Workshop warns business to brace for surging health care costs

August 2, 2010 J Roberts

Will the new healthcare reform act be beneficial to patients at the cost of being harmful to business? The jury is still out, but onething is for certain, costs will continue to rise in the immediate future.

The Daily – 07/22/10

By Beth Fitzgerald

As the new federal healthcare reform law is phased in through 2014, employers will face increased costs to comply with new regulations and reporting requirements, even as their health insurance premiums continue to rise.

That was the view from Scott Rappoport, CEO of Benefit Sources & Solutions, in

Bound Brook, who presented a workshop on the new law Thursday morning sponsored by the Somerset County Business Partnership. The session was held at Financial Resources Federal Credit Union’s Bridgewater office.

Rappoport reviewed key provisions of the law, starting with the “grandfathering” of healthplans that were in effect when the new law was adopted by Congress on March 23. Many employers can keep their old plans – but the restrictions are such that, in most cases, it will be too costly to try and hang on to an old plan, he said. “I really believe that in two years, it will be so ridiculously expensive to maintain a grandfathered plan that it won’t make any sense,” he said.

One positive aspect of the law is that it spells out the “essential benefits” – including preventive care – health plans must provide, he said, which addresses a need to “focus on wellness and chronic disease management, and getting and staying well.”

In 2010,employers with fewer than 25 workers averaging salaries of $50,000 or less who pay 50 percent of their health insurance premiums can get a tax credit of 35 percent of the employer’s premium contributions. But Rappoport said in New Jersey, a high-wage state, many small employers won’t qualify.

Yet New Jersey Citizen Action, a consumer advocacy group, this week released a report by Washington, D.C. – based Families USA that estimated more than 100,000 New Jersey businesses could be eligible for the tax credit this year.

When Choosing Health Care, Know What You’ll Owe

July 14, 2010July 20, 2010 J Roberts

Buyer beware! Most people don’t realize just how much out-of-pocket spending a healthplan may cost them until they become seriously ill or are hospitalized. The below article sheds light on the out-of-pocket expenses many consumers face and what they should be aware of when choosing a healthplan.

By WALECIA KONRAD

If you’re like most people, you may think they are the same. But while it is true both terms refer to the portion of medical bills you pay out-of-pocket, these two types of cost-sharing are quite different.

A co-pay is a fixed amount that you pay each time you see a doctor or fill a prescription, usually around $10 or $20. Co-insurance is the percentage of the cost of doctor visits, hospitalizations and prescription drugs that you must pay under your insurance policy.

Let’s say your policy calls for 80/20 co-insurance. After you meet your deductible, you must pay 20 percent of your medical bills; the insurance company is responsible for the remaining 80 percent.

Many plans demand both co-pays and co-insurance. Co-insurance is especially common when it comes to hospital stays. Of all workers covered by an employer-sponsored group health plan, 51 percent must pay co-insurance for hospital admissions, according to the 2009 Kaiser Family Foundation survey of employer health benefits. The average payment is 18 percent of the total. And 53 percent of covered workers pay co-insurance for outpatient hospital visits, with an average charge of 19 percent.

Co-insurance is common in the individual insurance market. And as companies head into this fall’s open enrollment season, many are considering a switch from co-pay to co-insurance as a way to increase employee cost-sharing and contain rising health benefit expenses, said Tom Billet, director for health and group benefits at the consulting firm Towers Watson.

Because of the confusion involving co-pay and co-insurance, many patients don’t realize just how much it may cost them until they become seriously ill or are hospitalized, said Lynn Quincy, a senior policy analyst at Consumers Union. “Ten or 20 percent may not sound like much, but 20 percent of a $100,000 surgery is a lot of money,” she said.

Co-insurance payments can add up quickly for seriously ill patients. It’s not unusual, for example, for a cancer patient to need $40,000 worth of medicine in a given year.

“Co-insurance on that could be as much as $14,000, and that’s just for the drugs. That’s not even counting going to the doctor or the hospital yet,” said Stephen Finan, senior director of policy at the American Cancer Society’s Cancer Action Network.

High co-insurance and other out-of-pocket costs, including insurance premiums, can sometimes discourage patients from receiving the treatment they need. One in three individuals under age 65 diagnosed with cancer has delayed needed health care in the last 12 months, according to a Cancer Action Network poll.

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Increase in health tests, procedures is raising costs in frugal Utah

May 24, 2010 J Roberts

The rising cost of healthcare is everywhere. Even in small town communities, where spending tends to be small or limited, people can’t avoid the increase in healthcare costs. What’s driving the increase? It appears to be over utilization. Essentially, this means that the number of test and procedures is on the rise. This is due to the addition of new surgical and other specialty suites and increased technology at hospitals. These services are all paid for on a fee-for-service type arrangement – meaning the more test one does, the more the doctor or the facility performing the test or service will receive in payment.

