Tuesday, April 12, 2011

OCR Exercises Its Enforcement Discretion

Last month we had the first case in which Office of Civil Rights used it HIPAA civil money penalty power, and it is a douzy. 

See full article here.

Note to self #1: respond to subpoena from the OCR. 

Note to self #2: when responding to a HIPAA violation complaint, do not include PHI on 4,500 patients outside the scope of the complaint. 

Tuesday, March 8, 2011

Co-ops and Co-ops

Free federal money

PPACA provides for $6 billion for start up funding of Consumer Oriented and Operated Plans (Co-ops) to begin operations 1/1/2014. http://cciio.cms.gov/resources/co_op/index.html. If there are two Co-ops per state, that would be $60 million per Co-op. Rhode Island will probably be covered by a Boston Co-op, but California will likely have Coops for NorCal, SoCal, and the Central Valley, at a minimum. Given that the Co-ops are projected to only require about 25,000 members to be self-sufficient, we are looking at an acquisition and service cost per member of $2400 in the first year. Considering that risk-bearing PCMH pilots have been run successfully for $120 per year in administrative fees, 2000% of that amount should be plenty to see some of these organizations succeed.

Public benefit

Success will not be measured in terms of return on investment, however, but on number of members covered and quality of service provided. Co-ops must be nonprofit. This nonprofit requirement would be most obviously met by traditional physician-hospital constructs.  An alternative, however, would be borrowing governance models from the credit union industry. Credit unions have retained the “community owned” character envisioned by PPACA founders where Blue Cross and Blue Shield plans have foundered to varying degrees. It is little wonder that PPACA bars any form of insurance industry participation in Co-ops.

Market size and participants

Congressional testimony on Co-ops indicates that these new entities will follow the growth plan of HSAs, which went from virtually no marketshare in 2000 to 12-15% in 2010. http://cciio.cms.gov/resources/files/j_bertko_testimony.pdf The credit unions largely missed out on the HSA land rush, however, seeing banks grab 99% of the market share. Could credit unions’ philosophical underpinnings, strong bricks and mortar presence, tight employer ties, together with facility with EFTs, make them emerge as a key participant serving Co-op customers?

Sunday, January 16, 2011

Opportunity for Supreme Court to Address De-anonymized Data

Last week, the Supreme Court granted review of Sorrell v. IMS Health Inc., after the Second Circuit Court of Appeal's decision to strike down Vermont's prescription confidentiality law. The law regulates data mining companies that sell or use doctors' prescribing records containing personal information on patients. The Second Circuit concluded as a matter of fact that “The PI data sold by the data-mining appellants is stripped of patient information, to protect patient privacy.” Will the publicity surrounding de-anonymization of Netflix data will present an opportunity for the Court to scrutinize individuals’ privacy rights as well? 

Thursday, June 10, 2010

Claremont Partners Collaborates with CHHS to Ensure Privacy of Medical Information

Claremont Partners has presented its working paper on how to best align California's Confidentiality of Medical Information Act with HIPAA. The paper was presented at the most recent meeting of the Privacy, Security, and Accountability ("CalPSAB") Legal Committee, organized by the California Health and Human Services Office of Health Integrity. The full story and materials are available here.

Monday, May 31, 2010

Book Review: Total Cure

One recent reform proposal blends elements of consumer driven healthcare with universal coverage. The author’s background as a health economist provides a perspective that supports market-based solutions. Hal Luft’s recent book, Total Cure (Cambridge: Harvard University Press), should be required reading for industry participants.

Regardless of whether the public or private sector pays for patient care, all manner of healthcare reform proposals will almost certainly rely on private industry to administer the system. As such, implementation of any major health reform will require active private sector participation.[1]

Today private industry administers most of the health payment system even when the check ultimately clears out of a government account. Medicare, for example, contracts with insurance and technology companies to provide the actual insurance policies, processing, and payment of claims. At the other end of the spectrum, when individuals pay for medical care out of pocket, private industry also tends to perform a broad administrative function.

