions is dangerous. And with increasing pressure on hospitals to reduce readmissions, this approach also runs the risk of becoming extremely costly. Just ask the guy who splurged on Brooklyn Dodgers tickets in 1958, or the guy who put all his money into 8-track cassettes in 1979, or the guy who started a Hummer dealership in 2005.

Any of these folks will tell you that past performance data can not only betray you, but it may also prevent you from recognizing the obsolescence of your sources. As a result, this data may cost you a fortune.

The Purpose-Driven Doctor

Nov 30, 2013• 7

By ROB LAMBERTS, MD

My older brother is also a doctor, but not a PCP like me. He’s a specialist: a limnologist. If you have problems with blue-green algae in your lake, he’s the man to see. Limnology is the study of lakes, and fittingly, Bill works in the “Land of a Thousand Lakes” as a professor in fresh-water ecology.

I’m not sure he’s thinking of switching over to direct-care limnology. I’ve been afraid to bring it up.

We do have a lot in common in our professions, as we both see a mindless assault on the things we are trying to save (patients for me, lakes for Bill). My frustration with our health care system is matched by his anger toward those who deny global warming and the harm humans are causing on our world.

Just as he can get my blood pressure up by asking if his child will get autism from the immunizations, I simply have to suggest this week’s cold weather as proof against global warming to raise his systolic pressure.

So it was notable when I heard a rant against an unexpected target: “You know the Gaia hypothesis?” he asked. “They think the world is a ‘living organism’ that works toward a ‘balance’ to maintain life. They believe that humans act against nature, and so are responsible for everything that’s wrong with ‘mother earth.'”

“It’s total bullshit,” he went on to explain, not waiting to hear if I knew what he was talking about. “Do you know that when trees appeared on the earth, they caused a mass extinction (called the Permian Extinction)! Trees! There’s no mystical ‘balance of nature;’ it’s always in a constant state of flux, of imbalance.”

Let me make this clear: Bill is not saying that it’s OK that we are harming the earth, nor is he trying to absolve us of our responsibility for what we are doing. His beef was with the notion that there is some kind of ‘balance’ of nature, when the evidence clearly points to the contrary. The result of this belief is that that there is somehow an imputed moral goodness from this ‘balance’ (resulting in the idea of ‘mother earth’), and a subsequent implied immorality to any assault on our mother’s sacred ‘balance’.

This has come to mind as I have had significant changes to my thinking about giving good care my patients, especially as it applies to the area of “wellness”. Since leaving my old practice, which was immersed in a world of ICD (problem) codes and CPT (procedure) codes, I have shifted my thinking away from a medical world where every problem demands a solution. I have moved my thinking away from reacting to every thing that is going on at the moment, and toward the bigger picture. I am focusing less on problems and more on risk. I am focusing less on solutions, and more on responsibility.

State Insurance Exchange Blind Spots: Unknown Risks and Unintended Consequences

Sep 23, 2013• 6

By Seth Kneller

October 1st marks the first ever public exchange open enrollment season. This means some of the speculation around consumer awareness and understanding, enrollment/uptake, premiums, and payer participation (not to mention the technical readiness of the exchanges) will finally subside and give way to a clearer picture of the PPACA’s initial success in mandating individual health coverage.

Despite this approaching level of clarity, however, several very significant “blind-spots” will continue to persist, principally for the health insurance carriers that choose to participate by offering PPACA compliant plans in the exchange.

This is due to the law’s guaranteed issue mandate prohibiting health carriers from denying coverage based on preexisting conditions. As a result, the traditional enrollment process which consists of a comprehensive assessment of each applicant’s health status and risk cast against the backdrop of time-tested underwriting guidelines is completely thrown out.

What takes its place is an extremely limited data set (i.e., the member’s age, tobacco/smoking status, geographic region, and family size) from which carriers can determine pre-approved premiums and variability therein. To use an analogy, health insurance companies no longer have a “bouncer at the door” turning people away, or a sign reading No shirt, No shoes, No service at the entrance.