By Jordan Rau

Kaiser Health News

PROVO, UTAH — If there is any place that should have medical spending under control, this is it. Residents of Provo, many of them Mormons who don’t smoke or drink, are among the healthiest in the country. The city’s biggest hospital is run by Intermountain Healthcare, which President Obama has lauded for providing high-quality care while restraining costs.

Until recently, Provo seemed to be a model for the nation. But spending on Medicare patients here has accelerated rapidly, as it has in many other areas of the country that are known for cost-efficient care.

The culprit: a swift increase in the number of procedures and tests being performed — a trend that has coincided with the additions of new surgical and cancer treatment suites and diagnostic machines at hospitals and clinics throughout the growing region.

“It’s very discouraging to see costs increasing rapidly in those low-cost areas we believe to have good care,” said Paul B. Ginsburg, president of the Center for Studying Health System Change, a Washington-based research group. “They appear to be succumbing to the same forces that have led to high costs elsewhere.”

This transformation calls into question initiatives — including some in the new health-care law — to encourage more profligate regions to learn from their frugal counterparts.

Medicare spending trends often parallel those in the country’s overall health system, experts say. In 2007, average Medicare spending per person in the greater Provo hospital market was $8,064. That was below the national average of $8,682, but far higher than it had been a few years earlier.

Between 2000 and 2007, Medicare spending in the Provo region rose on average 8.6 percent a year, nearly double the average national rate of 4.7 percent, according to the Dartmouth Atlas of Health Care, which analyzes geographic variations in medical spending. Provo’s growth occurred as Medicare beneficiaries underwent surgeries more frequently and spent more of their dying days in intensive care units.

Provo’s spending increases aren’t an aberration. Annual average spending grew 7 percent or more in other traditionally low-cost areas, including Oxford, Miss.; Wausau, Wis.; and Durham, N.C. Even in Rochester, Minn., home of the highly regarded Mayo Clinic, and Salt Lake City, where Intermountain is headquartered, Medicare costs grew faster than the national average, according to Dartmouth.

The increases are particularly worrisome in places where many providers have made changes to try to reduce costs. These include adopting electronic medical records, focusing on prevention and increasing cooperation between doctors and hospitals.

But Provo’s regional hospital market, which stretches south of Salt Lake City and includes nearly 27,000 Medicare beneficiaries in a population of more than half a million, also has embraced some of the less admired traits of expensive health-care markets.

Many doctors have set up their own large clinics where they share in the profits from diagnostic tests and other services. Physicians in the Provo region performed 17.3 percent more procedures on Medicare patients in 2008 than they did in 2000, outpacing the median national increase of 13.7 percent, according to a Government Accountability Office study.

“The first surgical center in Utah County was built by a physician from the hospital,” said Rulon Barlow, a former county health commissioner who runs the student health center at Brigham Young University in Provo. “So what did the hospital do? It built a surgery center. It wasn’t too much longer that another outfit came in across the street.”

Wendell Gibby, a radiologist who owns an imaging clinic, said he has seen a dramatic change in the area. “The gastroenterologists owning their own CT scanners, the oncologists owning their own radiation machines” are examples, he said. “If you’ve got a $1 million scanner, you end up using it.”

Hospital executives and doctors insist that they guard carefully against performing unneeded procedures. Scott E. Bingham, a cardiologist at the Central Utah Clinic, said: “The only thing that I see increasing in Provo is the number of patients we see.”

And Mike Kennedy, a family doctor and the chief of staff at the Hospital Corporation of America’s Timpanogos Regional Hospital in Orem, just north of Provo, speculates that the higher costs are the result of better care. “You’re probably seeing more aggressive treatment earlier on in disease stages,” he said.

But some treatments were being performed more frequently in Provo while decreasing nationally, according to Dartmouth data covering 2000 through 2005. They included operations to clear leg arteries and replace heart valves.

The number of aortic-aneurism repairs and hospitalizations for hypertension and asthma also rose faster than the national average. Though many procedures are still performed less frequently than elsewhere, a Dartmouth study released in April singled out Provo for having the highest rate of shoulder-replacement surgery in the country.

Commercial insurers say prices in Provo and the rest of Utah still remain lower than the national average. But experts say that could change, too.

“We take some comfort that we have less of a problem in Utah than elsewhere,” said Kim Bateman, vice president for medical affairs at HealthInsight, a Salt Lake City-based nonprofit organization that Medicare has authorized to find ways to improve the quality of care in Utah and Nevada. “But really I think we’re just behind them on the same curve — that we’re going to be subject to the same kinds of cost pressures as everyone else.”

