Payer analysis
Analysis frame
Competitor analysis
Government analysis
Power
Long view
Disruption
Influential amplifiers
Financial analysis
Strategic idea network
Patient analysis
Payer analysis
Rules
Health information exchange analysis
Electronic health records

Payer analysis

Summary

This analysis reviews the:
  • Impact of payers on the health care network and the providers. 
  • Reviews the impact of the government on payers. 
  • Describes the history and current structure of payers.  
  • Reviews payer's goals. 


Introduction

The health care payers include a number of concentrated forces. 
 



Goals of funding health care

Any health care network must balance the amount of health care provided/utilized against the cost of providing that health care to the population.  With: The increasing life spans of the US population, Its aging, The shift of capital from the public to private accounts, The increasing debt burden of the payers include four types:
  • From the 1930s the insurers Blue Cross and Blue Shield catalyzed health care activity by paying a daily per diem to hospitals for the diagnoses and treatments the hospital's dispensed.  At their inception in 1966 Medicare and Medicaid followed this reimbursement model. 
  • From 1983 Medicare and Medicaid switched to the PPS reimbursement mechanism.  This forced alignment of the supplier, diagnosis, treatment, billing and reimbursement processes.  The health care network is still structurally aligned around PPS.  Under scrutiny of ProPAC and its successor MedPAC,  as well as pressure of the BBA after 1997, the payments per DRG have been steadily reduced until it was below the cost of care, forcing hospitals to seek margin from their other payers.  Medicare outlier payments benefited hospitals that inflated charges and thus became eligible. 
  • Employers as they experienced cost shifting from the hospital's increased product charges moved their employees over to managed care based payment. 
  • Private payers pay hospitals directly for their diagnosis and treatment.  Typically this group has little power.  There are default rates for private payers - typically 40% of billed charges that are not covered by a fixed payment or a fee schedule.  For the uninsured poor until 2004 they obtained little discount on the hospital's chargemaster list price, because insurers and CMS required to be charged the lowest value offered to any patients.  Medicare has now relaxed this constraint. 
, The effects of the economic is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics. 
system on the population, The additional interventions that can be provided by the health care network; new strategies for success must be adopted. 

The government needs to directly or indirectly:

The ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
    • Children, allowed to, stay on their parents insurance until 26 years of age. 
  • Medicare solvency improvements. 
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
  • Qualifications for ACOs.  Organizations must:
    • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    • Participate in the MSSP for three or more years. 
    • Have a management structure. 
    • Have clinical and administrative systems. 
    • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
    • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
  • A requirement that chain restaurants must report calorie counts on their menus. 
has three components to support Democrats' strategies to achieve these goals:
  1. FFV is fee-for-value payment.  It may be a bundled payment for a set of services provided by a group of doctors and facilities, or full capitation.  In each case the risk has shifted from the payer to the providers of care. 
    health care provided to patients by hospitals and doctors paid by insurers, employers, TRICARE is the DOD civilian health care program for military personnel, retirees and their dependents.  It is the civilian component of the Military Health System managed by the DHA.  Congress goal was to allow military personnel increased access to health care resources available in the civilian economy.  , Medicare is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare is currently missing a cap on out-of-pocket costs and direct prescription drug coverage.  It includes:
    • Benefits
      • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hospital. 
      • Part B: Medical insurance for non-hospital services including: doctor visits, tests, injectable drugs, ambulances, physical therapy;
      • Part C: Medicare Advantage 
      • Part D: indirect prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
    • Eligibility
      • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived.  Medicare is legislated to become the primary health plan. 
      • Persons under 65 with disabilities who receive SSDI. 
      • Persons with specific medical conditions:
        • Have end stage renal disease or need a kidney transplant. 
        • They have ALS. 
      • Some beneficiaries are dual eligible. 
      • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
    • Sign-up
      • Part A has automatic sign-up if the person is drawing social security.  Otherwise the person must sign-up for Part A and Part B. 
      • Should sign-up for Part B during the Initial Enrollment Period, of seven months centered around 65th birthday, online or at a social security office.  But if still covered by spouse's insurance or not yet retired then may only join during the 3 month general enrollment period (January to March) each year, with coverage initiated the following July.  Incremental yearly 10% penalties apply for not signing up at 65.  These penalties apply to all subsequent premiums. 
    • Premiums
      • Part A premium
      • Part B insurance premium
      • Part C & D premiums are set by the commercial insurer.  
     & Medicaid is the state-federal program for the poor.  Originally part of Lyndon Johnson's 1965 Bill, eligibility and services vary by state.  Medicaid currently pays less for care than Medicare, resulting in many care providers refusing to participate in the program.  Less than 10 percent of Medicaid recipients, those in long-term care including nursing homes where 64% are dependent on Medicaid, use one-third of all Medicaid spending which is a problem.  The ACA's Medicaid expansion program, made state optional by the SCOTUS decision, was initially taken up by fifty percent of states.  As of 2016 it covers 70 million Americans at a federal cost of $350 billion a year.  In 2017 it pays for 40% of new US births. 
    (CHIP is:
    • The Children's Health Insurance Program started in 1997 as part of the BBA as SCHIP.  It provides health insurance coverage for children in families with income below 200 percent of the poverty line.  The coverage is focused on care specialized for children including: developmental delays, chronic conditions including asthma and obesity.  CHIP's funding must be iteratively re-authorized by Congress.  CHIP is financed federally, but states must enroll eligible children.  In many states one agency administers CHIP and Medicaid.  CHIP is leveraged by families that have employer based insurance with costly premiums, so the families only cover the adults.  
    • Clonal Hematopoiesis of Indeterminate Potential, where stem cells develop a somatic mutation cluster pair often found in leukemia, which is expressed in white blood cells they produce.  The mutation clusters give these stem cells a competitive advantage and they accumulate over time.  The white blood cells form inflammatory plaques.  CHIP increases with age, increasing the risk of dying, of clot fragment induced heart attacks and stroke, over the subsequent 10 years by 54%
    ) with support from subsidies for poor patients.  Hospital readmissions are financially penalized.  Hospital-acquired conditions is Hospital-Acquired Condition.   are financially penalized is CMS's HAC reduction program, authorized by section 3008 of the ACA, it is a part of pay-for-performance.  .  The amount of care requested by patients is constrained by network reach, premium prices, deductibles & copayments is a fixed payment for a covered service after any deductible has been met.  It is a key strategy of the ACA to make subscribers aware of the costs of treatment and to put pressure on high cost health services.  As such suppliers and providers are keen to undermine the copayment: value based health insurance, Paying the copayment (Oct 2015), Place on the USPSTF list of preventative services (Sep 2016);
    .  
  2. Mandated is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
    • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
      • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
      • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
      • Children, allowed to, stay on their parents insurance until 26 years of age. 
    • Medicare solvency improvements. 
    • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
    • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
    • Medical home models.  
    • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
    • Qualifications for ACOs.  Organizations must:
      • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
      • Participate in the MSSP for three or more years. 
      • Have a management structure. 
      • Have clinical and administrative systems. 
      • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
      • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
      • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
      • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
    • CMMI Medicare payment experimentation.  
    • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
    • A requirement that chain restaurants must report calorie counts on their menus. 
    health insurance coverage to provide a mostly healthy premium base to the insurance companies.  Subsidies to insurers that initially have a relatively unhealthy insurance pool.  
  3. Taxes gathered from the rich to fund the payments 