In other words, everyone, regardless of their risk profile, must now be welcomed in with open arms and with very limited risk-adjusted rates.

This wouldn’t necessarily be a problem if the enrolling population comprised a well understood risk pool representing a true cross-section of the population. The reality, however, is that a predominantly unknown and potentially unhealthy population will flood the individual health insurance marketplace in a two weeks just as most states quickly phase out their high-risk pre-existing condition pools and shift them into the exchanges.

Peacefully Coexisting With the Valley of Death

May 4, 2013• 2

By Les Funtleyder

Recently, there has been an uptick in newsflow around the “series A crunch”/ “the valley of death” in regards to financing. Because of who we are (a firm that connects investors with private equity investments); we at Poliwogg see a lot of the “crunched” and “valley-dwellers.” We have some good news. The good news is that we are seeing increased interest on the part of accredited investors who have not invested in private companies before and who are now more open to the idea in light of lackluster returns in other asset classes. Aggregating this group of investors allows for investments in the range that are too large for a traditional “friends and family” round but are too small for traditional institutional investors where the crunch is most pronounced. The caveat is that companies need to be ready to meet the demands of this new crop of investors. Probably, what will be required will be more stringent than what companies have been asked for in the past. On the plus side in exchange for more requirements, these investors are often more patient and more passionate (especially in the disease categories) than traditional investors.

A few observations about what we are seeing (we view mostly healthcare companies):

• Asset prices seem fairer than they have been in a while especially when compared to the prices of similar assets in the public market; spurring investor interest.

• There do seem to be a large number of companies that raised seed rounds (sometimes in substantial sizes) from friends and family. That said given the lack of arms-length transactions the supporting documentation ( e.g. possessing an accountant and law firm, audited financials) often seems a bit lacking in our view and can make a more institutional looking round challenging if not impossible. More disclosure is always better.

Calculating Risk

Jun 12, 2012• 1

By Linnea Duff

Thursday I traversed the frozen surface of the pond for perhaps the last time this season. The ice is thinning quickly. I had on my rubber boots and stayed what I felt to be a safe distance from shore: should I break through, the water would not be over my head. I got some fantastic photos and considered the little adventure a success. However, over dinner that evening when I mentioned that I’d been on the pond earlier, David and Peter were furious. Peter wouldn’t calm down until I promised I wouldn’t go out again.

I have always considered fear the enemy; something to conquer and overcome and I’ve had a lot of practice. Being risk adverse and scrappy has been an asset now that I have lung cancer. As a participant in a phase I clinical trial, there is the potential for unforeseen and possibly life threatening side effects of treatment itself. Before you are given your first dose of an experimental drug, you must read through and sign consent forms which acknowledge this risk. It is something most healthy persons would never do. When you have a terminal illness, it is similar to coming to the edge of a ravine with a tiger on your trail. Between you and safety is a rickety bridge that may or may not support your weight. However, even chancy passage is an easy decision when the alternative is certain death.

Wrong Rx for the FDA

Mar 6, 2012• 3

By Henry Miller

The congressional legislators who oversee the Food and Drug Administration and control the nation’s coffers have shown again that they neither understand drug development nor the regulatory problems that plague it.

In February, Sen. Barbara A. Mikulski(D-Md.) unveiled a bipartisan bill intended to spur innovation in research and drug development for chronic, costly health conditions such as Alzheimer’s disease, cancer, diabetes and heart disease.

According to the press release, the bill will invest “in public-private partnerships to ensure scientists and researchers are able to develop new safe and effective drugs,” shrink product development timelines, increase the number of drugs in the development pipeline and expedite the FDA review process.

However, there is currently plenty in the development pipeline. The federal government is boosting funding for research and development on Alzheimer’s disease; the Department of Health and Human Services alone will allot more than $500 million to it in fiscal year 2013. Moreover, drug companies spend more than $65 billion annually on R&D.

For example, there are now nearly 100 drugs in development for Alzheimer’s disease, dementias and other cognitive disorders, and almost 900 medicines being tested for cancer.