President Obama’s HiTech Act, enacted right after he took office, should produce a major transformation in American health care when it gets going. Along with the health care reform legislation that was dragged kicking and screaming through Congress last spring, the Act could put the planets in alignment for real change in the way care is delivered and paid for, and the way patient outcomes are achieved.

The HiTech Act specifies that every American should have an EHR (electronic health record) by 2014, and receive continuity of care through a regional Health Information Exchange. It even provides coverage for Geek Squads to help providers with the transition to EHRs: finding vendors, deployment, and identifying specific ways to advance care in their own practices. A first set of rules for what constitutes “meaningful use” of these information technology tools has just been released. So things are getting moving to give both patients and providers the information to make better health care choices. But…

These programs always sound good. For example, one new federal program, Beacon, looks at health system change at a community level in a group of demonstration communities, The communities that have been chosen as Beacons have already achieved a high level of EHR adoption and want to find out how they can use the information these records generate to improve health care. The stakeholders in these communities will come together, identify goals, and unleash a range of strategies in service of these goals.

But the programs requires the coming together of four largely separate tribes of crusaders for improvements in health care:

1) Quality improvement fanatics who want fewer accidents and bad outcomes in hospitals
2) Payment reformers who want to change reimbursement from volume to value
3) Consumer energizers who want consumers to be more involved in their own care, and to be given better information
4) Health IT evangelists who want to unleash futuristic tools and applications

For any of this to work, all these tribes have to work together, combining their perspectives and tools.

Fifteen demonstration communities with baseline high EHR adoption rates have already been chosen as Beacons. They’ve already been working through questions such as What do you want your community to look like in three years? Which patients do you want to achieve what outcomes (for example, care coordination for asthmatic children using range of Health IT tools to prevent hospitalizations)? And how do you measure whether you are getting anywhere?

Geisinger, one of the Beacons, is working through the process to get its outcomes identified first, then measures, then tools, then sustainability of its goals. It is trying to extend its best practices outside its boundaries.

It’s a laudable goal to deploy information technology in service of specific payment reforms and clinical reforms. What are the odds that this will succeed, however? Many people have broken their picks on the hard rock of true health care reform.

One of the provisions in the health care reform law passed in March says insurance companies must use 80% of the premiums they collect to provide actual health care– meaning, to pay claims. What a concept. Unfortunately, as the regulations for the legislation are being written in Washington, the same lobbyists who tried to stop the law completely are now trying to game it by affecting the definition of what constitutes paying a claim.

According to Forbes,

The legislation says that 80% of what’s collected by insurance companies must be spent to pay medical claims. This number is what’s known as a “medical loss ratio” or MLR. If the 80% MLR target is missed, rebates are to be given to the insured members. The problem is: what counts as a medical claim? What if you are running a program to encourage people to exercise? Could that be counted? What if the flu season is light this year but heavy the next? Should members get rebates in year one but the HMOs go broke in year two? (Yes, is probably the response from lawmakers.)

So the plans are trying to get all kinds of internal expenses counted as medical expenses, and hoping to obfuscate the reporting requirements, so when you shop for health insurance, you won’t be able to pick the plan that spends the most money on you, the customer.

Part of this is investor pressure. Investors want low medical loss ratios. If a company has to spend more than 80% of its revenue on you, the customer, otherwise known as the expense, it doesn’t look as profitable to investors. On the other hand, it is your premium dollar, and in theory you’re entitled to it.

Who will this impact the most? Individuals and small businesses, of course.

If you want to get really mad, you can download Sen. Jay Rockefeller’s letter to Secretary of Health and Human Services Kathleen Sibelius, in which he formally tries to explain this to her as she supervises the writing of the enforcement regulations, here. Rockefeller says consumers should be able to understand and shop for the plan with the most dollars spent on its members.

Forbes thinks that this will result in HMOs that look more like utilities, with highly regulated businesses that are closely scrutinized. And what, exactly, would be wrong with that?