The MACRA is Medicare Access and CHIP Reauthorization Act of 2015 is designed to encourage physicians to move to FFV and to link Medicare payment to quality & value.  It alters the way Medicare pays for part B physician services encouraging physicians and other ECs to conform to one of two value based payment schemes: Advanced APMs (where the EC can become a QP) or MIPS.  MACRA does not apply to hospitals which have their own meaningful use.  MACRA is designed to promote transformation and includes: Data reporting by ECs, New practice models, Changing clinical standards, and Physician evaluations; with hundreds of millions of dollars in penalties and bonuses.  It authorizes CMS to develop and deploy new rules.  It provides for PCPs in PCMHs to qualify as advanced APMs via a special lower risk pathway.  It replaced the problematic physician SGR formula. 
is a bipartisan law that continues the payment based pressure to shift from FFS is fee-for-service payment.  For health care providers the high profits were made in hospitalizations, imaging and surgery.  Due to its inducing excessive treatment activity it may be replaced by FFV bundled payment.   to FFV is fee-for-value payment.  It may be a bundled payment for a set of services provided by a group of doctors and facilities, or full capitation.  In each case the risk has shifted from the payer to the providers of care. 
encouraging physicians to focus on appropriate, high quality & cost effective care and keeping subscribers well.  It reinforces the use of ACO is an Accountable Care Organization. These are accredited bundles of companies which together try to offer Dartmouth-Hitchcock like business models (Dec 2015, Sep 2016) focused on wellness, improving the provision of primary care to a large group of Medicare patients, and rewarding doctors for preventing problems.  Advocate health illustrates the idea.  Robert Pearl notes that the transition is difficult: hospitals that find their efficiency improving should reduce the number of doctors they utilize.  But any doctors that are pushed out of the ACO will likely take their patients with them, undermining the revenues that support the FFV business.  The ACA regulates qualification to be a Medicare ACO.  Individual organizations within a Medicare shared savings ACO continue to submit their own claims and are paid by Medicare for FFS.  But the ACO is eligible for shared savings.  Within the shared savings program the CMS innovation center has setup advanced payment ACOs.  As an alternative to shared savings, in a Pioneer ACO, over time 50% of the FFS payments flow directly to the ACO as a bundled payment.  CMS has established quality measures for ACOs for Medicare.  The CMS program's purpose is to reward providers for reducing total cost of care for patients through prevention, disease management, and coordination. 
  • CMS initiated its Physician Group Practice Demonstration in 2005.  By 2008 the congressional budget office reported on Bonus-eligible organizations. 
  • CMS defines ACOs as organizations that "create incentives for health care providers to work together to treat an individual patient across care settings - including doctors' offices, hospitals and long-term care facilities."
  • CMS has developed APMs which include ACOs, and advanced APMs where the ACOs must be risk bearing. 
  • CMMI accepts providers' proposals to test various payment systems including shared savings and partial capitation.  
  • Private market ACOs have formed including: Providence Health & Services, Blue Shield California, Anthem Blue Cross, United Health Care, BCBS Minnesota, BCBS Illinois, Humana, CIGNA, Main Health Management Coalition, BCBS Massachusetts, Aetna.  
s and bundled payments is where the purchaser disburses a single predefined payment to cover certain combinations of hospital, physician, post-acute, or other services performed during an episode of care relating to a particular condition (unlike capitation).  This bundling is assumed (Sep 2018) to allow the value delivery system to optimize around low cost high quality long term health care.  With one bundled payment physicians & hospitals must coordinate care and reduce the unit costs to remain profitable.  And to avoid taking on risk of expensive complications physicians & hospitals are incented to standardize and focus on quality.  This optimization is dependent on quantifying the value of the outcome of the episode of care.  Previously FFS payments induced excessive treatment activity.  Bundled payment is included in CMS ACE demonstrations and BPCI initiatives.  There are significant impacts on IT. 
  1. It is argued that effective pricing of the bundle requires marketing data which must be extracted from the historic transaction base.  
  2. Billing and payment systems must be updated to handle the receipt and distribution of the bundled payments. 
  3. Care delivery must be re-architected to reduce costs and improve quality. 
  4. Monitoring sensors can be used to feed reports to ensure re-architected operations conform.  
. 

In 2016 CMS is the centers for Medicare and Medicaid services.   announced a mandated bundled-payment initiative for CABG refers to Coronary artery bypass grafting, a treatment provided by cardiac surgeons.  Lower cost angioplasty has disrupted this business but both have been provided by general hospitals.  Christensen argues angioplasty should be part of a radically lower cost business which should disrupt the solution business of the general hospital.  s & AMI is acute myocardial infarction which means that some of the heart muscle has died from a blocked blood supply.  AMI is hard to measure.  Nanosensors offer a possibility (May 2016).   s.  Along with MACRA the impact on cardiovascular services is significant. 
Payer types
Historically, the US health network had four distinct types of payer is a hospital's specific mixture of the four different types of payer:
  • From the 1930s the insurers Blue Cross and Blue Shield catalyzed health care activity by paying a daily per diem to hospitals for the diagnoses and treatments the hospital's dispensed.  At their inception in 1966 Medicare and Medicaid followed this reimbursement model. 
  • From 1983 Medicare and Medicaid switched to the PPS reimbursement mechanism.  This forced alignment of the supplier, diagnosis, treatment, billing and reimbursement processes.  The health care network is still structurally aligned around PPS.  Under scrutiny of ProPAC and its successor MedPAC,  as well as pressure of the BBA after 1997, the payments per DRG have been steadily reduced until it was below the cost of care, forcing hospitals to seek margin from their other payers.  Medicare outlier payments benefited hospitals that inflated charges and thus became eligible. 
  • Employers as they experienced cost shifting from the hospital's increased product charges moved their employees over to managed care based payment. 
  • Private payers pay hospitals directly for their diagnosis and treatment.  Typically this group has little power.  There are default rates for private payers - typically 40% of billed charges that are not covered by a fixed payment or a fee schedule.  For the uninsured poor until 2004 they obtained little discount on the hospital's chargemaster list price, because insurers and CMS required to be charged the lowest value offered to any patients.  Medicare has now relaxed this constraint. 
. The evolved payment structure encouraged hospitals to use the 'shop' business model. 