Study: Riskier surgeries for back pain raise costs

April 12, 2010 J Roberts

A recent study reveals that certain surgeries are leading to increased costs without producing better and healthy outcomes. In fact, the article suggests that certain surgeries may be performed too often and for inappropriate reasons. Perhaps changing the economics of medicine, to reward better care rather than simply providing more care is the answer.

Associated Press

A study of Medicare patients shows that costlier, more complex spinal fusion surgeries are on the rise — and sometimes done unnecessarily — for a common lower back condition caused by aging and arthritis.

What’s more alarming is that the findings suggest these more challenging operations are riskier, leading to more complications and even deaths.

“This is exactly what the health care debate has been dancing around,” said Dr. Eugene Carragee of Stanford University Medical Center.

“You have one kind of operation that could cost $20,000 and another that could cost $80,000 and there’s not good evidence the expensive one is being used appropriately in the majority of cases,” Carragee said.

Add to that the expense for patients whose problems after surgery send them back to the hospital or to a nursing home and “that’s not a trivial amount of money” for Medicare, said Carragee. He wrote an accompanying editorial in the Journal of the American Medical Association where the federally funded study appears Wednesday.

The cost to Medicare, just for the hospital charges for the three types of back surgery reviewed is about $1.65 billion a year, according to the researchers.

All the patients in the study had stenosis in their lower backs, a painful squeezing in the spine that’s most common in people over 50. The researchers compared the risks for three different types of surgery for the condition: decompression, simple fusion and complex fusion.

“All operations aren’t the same and some seem to be associated with higher complication rates than others,” said lead author Dr. Richard Deyo of Oregon Health and Science University in Portland. “It’s not necessarily true that the more aggressive surgery is better, at least in terms of safety.”

There’s little agreement about the best way to treat chronic lower back pain, and much depends on what’s causing the pain.

Patients should ask their doctors about alternatives to complicated operations, Deyo said. Could steroid injections and physical therapy be tried? Would a simple decompression procedure be as helpful as a spinal fusion and with less risk?

In a decompression procedure, the simplest method in the Medicare study, a surgeon cuts away part of the bone that’s painfully pressing on nerves. It can cost about $30,000 in hospital and surgeon fees.

For a fusion, a surgeon binds two or more vertebrae together using a bone graft, with or without plates and screws. The researchers defined a complex fusion as one involving three or more vertebrae or more than one side of the spine. Fusions cost $60,000 to $90,000.

The researchers analyzed data on more than 32,000 Medicare patients who had one of the three types of surgeries in 2007.

About 5 in 100 patients who had simple or complex fusions suffered major complications such as stroke compared to 2 in 100 with decompressions. The risk of death within 30 days after surgery was different too: 6 in 1,000 for complex fusions compared with 5 in 1,000 for simple fusions and 3 in 1,000 for decompressions.

The study didn’t address how successful the various types of surgeries were at relieving pain.

More than half the patients who had complex fusions had a simple stenosis, which usually calls for decompression alone. They did not have the curvature of the spine or a slipped vertebra — additional conditions that might suggest a fusion is needed. There’s not much evidence for doing a complex fusion for a person with simple stenosis, Carragee and other experts said.

“It certainly looks like there’s more complex surgery being done than we have very good evidence to support,” Carragee said.

Rates of complex fusions in Medicare patients rose 15-fold from 2002 to 2007, while decompressions and simple fusions declined, the study found. Although the overall procedure rate fell, hospital charges grew 40 percent.

Aggressive marketing of devices used in complex fusions is likely playing a role in the increase, Deyo said. The marketing includes ads in medical journals and lectures by surgeons on the payroll of device manufacturers.

Allegations of kickbacks to spine surgeons for using products and questionable financial arrangements to doctors as consultants have plagued the multibillion-dollar industry. One company, Medtronic Inc., reached a $40 million settlement with the U.S. Justice Department in a whistleblower case that included allegations the company paid doctors to use its spine surgery products. The company denied any wrongdoing.

Dr. Charles Rosen, a spine surgeon at the University of California, Irvine, founded the Association for Medical Ethics to nudge doctors toward scientific evidence over vested interests. Forty-nine spine surgeons have joined, pledging to refuse any type of compensation or earnings from companies for using a product.

Rosen applauded a provision in the new health care law that requires device makers and others to file annual reports to the government on their financial ties to doctors. Patients will be able to look up possible conflicts in a government database.

“Too much fusion surgery is done in this country and often for inappropriate reasons,” Rosen said. While complex fusions are needed for some conditions, he said, patients “should not hesitate to get a second opinion.”