Increasingly, banks coordinate payments from custodial accounts (HSAs, FSAs, HRAs) to maximize the tax advantage of their customers and shorten care providers’ revenue cycles. Among the marketing slogans designed to convey the value of the bank to the provider network are “revenue cycle management” and “realtime adjudication and settlement”. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 was largely responsible for these new niches for the banks. In response, insurance companies created their own banks as an end run around the competition. The insurance companies began functioning like banks while the banks were functioning like insurance companies, regardless of the government or a private party was ultimately responsible for payment.[2] Reform ought to focus on changing the way that private industry functions holistically rather than simply shifting cash flows from the insurance companies to the banks.

A Path Forward
Prompting private industry to adopt new standards often involves an iterative process of consensus building.  Making think-tank ideas safe for consumption may involve large consulting engagements to “productize” knowledge in a digestible format for the public and private sector. Total Cure, a new book by Hal Luft of the Palo Alto Medical Foundation, evangelizes key shovel-ready healthcare reform concepts, and will likely influence the direction of public policy.  For starters, Luft has created a sound byte-ready working title for his set of proposals: SecureChoice. The flowcharts littered throughout the book are ready-made for animated PowerPoint slides. Importantly, Luft takes his cue from B-school curriculums and articulates his vision of the future in present-tense; the SecureChoice platform is described as if it already exists. While as a public intellectual Luft’s acerbic wit may stymie consensus[3], SecureChoice provides a real roadmap for political and private sector implementation.

With years of experience as a healthcare economist and researcher, Luft has developed a keen eye for the practical side of system. A career of studying Medicare data sets allows him to speak credibly to professional implementers of technology, with comments like “coding improved once it made a difference in payments and quality assessment”.[4] The Total Cure spells out concepts in big blocks easily understood by decision-makers. First, everyone who experiences a major health problem will be entitled to superior medical care, as defined as care that is better than average. While readers outside of the business world may not be familiar with the increasing predictive power of empirical data, books like Super Crunchers have been on CEOs bookshelves for a few years now, so the idea of comparing outcomes between care providers should not cause too many blank stares. Superior care, then, is simply getting access to the providers and procedures that are likely to create an outcome in the top half of the distribution curve.

More generally, SecureChoice concepts are likely to be easily understood in the private sector because they are grounded in terms of economic incentives already familiar to managers.  Every businessperson who has listened to a surgeon recommending surgery in a borderline case must wonder at how doctors and hospitals balance professional ethics against a strong economic incentive to recommend clinically aggressive procedures.  Some legal prohibitions against remuneration for referral exist today, but if a treatment is provided by the same doctor or practice group that made the diagnosis, a possible conflict of interest exists. Because everyone is entitled to medical care for major problems under SecureChoice, the doctor providing the diagnosis would be forbidden from sharing any economic interest with the doctor providing the treatment.

Few incentives are better understood in the private sector than self interest. Accordingly, SecureChoice supports new growth markets for private sector capital. By formally splitting diagnosis from treatment, SecureChoice would be a boon for medical tourism, one of the fastest growing segments of the healthcare industry.[5]

The key tenet of SecureChoice is that health insurance should be for truly unpredictable events rather than for the routine care that is often covered under traditional health plans. This philosophy is likely to endear the platform to fiscal conservatives, as well as those entities that have already invested in high-deductible health plans. Business leaders do tend towards fiscal conservatism. Moreover, those who have invested in a high-deductible health plan approach will recognize this common vision of insurance as a backstop for catastrophic incidents.