Now the ACA is pushing hospitals towards FFV is fee-for-value payment.  It may be a bundled payment for a set of services provided by a group of doctors and facilities, or full capitation.  In each case the risk has shifted from the payer to the providers of care. 
.  Unfortunately the option to change insurer each year distorts the payer's include four types:
  • From the 1930s the insurers Blue Cross and Blue Shield catalyzed health care activity by paying a daily per diem to hospitals for the diagnoses and treatments the hospital's dispensed.  At their inception in 1966 Medicare and Medicaid followed this reimbursement model. 
  • From 1983 Medicare and Medicaid switched to the PPS reimbursement mechanism.  This forced alignment of the supplier, diagnosis, treatment, billing and reimbursement processes.  The health care network is still structurally aligned around PPS.  Under scrutiny of ProPAC and its successor MedPAC,  as well as pressure of the BBA after 1997, the payments per DRG have been steadily reduced until it was below the cost of care, forcing hospitals to seek margin from their other payers.  Medicare outlier payments benefited hospitals that inflated charges and thus became eligible. 
  • Employers as they experienced cost shifting from the hospital's increased product charges moved their employees over to managed care based payment. 
  • Private payers pay hospitals directly for their diagnosis and treatment.  Typically this group has little power.  There are default rates for private payers - typically 40% of billed charges that are not covered by a fixed payment or a fee schedule.  For the uninsured poor until 2004 they obtained little discount on the hospital's chargemaster list price, because insurers and CMS required to be charged the lowest value offered to any patients.  Medicare has now relaxed this constraint. 
incentives towards the short term.  However, Intermountain has developed a novel approach that encourages long term contracting with its health plan SelectHealth (share). 


The scale and scope of government based payers: Medicare is a social insurance program that guarantees access to health insurance for Americans aged 65 and over, and younger people with disabilities and end stage renal disease or ALS.  Medicare is currently missing a cap on out-of-pocket costs and direct prescription drug coverage.  It includes:
  • Benefits
    • Part A: Hospital inpatient insurance.  As of Dec 2013 Medicare pays for home care in only limited circumstances, such as when a person needs temporary nursing care after a hospitalization.  Part A covers 20 days of inpatient rehabilitation at a SNF after discharge from inpatient care at a hospital. 
    • Part B: Medical insurance for non-hospital services including: doctor visits, tests, injectable drugs, ambulances, physical therapy;
    • Part C: Medicare Advantage 
    • Part D: indirect prescription drug coverage The MMA prohibits Medicare from directly negotiating drug prices. 
  • Eligibility
    • All persons 65 years of age or older who are legal residents for at least 5 years.  If they or a spouse have paid Medicare taxes for 10 years the Medicare part A payments are waived.  Medicare is legislated to become the primary health plan. 
    • Persons under 65 with disabilities who receive SSDI. 
    • Persons with specific medical conditions:
      • Have end stage renal disease or need a kidney transplant. 
      • They have ALS. 
    • Some beneficiaries are dual eligible. 
    • Part A requires the person has been admitted as an inpatient at a hospital.  This is constrained by a rule that they stay for three days after admission.  
  • Sign-up
    • Part A has automatic sign-up if the person is drawing social security.  Otherwise the person must sign-up for Part A and Part B. 
    • Should sign-up for Part B during the Initial Enrollment Period, of seven months centered around 65th birthday, online or at a social security office.  But if still covered by spouse's insurance or not yet retired then may only join during the 3 month general enrollment period (January to March) each year, with coverage initiated the following July.  Incremental yearly 10% penalties apply for not signing up at 65.  These penalties apply to all subsequent premiums. 
  • Premiums
    • Part A premium
    • Part B insurance premium
    • Part C & D premiums are set by the commercial insurer.  
 and Medicaid is the state-federal program for the poor.  Originally part of Lyndon Johnson's 1965 Bill, eligibility and services vary by state.  Medicaid currently pays less for care than Medicare, resulting in many care providers refusing to participate in the program.  Less than 10 percent of Medicaid recipients, those in long-term care including nursing homes where 64% are dependent on Medicaid, use one-third of all Medicaid spending which is a problem.  The ACA's Medicaid expansion program, made state optional by the SCOTUS decision, was initially taken up by fifty percent of states.  As of 2016 it covers 70 million Americans at a federal cost of $350 billion a year.  In 2017 it pays for 40% of new US births. 
; ensure they have considerable influence. 
The participation of states in Medicaid funding ensures a keen interest in cost containment.  States ensure diversity in the strategies used:

State & local government provide a promise of retirement to their major sets of employees: Teachers, Nurses, Police, Fire; a difficult guarantee to keep.  They often leverage a focused organization: CalPERS; to manage the funding stream to match the promise.  This stream has become increasingly stressed:

As the gap in pension funding has expanded, the states, insurance companies and pension managers have increasingly used leveraged finance based on investments by large private equity is the pooling of commitments from fund investors, to: buy assets that are not publicly traded: companies, real estate, and debt; improve their acquisition's value and sell them again, returning the sale cash to the fund investors.  Private equity companies gain competitive advantage from being lightly regulated, and wealth from the fees and special tax privileges.  Private equity companies were initially corporate raiders. 
firms - who are investing in housing & infrastructure including hospitals:

The health insurers have been transformed by the ACA:

Employment related health insurance is problematic because less people will be covered during a major downturn's layoffs.  The large employers: Alphabet, GE, Honeywell, IBM, UPS, Wal-Mart; have succeeded in shifting health care costs to their employees, as they explore ways to improve the management of capital and efficiency and effectiveness of the health care services their employees use and lifestyles:

People without health insurance are mostly in a weak position when they have to pay for health care:

Payer goals
The payers include four types:
  • From the 1930s the insurers Blue Cross and Blue Shield catalyzed health care activity by paying a daily per diem to hospitals for the diagnoses and treatments the hospital's dispensed.  At their inception in 1966 Medicare and Medicaid followed this reimbursement model. 
  • From 1983 Medicare and Medicaid switched to the PPS reimbursement mechanism.  This forced alignment of the supplier, diagnosis, treatment, billing and reimbursement processes.  The health care network is still structurally aligned around PPS.  Under scrutiny of ProPAC and its successor MedPAC,  as well as pressure of the BBA after 1997, the payments per DRG have been steadily reduced until it was below the cost of care, forcing hospitals to seek margin from their other payers.  Medicare outlier payments benefited hospitals that inflated charges and thus became eligible. 
  • Employers as they experienced cost shifting from the hospital's increased product charges moved their employees over to managed care based payment. 
  • Private payers pay hospitals directly for their diagnosis and treatment.  Typically this group has little power.  There are default rates for private payers - typically 40% of billed charges that are not covered by a fixed payment or a fee schedule.  For the uninsured poor until 2004 they obtained little discount on the hospital's chargemaster list price, because insurers and CMS required to be charged the lowest value offered to any patients.  Medicare has now relaxed this constraint. 
must transform subscription revenue into:
  • A base of subscribers with improving health,
  • Contracts with health care providers who the subscriber's value
  • Infrastructure for operating the company and
  • A stream of profits if for profit
The subscriptions are mainly based on yearly contracts in 2015.   That is a poor match to the long term: chronic problems and wellness strategies; of the subscriber pool that are increasingly important contriibutors to the payers cost base. 

Intermountain's SelectHealth Share replaces the problematic yearly contracts. 

