Large Employers Limiting Choices to Providers

By George W. Chapman

Faced with continually rising healthcare premiums and costs, many large employers like Walmart are receiving a lot of press for selecting, approving and limiting the physicians and hospitals their employees can use. This “narrowing” of the panel of providers to control costs and raise quality is not new. The concept has been around since the 1970s when staff model HMOs and preferred provider organizations (PPOs) were established and members were limited to a select panel/network of providers. What is new is that the impetus to limit the panel/network is coming from the employer versus the HMO or insurer. In the past, some HMOs and PPOs actually failed because consumers were overly wary of limited networks and demanded almost unlimited choices. To attract business, commercial insurance companies would tout their huge networks of physicians and hospitals, basically guaranteeing the consumer that their physician and their hospital were in the network. The problem is, it is difficult, if not impossible, to effectively contain costs and maximize quality with so many disparate providers. Taking matters into their own hands, employers are aggressively seeking out the most cost-effective physicians and hospitals with the best results. Walmart reports employees spend less time in the hospital, need less expensive follow-up care and avoid unnecessary procedures including surgeries. Walmart’s plan is administered by the Pacific Business Group on Health. In order to lower costs and improve outcomes, consumers must be willing to forego unlimited choices for smaller panels or networks.

Hospital Ratings Challenged

The American Hospital Association is lobbying CMS to either improve its five-star hospital rating system (Hospital Compare) or take it off line. The AHA believes the 14-year-old rating system does not accurately portray hospital performance. Critics claim the star ratings, from one to five, are misleading and harmful oversimplifications of how a particular hospital performs. They suggest working with CMS on developing hospital peer groups (teaching, urban, rural, large, small, regional, etc.) for better and fairer comparisons. Currently, larger teaching hospitals that admit the sickest patients, often transferred from other hospitals, tend to fare worse in the current rating system.

Amazon Accepting HSA Cards

As part of its aggressive foray into healthcare, Amazon announced it will be accepting health saving accounts cards for the purchase of medical supplies online. More than half of US employees are enrolled in high deductible, HSA-eligible, plans which means high out-of-pocket expenses. Out of pocket spending for healthcare was about $370 billion last year. By offering consumers an affordable and convenient option for medical supplies, Amazon hopes consumers will fund their HSAs and take advantage of the savings. A lot of the confusion with HSAs is over what products are eligible for purchase. Amazon will end the confusion by listing eligible products or items on your screen. HSAs are the best tool for saving money because of the multiple tax advantages. You contribute per-tax dollars to a tax-free account, paying for eligible items tax free. There is no “use or lose it “requirement. Unspent dollars earn interest.

Hackers and Ransom

No industry is completely immune to cyberattacks. Hackers can breach or attack even the best defenses. If you refuse to pay up, they will destroy your files. For healthcare providers, years of records can be wiped out. There is breach insurance and these companies employ negotiators when a client is breached. Typically, negotiations are done through a third party and your ransom money is converted to bitcoin so it can’t be traced to the clandestine hacker. An ENT practice in Michigan was breached and the ransom was $6,500. In this case, the physicians refused to pay and decided to retire early. The hackers deleted all files, including patient records, appointment schedules, payment info. (The physicians are still faced with penalties for the breach.) Fortunately, their patient records were encrypted. IT experts feel HHS privacy and security standards are way too focused on compliance and penalties for breached providers versus focusing more on the criminal hackers.

A Nation in Pain

An analysis funded by the National Institutes of Health estimated nearly 40 million of us experience severe levels of pain. An estimated 126 million reported some type of pain in the 90 days prior to being surveyed. It is hoped the study will help shape future research and development, target more effective pain relievers and complementary health approaches. The latter refers to non-prescription drug relief from yoga, massage and meditation. The study has attracted more attention as the opioid epidemic has worsened.

Battling Drug Prices

Scott Gottleib recently resigned his position as FDA commissioner. Frustrated by the dirty tactics of drug manufacturers to delay or prevent the entry of biosimilar drugs into the market produced by competitors, he is taking his fight to lower drug prices to The American Enterprise Institute think tank. He said his primary focus with AEI will be discovering affordable solutions to innovative treatments, including gene therapies. Bringing in substitutable generic drugs to the market under the “conventional drug pathway” (controlled by the pharmaceutical industry) is fraught with roadblocks and politics. The biosimilar pathway should bring about much-needed competition and lower prices.

Primary Care 2.0

It’s been proven that outcomes are better when your care is managed by a personal primary care physician who provides cost effective treatment and preventive services and acts as your quarterback for access to specialists and the healthcare system in general. Unfortunately, with the shortage of primary care physicians, people are seeking more short-term, episodic and expensive alternatives like urgent care and emergency departments. Continuity of care is critical to better outcomes and lower costs. Those without a primary care provider or manager are finding that navigating our confusing healthcare system alone is a nightmare. Primary Care “1.0” must be updated to PC “2.0” to accommodate today’s reality. There must be increased incentives like free medical school tuition, higher residency pay and tax breaks for medical students selecting a primary care career. Empowered nurse practitioners and physician assistants, working in tandem with physicians, can help alleviate the shortage and provide increased access to quality care. But the real panacea will be the evolution of telemedicine as an accepted method of delivering coordinated, low-cost, high-outcome primary care.

George W. Chapman is a healthcare business consultant who works exclusively with physicians, hospitals and healthcare organizations. He operates GW Chapman Consulting based in Syracuse. Email him at