December 1, 2012

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Utah Business Staff

December 1, 2012

HURST: I agree that getting more people in the system helps avoid some of the unnecessary care and some of the waste that we see in the healthcare system. The challenge is paying for it. If there is now Medicaid payment reform in Utah and I’m being capitated as a provider of care and that reimbursement is lower, as a provider—whether I’m a hospital or a physician—I have to generate so much revenue in my organization to cover my expenses and make a profit.

SANPEI: The notion has always been not to cut funding to the provider, the notion has been to change how they receive that funding so they have an opportunity, in a rational way, to curb that cost growth trajectory without having to do the cost shifting. Because the alternative, which is still on the table—in order to curb that cost trajectory, the easy thing for the state to do is simply to cut rates, right?                         
And if the state simply cuts rates, what then happens is the providers pass those additional costs on to the commercial insurers and the commercial insurers pass that additional cost on to the businesses and the businesses then end up not being able to cover as many individuals with insurance, which means you have more uninsured and more underinsured, who end up back on the rolls of the state for Medicaid—and then we cut rates again.

RUFF: The reality is that we keep talking about cost and mostly we are talking about payment reform. The problem is that, as providers, we need to find new ways to deliver care that costs less. Particularly in relation to chronic disease models.
Medicine is not just intuitive anymore. I grew up in an era where you went to the hospital because that was the only place a subspecialist could figure out what was wrong with you. But in a lot of ways medicine today doesn’t require that. We have standardized processes for treating particularly chronic diseases—obesity, diabetes, hypertension, things like that. If we just follow those algorithms, it doesn’t really take a physician to be involved in that, to be honest. Passing that care off to mid-level providers or even nurses will reduce cost but the outcomes will probably be the same or better.
So we can’t just talk about payment reform. We have to talk about delivery reform and shifting a lot of those methods we have traditionally used into less expensive environments, particularly away from hospitals. Hospitals are not the best place to provide a lot of the care that we provide today.

MCOMBER: It gets us back to the accountable care organizations under Medicaid and the possible cost shifting that could cause. Because you don’t want to cut provider reimbursement, and yet we are giving per member per month to a plan and it’s up to the plan to determine the reimbursement rates for providers. The devil’s in the details. We don’t know exactly what’s going to happen with that and we would hope that the providers—the physicians and the hospitals and other providers—are included in that discussion. But the plans are the ones who are going to get the money and determine how that is going to be divided. So just a little bit of a caution on that.

How are businesses going to respond to the individual mandate?

BINGHAM: You are going to see a variety of reactions to that. Definitely many of our clients have said, “What can we do to get underneath 50 employees?” or “What can we do to cut the number of hours that employees work?”
For some employers, like our large tech industry, they are going to compete—it’s going to be business as usual because they need to have those types of benefits to keep and bring in the type of employees that they want. However, a number of smaller employers are going to vacillate between paying the penalty versus offering coverage. In the end, those that want and value their employees are going to continue to offer it. But how they are going to be able to pay for that is going to be a different story.

HURST: A new boon in the healthcare consulting industry is helping employers determine whether to pay or play. Many clients are asking the question, “What is the penalty if I decide not to play? Is it advantageous to me as a business owner not to offer benefits? And if the penalty is so many dollars, that’s probably less than what it would cost me to offer benefits.”
As it relates to the individual mandate—that’s a political hot topic, but those who are not covered end up where?
In the ER, at a much higher cost to the healthcare delivery system, which either turns into charity care that’s funded through a foundation or charity care that’s funded from the bottom line.
Some employers might decide to say, “I don’t want to be in the business of offering health benefits. I’m a manufacturer, I’m a software engineering company. My job is not to have my second-highest expense be employee benefits.” Employers are making some interesting decisions in their mind.
The Utah Health Exchange, which has been renamed to Avenue H, is a whole different kind of marketplace. It’s a defined contribution marketplace that allows an employer to say to their employee, “Here is a set sum of money. Go onto Avenue H and purchase your healthcare insurance. You can purchase it from multiple carriers. And you select the benefit plan design that best suits you and your family.”

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