UHG's strategy develops a new network structure that addresses these mismatches:
  • Abelson sees UHC migrating from a health insurer to a diversified health services company.  The strategic extension of its Optum group is in line with this. 

Anthem has similarly extended from insurance into integrated health care, with its ownership of CareMore. 

CMS is the centers for Medicare and Medicaid services.  's CMMI is the center for Medicare and Medicaid Innovation.  It is a test bed for new ways of financing and delivering care.  It allowed Congress to institutionalize innovation sending a signal to providers that they would be participating in CMS driven programs that could become mainstream.  It funds evaluations of innovative health care models.  Under the ACA if the HHS secretary finds any of its projects would reduce Medicare spending without harming the quality of care the projects may be expanded nationwide.  The CBO estimates the CMMI will save $34 billion between 2016 and 2026.  CMMI projects include:
  • Medicare will make a bundled payment for hip and knee replacement surgery (CJR) and 90 days of follow-up care forcing hospitals to work closely with doctors, nursing homes and home health agencies.  
  • New ways to pay for prescription drugs, medical devices, cancer care (OCM).  
  • HHS secretary has invoked his 3021 authority to institute DPP. 
encourages experimental bundled payment is where the purchaser disburses a single predefined payment to cover certain combinations of hospital, physician, post-acute, or other services performed during an episode of care relating to a particular condition (unlike capitation).  This bundling is assumed (Sep 2018) to allow the value delivery system to optimize around low cost high quality long term health care.  With one bundled payment physicians & hospitals must coordinate care and reduce the unit costs to remain profitable.  And to avoid taking on risk of expensive complications physicians & hospitals are incented to standardize and focus on quality.  This optimization is dependent on quantifying the value of the outcome of the episode of care.  Previously FFS payments induced excessive treatment activity.  Bundled payment is included in CMS ACE demonstrations and BPCI initiatives.  There are significant impacts on IT. 
  1. It is argued that effective pricing of the bundle requires marketing data which must be extracted from the historic transaction base.  
  2. Billing and payment systems must be updated to handle the receipt and distribution of the bundled payments. 
  3. Care delivery must be re-architected to reduce costs and improve quality. 
  4. Monitoring sensors can be used to feed reports to ensure re-architected operations conform.  
 structures to form between care operations, doctors and patients. 

Aetna's acquisition by CVS links the payer to community based sites of care. 

Population goals
The population needs:



The current US system performs poorly relative to these goals

Payers include four types:
  • From the 1930s the insurers Blue Cross and Blue Shield catalyzed health care activity by paying a daily per diem to hospitals for the diagnoses and treatments the hospital's dispensed.  At their inception in 1966 Medicare and Medicaid followed this reimbursement model. 
  • From 1983 Medicare and Medicaid switched to the PPS reimbursement mechanism.  This forced alignment of the supplier, diagnosis, treatment, billing and reimbursement processes.  The health care network is still structurally aligned around PPS.  Under scrutiny of ProPAC and its successor MedPAC,  as well as pressure of the BBA after 1997, the payments per DRG have been steadily reduced until it was below the cost of care, forcing hospitals to seek margin from their other payers.  Medicare outlier payments benefited hospitals that inflated charges and thus became eligible. 
  • Employers as they experienced cost shifting from the hospital's increased product charges moved their employees over to managed care based payment. 
  • Private payers pay hospitals directly for their diagnosis and treatment.  Typically this group has little power.  There are default rates for private payers - typically 40% of billed charges that are not covered by a fixed payment or a fee schedule.  For the uninsured poor until 2004 they obtained little discount on the hospital's chargemaster list price, because insurers and CMS required to be charged the lowest value offered to any patients.  Medicare has now relaxed this constraint. 
are a key part of the US health system. 

The ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
    • Children, allowed to, stay on their parents insurance until 26 years of age. 
  • Medicare solvency improvements. 
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
  • Qualifications for ACOs.  Organizations must:
    • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    • Participate in the MSSP for three or more years. 
    • Have a management structure. 
    • Have clinical and administrative systems. 
    • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
    • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
  • A requirement that chain restaurants must report calorie counts on their menus. 
encourages them to associate effectively with providers and to help their health plan members to become more healthy.  The idea stems from the Dartmouth Institutes advocacy of Grand Junction, Colarado's risk oriented health care network organization (Dec 2015).  To have any hope of understanding how to manage risk, payers such as UPMC's Pittsburgh Health Plan are developing predictive health analytics aims to improve patients' healthcare outcomes and contain costs by using modeling technology integrating lifestyle information with patient data and modeling healthcare outcomes.  At the population level the hope is to create a total view by combining and structuring big data.  Then by segmenting the data at the cohort and patient level by risk, interventions and programs tailored to each person can be designed, supported by integrated care coordination.  A Shewhart cycle is then used to iteratively learn and optimize the process.   models. 

