Thursday, September 20, 2007

Employer-Driven Reform Storm Hits Connecticut

“Reform will occur only if America’s non-health care business leaders recognize that it is a critical concern for them and us. By pooling their influence, they could overwhelm the health care lobby and drive changes that re-establish American health care’s stability and sustainability.”

Brian Klepper, PhD, Director Center for Practical Health Reform, Letter to Editor, New York Times, September 19, 2007

Sometimes a storm hits where we least expect it. Sometimes it’s a surprise because we misread climatic events, or because we called the storm by the wrong name, like consumer-driven care rather than employer-driven care.

In retrospect employer-driven care in the name of consumer-driven care should have been obvious. Employers pay for 54% of health costs. And employers are reluctant to give up their health care role. This is true even though high health costs hurt them badly,in the pocketbook and on the bottom line, as GE and Ford will attest. If employers are to hang onto health care as a workplace incentive, and to afford it and remain competitive, they will not sit back and do nothing. They will do something, and they will choose tools they know best how to deploy - in this case, information technology – to contain costs and control quality.

Fairfield County in Connecticut is perhaps the most affluent county in America. Health care costs there, as in much of the Northeast, are 20% above the national average. Many of the nation’s most affluent employers and richest citizens live there in Greenwich. More than 2000 doctors, most of them doing well, practice in the county.

So why should the Fairfield Country Medical Association, in conjunction with nine orthopedic surgeons, rear up and file a class action lawsuit against United-Healthcare and Cigna?

The suit says these health plans use computer algorithms inappropriatey to crunch claims data to steer patients to less costly doctors. Not so, say the plans. We’re simply using data to direct patients to the most “efficient” doctors --those who practice who follow best practices and who provide care at reasonable costs.

What’s behind this storm? It’s basically about health plans using sophisticated computer algorithms to capture data from multiple sources – doctors’ offices, hospitals, labs, imaging centers, outpatient surgery and diagnostic centers. rehab facilities, and pharmacies – to put together a coherent picture of what “episodes of care” really cost. This health IT exercise goes by the names of “connecting the dots,” data mining, predictive modeling, or Health 2.0 and defies precise definition.

Whatever you call it, it’s about employers getting their arms around health costs and rational care delivery. It’s said to be about delivering “transparent” information about costs and quality and outcomes to consumers, but it may be more about supplying employers with predictable cost information. Health plans, who are surrogates for employers, have leaped upon the “consumer-driven care” bandwagon because the plans have the technology to drive the bandwagon – to bring data together from multiple sources, analyze it, and focus it to judge, select, reward, or punish individual doctors and to determine what a given episode of care costs in a given city or region.

From the doctor’s point of view, much of this claims data crunching is unfair because it’s opaque. The health plans’ algorithms, you see, are “proprietary,” another word for secret black boxes inaccessible except to those who build them.. Doctors don’t know until it's too late why they’re rejected for a “select,” “preferred,” “premier, ”or “premium’ network.

But a storm it is. I became acutely aware of the size, ferocity, and direction of the storm while interviewing Jeff Hogan, a regional manager for the Rogers Benefit Group, a Minneapolis-based furn with 71 regionnal offices. Hogan is located in Farmington, Connecticut, and sells health care benefit programs to mid-mid-sized and large businesses throughout the Northeast. He tells me he can hardly keep up the demand of high-deductible health plans linked to HSAs.

Hogan says employers all over Connecticut are dumping HMOs and PPOs for high deductible plans because of the promises of cost savings and measurable quality, and health plans are happily developing the IT tools to justify the switch.

Here is a sample of what Hogan is talking about in his own words.

There’s a tremendous increase in the technological functionality of software supporting employer-sponsored and consumer-directed products--- online tools for employees, online populated personal health records for employees, online health risk assessments that grade employee's health, and online price and quality transparency tools directly linking price and review doctor's and hospital services.”

“Behind the scenes, health plans are introducing
sophisticated data mining tools reviewing EVERY claim for unwarranted practice deviation, contraindications across 35 disease processes. The plans then reports back to employers the return on investment.”

Hogan believes employer-driven care, mediated by health plans and directed towards consumers, has taken on a life of its own and will take the reform movement by storm.


Employer-driven care, in the name of consumer-driven care, is gathering momentum in sections of the country where costs are high. The principal tool of employers, and health plans representing them, is data-mining of claims from multiple sources to identify cost-efficient providers, who, the plans say, follow best practices. This data is then used to separate doctors into “premium” ,“preferred”, “select, ” or “tiered” networks which employers will use. Doctors in Fairfield County Connecticut and Washington State are suing health plans because doctors claim the plans are using costs, not quality, to rank them. Furthermore, the doctors assert the software being used to judge them is “proprietary,” secretive, and opaque and known only to the health plans. What’s transparent to consumers and employers isn’t transparent to physicians, who believe data mining is about cost nor quality.

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