Health care reform isn’t over.  For patients, it has just begun. The health plans are beginning to figure out how they will survive and thrive under the new rules, and the way forward is, according to one managed care exec, to change how providers are paid. This will have consequences.

Jeffrey Kang, MD, chief medical officer for Cigna, has some thoughts on this already:

It’s important to measure and provide incentives for better outcomes… not for improved processes or certifications achieved.  Some examples of outcomes to measure might include smoking cessation, weight loss, lower blood pressure, and lower total cost of care.  Incentives should be around pay-for-performance…not for shared insurance risk.

“We as health plans are better off continuing to hold that insurance risk because we have the actuaries and the capital,” he says. Health plans can then focus on “really trying to create payment methods that give people incentives to improve quality, lower cost or penalties if they miss these targets.”  Cigna has eight pilots offering incentives for quality, outcomes and lower total healthcare costs.

As for wellness and disease management, Kang notes, “From a benefit design perspective, the legislation did get it correct” by focusing on first dollar coverage for prevention and screening.

Cigna should be one of the thought leaders in this aspect of the reform, because they were around 25 years ago when this was tried before under the term “health maintenance organization.” The HMOs (disclaimer: I did the marketing for one of the first) thought that if they could keep people healthy, they could lower the cost of care.

They tried everything. They held classes, they provided patient education films and leaflets,  they put up big posters in doctors’ offices. None of it worked.

Finally, they “capitated” the doctors. A doctor received $X per patient per year, whether he saw that patient once or one thousand times. A patient had to be seen by a PCP (primary care physician) before he could make an appointment with a specialist.

Capitation was supposed to be a way to quell rising costs and encourage doctors to keep their patients healthy. But doctors resented being gatekeepers and fought back by refusing to participate in some HMOs, and the patients responded by rising up in hordes to protest lack of access to care. During this period, if your employer changed plans, you likely had to leave your doctor.

Buoyed by patient support, some doctors began backing out of  capitated HMOs altogether, and employers began to buy a new product: the PPO — a plan where the patient could choose the doctor, and there were fewer gatekeepers. That’s how patient choice got to be such a big issue in the last health reform debates. Patients learned that under an HMO they couldn’t choose which doctor they wanted to see, but had to see a doctor in their plan.

Never mind that most patients couldn’t choose a doctor wisely in their wildest dreams, especially while sick.

This time around, we have marvelous sources like HealthGrades and Yelp, two services that further distort the process of patient choice through advertising or subscriptions.

Cigna took a lot of flak the last time around for being a horrible HMO. So, by the way, did Kaiser. This time, executives of both are emerging as thought leaders in the cost control space.

I hope we don’t go through the same thing we went through in the 80s. It could have been wonderful (yes, I’m biased because Intergroup, the HMO I worked with, started with pure motives) but it ended up dreadful. And we literally can’t afford to have that happen again.

Once again I am amazed at how money is misspent in health care, even though mucho technology is out there to cut costs.

Arizona Health-e Connections Summit is a conference/trade show for people interested in linking disparate bits of data into meaningful information for both payers and providers (never mind the patient–she comes last).

Roaming around the trade show floor,  I saw two great examples of health IT misadventures:

In an era where almost everything has an API, a company called Certify Data Systems is selling a literal “black box” to create a “secure handshake” between Cerner’s data, which is in use by enterprise health systems and hospitals, and the  simpler products used by physician practices.  But in the era of OAuth and Facebook Connect, why do we need a black box to bring data from one software application to another? Don’t answer; that was a rhetorical question.

Second example: Intel is demonstrating a device similar to a tablet with a kiosk-like touch screen, meant for the home night stand of the chronically ill.  The device can transmit data from peak flow, blood sugar, or blood pressure monitors back to a doctor’s office, initiate a call to a nurse through a simple command button (Call My Doctor), or a prescription refill through another button (I Have Run Out of Medicine.) This is the opposite of the black box in its user experience.