The US health system supports screening, diagnosis and treatment processes.  Each activity must be paid for. 

Screening
Screening is an adaptive in evolutionary biology is a trait that increased the number of surviving offspring in an organism's ancestral lineage.  Holland argues: complex adaptive systems (CAS) adapt due to the influence of schematic strings on agents.  Evolution indicates fitness when an organism survives and reproduces.  For his genetic algorithm, Holland separated the adaptive process into credit assignment and rule discovery.  He assigned a strength to each of the rules (alternate hypothesis) used by his artificial agents, by credit assignment - each accepted message being paid for by the recipient, increasing the sender agent's rule's strength (implicit modeling) and reducing the recipient's.  When an agent achieved an explicit goal they obtained a final reward.  Rule discovery used the genetic algorithm to select strong rule schemas from a pair of agents to be included in the next generation, with crossing over and mutation applied, and the resulting schematic strategies used to replace weaker schemas.  The crossing over genetic operator is unlikely to break up a short schematic sequence that provides a building block retained because of its 'fitness';  In Deacon's conception of evolution, an adaptation is the realization of a set of constraints on candidate mechanisms, and so long as these constraints are maintained, other features are arbitrary. 
process which induces key amplifiers within the health care network. 
Diagnosis
Each health problem processed by the US system is diagnosed (Francis Collin's vision, Issues: Sep 2015, Oct 2015, Aug 2016), consequently being labelled with a diagnosis code (ICD is the International Classification of Diseases diagnosis codes which doctors must specify and associate with a correct CPT procedure code to have treatment accepted and reimbursed.  ICD is mainly focused on billing.  Methodological issues (Jun 2018) are driving a shift to precision medicine. 
).  After postponing the deadline twice for using ICD-10 is the 2009 iteration of the ICD.  ICD is mainly focused on billing.  ICD-10 allows for greater specificity which is assumed to translate into lower rejection rates, easier audit compliance, and better data mining.  ICD is seen as less rich as a representation for clinical record keeping than SNOMED-CT which becomes a concern if the EHR standards force ICD-9 codes to be the required but insufficient representation of a medical procedure.   it is now 1 Oct 2015. 

Treatment
Treatments are proposed based on the diagnosis.  Treatment transaction codes (CPT the AMA specified procedure treatment codes for medical and psychiatric procedures performed by physicians and surgeons used when billing for procedures.  The AMA operates a $70M business which develops the classifications in secret.  Doctors are not informed of changes.  Insurers 'bundle' and 'downcode' treatments that have been performed.  Potentially doctors may lose money on the overall treatment.  ) and descriptive codes (SNOMED-CT is the systematized nomenclature of Medicine Clinical Terms.  It is a systematically organized computer oriented set of codes, terms, synonyms and definitions covering diseases, findings, procedures, microorganisms, substances.  It is useful in organizing medical records providing a systematic structure that helps reduce variability.  However, it is not as flexible for recording diagnosis as free text.  EHR standards prefer SNOMED-CT or ICD due to these being computer oriented codes.  ) are associated. 
Treatment will typically be associated with a bill for payment. 
The government and insurance companies require that the diagnosis and treatment (services) are covered appropriately by a contract that agrees the fee for each service. 

Both insurers and the government agree with health care providers how much each service will cost.  

Brokers have acted as middlemen between small businesses and the health plans with offerings for their employees.  The ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
    • Children, allowed to, stay on their parents insurance until 26 years of age. 
  • Medicare solvency improvements. 
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
  • Qualifications for ACOs.  Organizations must:
    • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    • Participate in the MSSP for three or more years. 
    • Have a management structure. 
    • Have clinical and administrative systems. 
    • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
    • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
  • A requirement that chain restaurants must report calorie counts on their menus. 
is impacting this area.  Startups such as Zenefits are also active aiming to leverage network effects and using the broker fees to fund the business. 