Remaining Hurdles

The main challenge with SecureChoice is defining those medical conditions for which citizens are entitled to care. In an effort to distinguish the proper scope of the guaranteed coverage, Luft distinguishes major acute interventions and chronic conditions from minor acute interventions and preventive medicine.[6] While this distinction aligns with a conservative view of the purposes of insurance and incentivizing efficient behaviors, Luft does not provide guidance on resolving the disputes that implementing such a distinction would entail.[7] Practitioners and patients engaged in a holistic approach, for example, that focuses on the interconnectedness of physical and mental systems will find difficulty in separating minor from major conditions. SecureChoice is shovel-ready in many respects, so lack of detail on the distinction of major from minor medical conditions raises a red flag.

It may be that the line between distinguishing coverage for acute conditions should be revised to include both minor and major conditions, so long as the cost of the care does not exceed that average cost to deliver a superior outcome. While insurance theory purists may argue that because an occasional doctor visit for a sore throat or some other minor common condition ought to be anticipated and budgeted as an non-insured expense, covering these incidents will eliminate the more contentious debate over the distinction between a minor and a major condition.

[1] When ideas don’t gain traction with private industry, implementation becomes difficult. See the sad history of the CMS’ efforts to find a private-sector custodian of Medicare Savings Accounts.
[2] See, e.g., health FICA and other technologies where banks and other financial services have intermediated themselves into health carriers role as a provider of value to provider networks.
[3] On a 6/12/09 appearance on NPR’s Forum, Luft remarked that Visa would have “no problem” handling an enhanced healthcare payments system, which may overstate Visa’s competence. In response to a query on European health systems, he quipped that adoption of an European model would be as successful as adoption of the metric system.
[4] At 141
[6] SecureChoice would also entitle citizens to preventative medicine in some circumstances.
[7] He does, however, explicitly defer consideration of politically charged issues like abortion and end of life care.

Friday, April 30, 2010

California's Unusual Protections for Medical Information

Today's California Office of Health Information Integrity Privacy Security and Accountability Board Legal Committee meeting continued the discussion of possible deviation in California law from HIPAA.

Like many things in the 9th Circuit, California has its own rules for protection of medical information, the California Medical Information Act ("CMIA" Civ. Code Section 56 et al). Importantly, California Civil Code §56.10(c)(14) has been interpreted by the California Office of Health Information Integrity to possibly be less permissive than HIPAA. The minority view, at least, is that the "as authorized by law" provision applies only to laws pertaining to public safety. Because HIPAA does not pertain to public safety, the Legal Committee is now in the process of examining those state and federal laws that do pertain to public safety. The working list can be found here. The hope is that by better understanding the current scope of permitted disclosures of medical information, the California legislature can make a better decision about possibly revising the CMIA.

Thursday, April 22, 2010

California Health Care Bills Pass Legislative Hurdle

The Senate Health Committee yesterday passed out two bills that will help implement federal health care reform at the state level. They are the California Senate’s first measures to address the skyrocketing rate increases in the individual health insurance market (SB 890), and establish a health care exchange (SB 900).

SB 890 would stabilize the individual health insurance market and help Californians buy the best type  of insurance suited to their needs. It would also be broader in scope than the recently enacted federal law.

By standardizing the individual insurance market, SB 890 would allow consumers to clearly compare health plans based on similarity, coverage and price. Currently, anyone who wants to purchase an individual insurance policy is presented with more than 100 options, causing confusion and making it almost impossible to make an appropriate choice.

Consumers would be given the freedom for the first time to switch to an equal or lower priced plan after one year, either within their health plan or to another health plan. Currently, consumers can only switch plans after 18 months, and only within their plan.

SB 900 would establish the California Health Insurance Exchange. A main feature of federal health reform legislation is the establishment a state level health insurance exchanges that will enable individuals to comparison shop for health coverage, facilitate their enrollment in coverage, and administer tax subsidies for low- to moderate-income people.

SB 900 would require insurers to offer five plan levels -- Platinum, Gold, Silver, Bronze and Catastrophic. This would give people a broader choice of individual plans that is more extensive than federal law, which only requires plans to offer a Silver and Gold plan.