But it costs about $100 a month to lease, and as a patient you can’t have it unless both your payer and your provider agree, because they are in charge of your records. And who will pay for this if you can’t afford it? Unless it becomes part of the attempt to control costs put forth by the new legislation, it will never get into the market.

On the other hand, it just might, because buried in the bill we all love to hate is a provision that if a doctor admits a patient to the hospital and that patient gets discharged and re-admitted within 30 days, the hospital and the doctor both won’t get paid. So there will be an incentive to monitor those chronically ill patients at home. In addition, the speaker from CMS said that Medicaid and Medicare were looking for expanded definitions of “meaningful use” for health information technology products, and to that end were examining the medical home concept and other drivers of quality and value (effectiveness) rather than mere quantity of services.

Wouldn’t that be cool? I’d love to have the convenience of remote monitoring as a patient, and my absence from my doctor’s office for routine matters of chronic illness (blood pressure monitoring) would free him up to see other, more interesting  patients.

There has been precious little civil discourse around the reent health care legislation, but Victor Trastek, MD, CEO of Mayo Clinic Arizona,  made a distinguished contribution to it when he spoke to the Harvard Business School Club in Phoenix today.

Of course he was speaking to educated people, but it was heartening to hear him say that everyone in the health care equation is going to have to do his/her part to make the new legislation a success, especially physicians, who will have to step up and learn how to collaborate around scarce resources to produce greater value, and patients, who will have to think about behavioral changes. Although some of the guests asked tough (politicized) questions, he refused to diss the new legislation, despite his admission that there’s a 20% cut in Medicare payments to physicians still “hanging out there” while Congress is on recess and that “rationing is what happens if we fail to get everything else right.”

It was all the more heartening because Mayo Clinic is a leading national health care institution, known for its high quality and ability to treat difficult cases.  It is also a leading employer in Arizona.  It contributes $1.45 billion to the Arizona economy, and its facility has 425 physicians and a staff of 4400, dedicated to the three connected areas of medical practice, patient and medical education, and research.

But Arizona, it turns out, makes up only about 10% of Mayo’s revenues. Mayo Clinic the the largest nonprofit health care system in the country, with a multi-specialty integrated model of care for mostly sicker people. Although it does some primary care, most of its physicians are specialists. And its Arizona CEO is a former thoracic surgeon, not a business guy.

Dr. Trastek said the new legislation tries to answer the question that’s troubling everybody: “How do we give good affordable health care?”

Somewhat surprisingly, he went on to say that although payment is a big part of health care, and payment was the biggest thing addressed by the legislation, the biggest responsibility for the new program’s success falls on the patient.

And then he reminded everyone in the room that presidents since Harry Truman had been trying to increase access to health care for Americans. In fact, I learned that the first Medicare card, signed by Lyndon Johnson, went to Harry Truman!

Then came the presentation of reality: Medicare goes to everybody whether they need it or not, and that may have to change. This is called “means testing,” and no one wants to acknowledge that people with more money might have to pay something for Medicare in the future. Especially if the elderly want physicians to keep taking Medicare patients.

One of the funniest parts of the  presentation was a slide Trastek showed of the actual formula Medicare uses to pay physicians. It is such a complex equation that it ran off the right side of the slide, and Dr. Trastek said that wasn’t even the entire formula! That was a very good visual to show the complexity of the program, and why some people feel it’s unmanageable. Dr. Trastek also told us that Congress went home for Easter without deciding whether to cut physician payments or not (presumably Congress doesn’t want to cut payments and lose physician participants, but doesn’t know how find the money to do the pay-go thing), so Medicare has just stopped paying its bills altogether. Imagine trying to run a physician practice caught between the banks who aren’t lending to businesses and Medicare, which is no longer paying timely. Must be a CFO’s nightmare.

In addition, health care inflation is up 30% in last decade , while payments to physicians went down 5%. So it’s no surprise that physicians try to do more. That’s now they make money.

The current method of funding health care has been through a cost shift from the old to the young. But their are too many of us old people, and not enough young.  And many of the young are unemployed.  Or can’t pay the high premiums. One of the biggest parts of the legislation intends to fix all this.

