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New News - Class 1

Consumer Reports Rates HMOs, PPOs

In its summary of the ratings, per Consumer Reports (Sept. 2007):  "Only 67 percent of our readers said they were completely or very satisfied with their plan; that's up slightly from our total in our 2004 survey of HMOs and PPOs (64 percent). That rate is only average compared with what we've found when we've done consumer satisfaction surveys of other services. ... Why isn't satisfaction with HMOs and PPOs higher?  Problems getting an appointment to see a doctor were reported by 10 percent of our readers, 21 percent had to deal with billing errors, 25 percent said they had a problem with their primary-care provider, and 36 percent who called a plan representative for assistance said they had trouble getting the help they needed." In a summary of its methodology, "A nationally representative on-line survey of 2,905 respondents between the ages of 18 and 64 was designed by Consumer Reports and fielded by Knowledge Networks in May 2007. The sample excluded U.S. residents covered by Medicare or Medicaid. For the full sample, the sampling error was 2.43 percent at the 95 percent confidence level."
      The magazine also considered the broader issue of health insurance and healthcare costs  and in an overview, writes, "From escalating medical debt to postponed retirement, our exclusive national survey of working-age adults shows the depth of jitters even for those lucky enough to have insurance through their jobs or families."
      In reviewing the growth in healthcare costs despite the advent of managed care, the magazine states that:  "Back in the 1990s, employers and insurance companies embraced the idea that 'managed care' could simultaneously save money and improve quality.  Employees were put into HMOs, which in turn used their burgeoning membership numbers to force doctors and hospitals to cut their prices or lose access to patients."  Consumer Reports highlights pushback from patients and doctors, noting that breast-cancer patients "sued and got some state legislatures to pass laws requiring health plans to cover $80,000 bone-marrow transplants," and "doctors and hospitals joined forces and, in many cases, successfully pushed back against managed care's demands for deep discounts to their fees."
       In looking at the Medicare Advantage programs, the magazine notes that "about 20 percent of Medicare beneficiaries nationwide find themselves right back at square one: poring over confusing HMO rules, being restricted to certain doctors and hospitals, and coping with unanticipated high co-pays and deductibles."
      Also, the magazine considered the growth of medical bills among the insured, writing: "Between 2001 and 2005, the percentage of middle-income families -- those who earn between $40,000 and $80,000 for a family of four -- who had job-based health coverage dropped four percentage points.  Half lost benefits because their employers dropped health insurance altogether or quit offering dependent coverage." However, "15 percent gave up their employer-based insurance because they could no longer afford the premiums."

4-8-06:

Growing uninsured population

The U.S. uninsured population is estimated to be about 43.6 million.  The American Hospital Association claims U.S. acute-care hospitals provided $22.3 billion in uncompensated care in 2002, representing 5.4% of their total expenses.  (Modern Healthcare 2-18-03)

Managed Care Backlash

According to the Center for Studying Health System Change, "Tracking Report" (November, 2002):  "the managed care backlash has altered the relationship between health plans and physicians - not towards less managed care, but, rather, to a kinder, gentler managed care."  In recent years, enrollment in preferred provider organizations (PPOs) has grown substantially at the expense of health maintenance organizations (HMO) enrollment.  This is likely due to PPOs' tendency to place fewer restrictions on health care service use and allow more direct access to specialists.  Yet, primary care physicians in 2001 acted as gatekeepers for 44.6% of their patients, 3.6% greater than in 1997.  From 1999 to 2001.  The use of primary care physicians acting as gatekeepers held steady.

Excellent Article for Overview of Issues:

Per Chicago Tribune (June 11, 2002):  According to the article "Health Care Woes Cost Billions" a study that has been in the making for the past two years by the Chicago based Midwest Business Group on Health  assisted by the Juran Institute, an international research group, indicates that low quality health care in the U.S. such as medical errors, unnecessary treatments, misused drugs and bureaucratic waste costs nearly $400 billion a year or about 30% of the total $1.3 trillion spent annually on medical expenditures in the U.S. The cost to private employers is between $1,700 and $2,000 per insured worker.  Premiums are up 16% this year for most large employers and smaller companies are seeing even larger cost increases.  These researchers say that by getting health plans to do more and pushing medical care providers to improve quality, employers and government can do something about their high medical costs by being smarter purchasers by demanding better quality medical service and information from doctors, hospital's and health insurance companies.  The report estimates, for example, the costs of treating diabetes is $98 billion annually but that amount could be less if the disease was diagnosed early on preventing premature death, limb amputations, kidney disease, or blindness.  The average worker loses 11.3 hours of work each week because of the disease.  The total annual direct and indirect costs of asthma is estimated to be $18 billion.  The authors of the study advocate that employers better scrutinize the choice of doctors, hospitals and health plans they offer workers to help control costs. Often employers choose the cheaper insurance without examining its quality and performance of doctors and hospitals in the health plan's network.  Doctors and hospitals have yet agreed on a broad set of standard measurements or rating systems for consumers to use (see Class 5 of this website regarding quality and utilization review).  A shared strategy for quality improvement and for sharing information with the public is lacking according to the American Hospital Association's senior vice president for policy who is also quoted in the article claiming that this study draws an overly broad conclusion and is incorrect and possibly misleading.  A Washington group called the National Quality Forum is working on a set of core measures for hospitals, employers, consumers and the government.  

Ford Motor Co. has been working with report cards on a website for its employees and retirees profiling hospitals in Atlanta, Buffalo, Indianapolis, Cleveland, and southeast Michigan.  Bank One has begun offering disease management in the last two years for expensive illnesses such as diabetes.  Dr. Wayne Burton, senior vice president and corporate medical director at Bank one says, "We know in bad flu season flu shots can prevent a lot of absenteeism." (see class 6 of this website regarding physician executives).  Employers and insurers acknowledge that workers still do not take advantage of low cost preventive health care services.

Physician Salaries

Per Modern Healthcare (6-24-02):    According to a survey of about 5,000 hospitals and physician practices by a Texas physician staffing firm, Martin, Fletcher & Associates, most major medical specialties, except for pediatrics and family practice, average annual salaries and benefits grew in 2001.  Oncologists were the leaders whose salaries and benefits increased 15.5% to an average of $260,000 a year and emergency room physicians compensation package grew by 11% to $200,000.  According to the report, orthopedic surgeons increased 8.5% to $380,000 annually.  Salaries remained stable for family practice physicians at about $155,000 and pediatricians at $160,000.  According to the Texas physician staff firm, nationally, the aging population is driving up demand for medicine while the aging physician population and early retirement is reducing the supply of doctors.  

Hospital Closings

The Health Human Services (HHS) Office of Inspector General has posted a new Inspection Report to its website regarding hospital closures.  This report describes the extent, characteristics, reasons for, and impact of hospital closures in 2000.  Sixty-four general, short-term, acute care hospitals closed -1.4 percent of all hospitals in 2000. The same number of hospitals closed in 2000 as in 1999; however, 29 hospitals opened or reopened in 2000, seven more than in 1999.  After closure, 31 percent of the hospitals were being used for other health-related services--such as outpatient and long-term care facilities.

See:  Hospital Closure:  2000 (OEI-04-02-00010)
http://oig.hhs.gov/oei/reports/oei-04-02-00010.pdf

Living Longer With Increase in Chronically Ill

According to the National Center for Health Statistics' annual report of the nation's health:  Americans are living longer, becoming more health-conscious and yet more chronically ill.  Overall U.S. life expectancy in 2001 was 77.2 years, an increase of nearly four months from 2000.  Also, people were spending more on healthcare and there were trends of worsening health, such as:  rise in diabetes which in 2002 afflicted 6.5% of adults and the rise in the percentage of children including adolescents classified as "overweight" from around 7% in late 1970s to 15% in late 1990s. The report is available at:  http://www.cdc.gov/nchs  (Modern Healthcare 10/6/03 )

Costs of Injuries During Hospitalization/ Patient Safety

According to a federal study in Journal of the American Medical Association, injuries during hospitalization resulted in an estimated 32,591 patient deaths, $4.6 billion in additional national healthcare expenditures and 2.4 million in added hospital days in 2000.  Among 18 types of injuries, postoperative bloodstream infections had the most serious consequences; they extended hospital stays an average of nearly 11 days and increased patients' risk of death 21.9%, or about 3,000 deaths per year.