Mayo has its own plan to address these conditions. It is aiming to create value, coordinate care, reform the payment system,  and thus insure everyone. As a result, it pushed hard to have the payment system shifted to value, or outcomes. As a system, it already measures outcomes, has cut costs, and aims for zero defects. Trastek feels it is the physician’s job to help  patients get the best care under the new law.

And speaking of the law: Dr. Trastek admitted that will take months for Mayo to figure out everything that’s in it.  Bottom line, it will cover 30 million more people, of whom 14 million will be on Medicaid, which states will have to find a way to pay for. That’s why fifteen governors are suing to opt out. But opting out doesn’t seem like Mayo’s answer to the problem: Mayo says we have to deal with utilization or we will never fix the system, because utilization will double and triple without control. Dr. Trastek pointed out that Medicare patients now have the right to see a specialist every day if they want to, and in most cases it’s free. And the specialists (he didn’t say this) don’t try to control utilization, because Medicare doesn’t reimburse them enough and they thus have to “make it up in volume.”

The best parts of the program, I think Trastek believes, are pilot programs to pay for value, and the move of the industry to technology (robotic surgery, tele-stroke programs where doctors are virtually present in rural emergency rooms, and electronic medical records). The messiest parts are mandating that well people buy insurance, fixing the primary care doc shortage, getting rid of skyrocketing debt for medical education, and taking care of payment systems that encourage physicians to drop Medicare patients. Some of the innovative things Mayo does include teaching medical students “delivery skills” such as law and journalism, to improve their communication with patients; training through simulation and collaboration; and

After presenting this factual and complicated picture, Trastek came back to what we can do. Again he pointed out that everybody has to do something — physicians can’t sit back this time and not change their practice methods, and patients can’t continue the American lifestyle of “I will do anything I want, and if I break you will fix me so I can go back out and do it again.”  He believes that in the future, patients will be financially incentivized to take better care of themselves, and health systems will have to learn to work together.   And if not, there WILL be rationing. Health care can’t be free.

Now that Nancy Pelosi has her place in history and perhaps the pool table she wants for her birthday, it’s time to sit down and take stock of what we did and didn’t do by passing health care reform.  Here’s what I think we did, besides scaring the spit out of half the country:

1) We increased access to health care for people who previously were uninsured or uninsurable –we are moving toward community rating by age or condition  instead. It will still not be free or necessarily even cheap to get insurance, but you can get it and you can’t lose it if you get sick or have a lifetime cap imposed on you

2) We mandated that the young and healthy support those who are not young or healthy, against the day when they, too, might be similarly unfortunate

3) We made it possible for people to stay on their parents’ policies while pursuing their educations or working their  low-paying entry-level jobs

4) We cut some of the waste and fat from Medicare, re-distributing a base level of care and getting rid of the “advantage” extras. Seniors hate this, but it will keep Medicare solvent for longer

5) We forced the insurance companies to re-think their business models

6) Hopefully, we will reduce the use of  costly emergency room services for primary care by doing the above

But although we almost fell apart as a society doing even these small things, we have only addressed a small part of the complicated health care equation: access to care. We still haven’t adequately addressed cost, or quality. According to a study released by ACCCHS, Arizona’s version of Medicaid, Arizona is projected to have to spend $11.6B in general fund monies, $13 billion overall, between 2011 and 2020 to cover unfunded mandates on expanded coverage. Arizona had just decided to reduce its coverage to close a budget deficit, but is not prohibited from getting rid of KidsCare (our version of SCHIP). Where is Arizona going to get the money? It is going to have to raise taxes, which is anathema to its legislature. After all, this is a state in which John McCain is being challenged from the right.

And Robert Reich points out that this is a very conservative reform bill, because it still allows for free market competition and high deductible plans ($4000 per family, $2000 per individual), which have only recently become part of the insurance landscape. Many people are apt to feel this is still out of reach.

In fact, key elements of the law are right out of the conservative playbook, says the Columbia Journalism Review.

What haven’t we done?

1)We haven’t changed the provider incentives, instituting widespread reimbursement reforms.  We should be reimbursing for outcomes,  not procedures, and we avoided that thorny question, although there are small demonstration programs in the bill that could lead us there through back doors.

2) We haven’t attacked tort reform, although my personal opinion is that would go away if we attacked the quality issue: they are two sides of the same coin. When I hear that hand-washing isn’t effectively enforced at many major hospitals, I wonder why we don’t have MORE litigation rather than less. Even a car mechanic is forced to a higher standard of delivering quality than some medical centers.

3) We haven’t done anything to reign in the high cost of devices and drugs, although many of them are largely ineffective. I’m not sure I know how to propose a solution for that, because biotech and medical entrepreneurship involves a lot of research and very long time-to-market that raises the R&D costs on the front end. And when we try to speed the process from the government end we get studies fraught with conflict of interest and drugs like Vioxx that are rushed to market until they start to kill people.

4)We haven’t changed the model of delivering sick care rather than health care, although I hope  that providers will try to manage costs by trying to promote wellness.

5) We haven’t begun the public health and expectation-setting that we have to do with an aging population and a shortage of resources (both money and talent).

There. Will. Be. Rationing. Get  used to it.

Imagine you are one of the millions in this country who can’t get health insurance because you have a pre-existing condition. Now roll the clock forward to January 1, 2014 and walk with me down the virtual hallways of a brand-new marketplace, a marketplace where you can buy some peace of mind and help for your family, no questions asked.

That guy over there who was just diagnosed with diabetes at age 20? He’s 26 now, and about to be dropped from his parents’ insurance, but he’s not worried. He can go online, head over to Insurance Exchange Central, and shop for his own individual policy. He’s still in school and not making much money at all, but not to worry, because his costs will be covered by some significant government subsidies so that he can still afford his syringes, insulin, test strips and other needs.

This young man fights with his desire to be free of his diabetes and the daily knowledge that his lifestyle has to be adjusted to live with it. Because his doctor is part of the community health center down the street, he’s able to check in often and work on some wellness initiatives to help control his diabetes and accommodate his lifestyle. The particular young man I’m thinking of loves to ride his bicycle, and tries to ride 20-30 miles per day. The exercise helps keep his glucose levels down to manageable levels, and the meter he uses sends daily glucose reports to his doctor via his wireless phone. His records are electronic, so when he travels to bike races in other states his medical history follows him in case he needs treatment.

This is one example of what will happen when health reform passes. No more exclusion for pre-existing conditions. Electronic health records. Focus on wellness instead of sickness. Streamlining Medicare. Government subsidies to assist with affordability.

Bottom line: We embrace everyone’s health as a national value, whether they’re healthy, diagnosed with an illness, are young, old, rich, poor, or middle class, employed or unemployed, artist or entrepreneur. Everyone.

This, and only this, justifies passing the Senate bill. When the other benefits are factored in, it is clear it’s well worth passing and should be passed. Right now.

If we do nothing about health care reform:

Up to 17 million more people will be uninsured by 2019 than today.

The average family’s health care costs will nearly double by 2020, from $13,000 to $24,000

— meaning they’ll be paying a quarter of their income toward health care costs.

Insurers can continue the massive and arbitrary premium rate increases we’ve heard about

recently — such as Anthem Blue Cross raising rates for customers in California by nearly

40%, and rates in Illinois going up by as much as 60%.

As many as 275,000 people could die prematurely over the next 10 years because they

don’t have health insurance.

Health care costs will take up a staggering amount of our national budget. In 1960, it was 5

percent of gross domestic product (GDP), last year it was 17 percent. Costs will reach 21

percent of our economy by 2020 if we fail to act.

Rapidly rising costs will make it harder for employers — particularly small businesses — to

provide quality health insurance to employees, leading many to drop coverage or shift to

plans that cover less.