The excess charges associated with such infections were $57,727 per case.  The next most serious event was postoperative reopening of a surgical incision, which increased risk of death 9.6%, or 405 deaths annually, while adding 9.4 days per stay and $40,323 in charges per case. Birth and obstetric trauma resulted in little or no added length of stay, cost or risk of death.  (Modern Healthcare 10/7/03 )

 12/7/01:    Per Managed Care Trends Digest 200, the number of HMOs dropped in 1999 (802 HMOs) as compared to 1998 (902 HMOs) while enrollment in HMOs continued to grow in 1999 (over 100 million enrolled in HMOs).  From 1994 though 1996, Medicare and Medicaid enrollment in HMOs more than doubled and quadrupled respectively.  Employees covered by PPOs rose 8.7% in 1999 from 1998 to 106.8 million while the number of operating PPOs fell 4.3% to 1,079.   

11/6/01:  The article in the Chicago Tribune (11/6/01), "First Health Shares Tumble 14%" with subtitle "Decline Follows 'Great Quarter'", gives a perspective about the PPO model.  This article states, "First Health has enjoyed rapid growth of late because it specializes in providing large corporation clients with what is known as "preferred provider organization" employee health insurance.  Such PPO plans, which offer corporate clients a broad list of physicians who have agreed to provide treatment at an agreed-upon rate schedule, are becoming increasingly popular with health-care consumers because they offer more flexibility than do more restrictive HMO plans."  According to the company president, the economic downturn is positive for this PPO because "in general, a difficult, challenging economy is good for us, because our clients tend to utilize the PPO more, and to implement the more aggressive managed-care programs we offer".

Health Care Statistics

According to Crain's Chicago Business (July 9, 2001):  As of 2001, the number of HMO Members in 6-county Chicago area according to the Illinois Assn. of HMOs as of January 1, 2001 is over 1,900,000.  The physician mix for 2000 in primary care including internal medicine, pediatrics and general/ family practice, both office-based and hospital based and not including radiologists, pathologists and anesthesiologists is 4,395 in Cook county and 6,083 in six-county area and for specialists is 5,392 in Cook county and 7,553 in six-county area.

The health care payer mix for the year 2000 of insured people by type of insurance in percentages is: PPO/POS/ CHAMPUS: 35% in Cook county and 43 % in six-county area; HMO 22% in Cook county and 22% in six-county area; Medicare 11% in Cook county and 10% six-county area; Medicare HMO 2% in Cook county and 2% in six-county area; Medicaid 12 % in Cook county and 9% six-county area; Medicaid HMO 2% in Cook county and 2% six-county area; Uninsured 15% in Cook county and 12% in six-county area.

8/8/01    OTHER ISSUES OF INTEREST

Consider:    What are the ETHICS of Cloning?  

Per Chicago Tribune (8-8-01), "Human Cloning Debated" subtitle "Group Planning 200 Implants Challenged at D.C. Hearing," Dr. Severino Antinori, an Italian doctor and leader of cloning team said it would perform cloning of a person in an undisclosed Mediterranean nation.

According to Chicago Tribune, September 12, 2000, " HMOs Make Strides in Basic Care":  A New study from the National Committee for Quality Assurance, a Washington-based non-profit groups, said that HMOs made their "largest gains" last year in increasing rates at which "Members receive preventive care, including vaccinations and health screenings.  In Illinois, HMOs that were studied were in the 'middle of the pack' of those elsewhere, the committee said."  In Chicago, fewer than one in four consumers are enrolled in HMOs.  NCQA will begin for the first time this year to accredit PPOs, which are the dominant health insurance in Chicago area and growing at a faster rate than HMOs across the country.  

    HMOs appear to making their most substantial progress in programs that try to prevent heart disease; an average of 85% of HMO members who suffered heart attacks last year were prescribed beta blockers, drugs taken after a heart attack to reduce the chance of a second heart attack, as compared to 80% in 1998 and 62% in 1996.  According to statistics from the American Heart Association, heart attacks alone lead to between $12 billion and $24 billion in medical-care costs and lost worker productivity each year.  Also, screenings for cholesterol jumped to 69% last year from 59%.  The study covers only plans that cover a total of 51 million people.  Consumers can get ratings of health plans accredited by NCQA at www.ncqa.org

According to Crain's Chicago Business, August 7, 2000:

    Twenty-three of the largest hospitals in the Chicago area posted revenue increases in 1999.