Even those who have insurance today will be less secure, and more likely to lose coverage if

they switch jobs or lose their job due to rising costs on the individual market or being

denied coverage due to a pre-existing condition.

Although this information comes from the Organizing for America site, there’s nothing controversial about this fact set.

With the introduction of President Obama’s blend of the House and Senate health care reform bills, there’s been a flurry of activity in the Netroots over the missing public option. Several groups are mobilizing for it at the same time that key Senators who supported it in the past are quietly leaving it on the table. Because it is still a cause of controversy and division, I think it’s worth listing the arguments for and against it in as objective a fashion as possible.

Arguments in favor

1. A public option creates competition in the marketplace.
2. A public option saves money.
3. A public option puts downward pressure on premium costs.
4. A public option establishes a framework for a national single payer system in the future.
5. A public option gives individuals a choice not to fund commercial health insurance companies.

Arguments against

1. A public option establishes a new government agency.
2. A public option puts government in charge of making health decisions.
3. A public option duplicates the Medicare framework already in place.
4. A public option will be costly to initiate and manage.
5. A public option may result in providers refusing to participate because of low payment rates.
6. A public option may result in adverse selection; that is, where the oldest and sickest gravitate to the public plan, driving government costs up.

Within this framework, there are individual arguments to be made about whether each point is valid or not. My goal here was simply to list the primary arguments for and against and let the discussion flow from there.

Are there any I missed? Leave a comment and I’ll add to the list.

Well, health care has gone to the back burner. Now everyone, not just Republicans, is unwilling to talk about it. In theory, Democrats are scrambling behind the scenes to figure out a way to pass something, but we are definitely finished having a debate about it.

President Obama revealed his budget today, to the usual “OMG the debt will leave our children with a lower standard of living” from the people across the aisle.  Pressed on how he thought the budget deficit ought to be addressed, one of Chris Mathhews’ Republican guests admitted that the only way to lower the deficit would be to “transition people 55 and under out of Social Security and Medicare benefits and into a different plan that isn’t so expensive.”  I bet that will be a sure election-winner: work all your life and get kicked to the curb in favor of someone else’s grandchild.

Nobody talks about changing the objectives of the system, the delivery, or the costs.  All they talk about is the budget deficit and cutting. In the mean time, what’s the quality of life for people who need health care now?

In Arizona, where I live for most of the year, Medicaid enrollment has gone up 18% since last year, and the state has one honkin’ deficit itself. As a response,

…Governor Jan Brewer, struggling with a $1.4 billion deficit this fiscal year (and a projected shortfall of $3.2 billion in fiscal 2011), ordered the state to stop enrolling children in KidsCare, that state’s CHIP program that provides coverage for 47,000 children. Brewer has also introduced a ballot measure that would roll back a 10-year-old expansion of Arizona’s Medicaid program, resulting in 310,500—more than 4 percent of all Arizonans—losing their coverage.

It will be interesting to see how long it takes everyone to figure out that if we reformed not the money piece, but the delivery piece, of the health care system, we might be able to provide care for children and the elderly and still decrease the deficit.

I actually do think automating the systems will help a little, and auditing Medicare and Medicaid more carefully and completely will also help. Both programs, according to people I know who have done pilot recovery auditing projects for them, are full of waste — excess utilization, incorrect billing, duplicate payments. And as for fraud, “60 Minutes” exposed how easy it is to defraud Medicare in Florida several months ago.

There are all sorts of other pilot programs in the bill-that-will-never-be-passed, from the Primary Care Medical Home to prevention to outcomes research. Now most of that will be scrapped, and a paralyzed Congress will just keep trying to figure out how to reduce the deficit on the backs of the vulnerable.

The military budget? Two wars at a time? That might be a little expensive, but why cut back on that? Instead, the budget has been framed as a Hobson’s choice: leave our children with debt later, or leave them without health care now. Let’s just throw some poor kids out of a Medicaid program and use the savings to buy drones that kill civilians in other countries.