Competition between the government, health plans and private payers


Developing a health insurance business in a newly entered state is challenging (2014). The ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
    • Children, allowed to, stay on their parents insurance until 26 years of age. 
  • Medicare solvency improvements. 
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
  • Qualifications for ACOs.  Organizations must:
    • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    • Participate in the MSSP for three or more years. 
    • Have a management structure. 
    • Have clinical and administrative systems. 
    • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
    • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
  • A requirement that chain restaurants must report calorie counts on their menus. 
provides opportunities for insurers to participate in muliple states which should help increase competition.  The key constraints on entry (Sep 2015) are financial and due to need to build network effects.  Insurers need to develop contracted networks of doctors and hospitals local to the consumer.  That takes time and leaves their offer weak while the network is limited.  And while the insurer lacks knowledge of the demographics they may need a capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty.  Capital includes: real property, financial capital and professional capital.  It is not immutable instead depending on the state of the society within which it exists.  It can be owned by governments (public capital) and private individuals (private capital).   cushion to handle losses from guessing wrong.  Some states have relatively young fit populations: Utah, Colorado.  But entering other states may imply large payouts in early years (Aug 2015).  The republican led congress had also reduced the budget for co-op startup by 60%.   The state insurance regulators have ensured orderly winding up of the failing co-ops (Nov 2015);

Hospitals are presented with a dilemma when they classify care.  Payers include four types:
  • From the 1930s the insurers Blue Cross and Blue Shield catalyzed health care activity by paying a daily per diem to hospitals for the diagnoses and treatments the hospital's dispensed.  At their inception in 1966 Medicare and Medicaid followed this reimbursement model. 
  • From 1983 Medicare and Medicaid switched to the PPS reimbursement mechanism.  This forced alignment of the supplier, diagnosis, treatment, billing and reimbursement processes.  The health care network is still structurally aligned around PPS.  Under scrutiny of ProPAC and its successor MedPAC,  as well as pressure of the BBA after 1997, the payments per DRG have been steadily reduced until it was below the cost of care, forcing hospitals to seek margin from their other payers.  Medicare outlier payments benefited hospitals that inflated charges and thus became eligible. 
  • Employers as they experienced cost shifting from the hospital's increased product charges moved their employees over to managed care based payment. 
  • Private payers pay hospitals directly for their diagnosis and treatment.  Typically this group has little power.  There are default rates for private payers - typically 40% of billed charges that are not covered by a fixed payment or a fee schedule.  For the uninsured poor until 2004 they obtained little discount on the hospital's chargemaster list price, because insurers and CMS required to be charged the lowest value offered to any patients.  Medicare has now relaxed this constraint. 
check the classifications and downcode is where a cheaper 'equivalent treatment' is payed for in response to an insurers being charged for a provided treatment.   or refuse to pay for certain care activities.  Regulation allows CMS is the centers for Medicare and Medicaid services.   to audit (RAC is recovery audit contractor program created by the MMA of 2003.  It is intended to identify and recover invalid FFS Medicare claims payments.  ) and punish hospitals who mis-classify care. 

BCBS of massachusetts has developed an alternative quality contract (AQC) is:
  • A 2009 payment arrangement developed by Blue Cross Blue Shield of Massachusetts.  It was developed to support change.  It differs from capitation in including upside measures for patient safety, appropriateness of care and patient satisfaction.  Its key components are:
    • Integration across the care continuum
    • Accountability for performance measures for ambulatory and inpatient care.  Includes a 10% incentive for performing. 
      • Performance measures are selected that are: Nationally accepted, Vary across providers, Include sufficient data on provider being measured, measured at the level that can influence the outcome. 
    • Global payment for all medical services with health status adjustment and with margin retention. 
    • Five year contract to create a sustained partnership 
 to replace capitation is a global payment for all care for a patient during a specified time period.  It forces the provider of care to take a high risk.  Managing the risk implies successful population health management. 
and so encourage providers to accept FFV is fee-for-value payment.  It may be a bundled payment for a set of services provided by a group of doctors and facilities, or full capitation.  In each case the risk has shifted from the payer to the providers of care. 
based care delivery. 

Consultants provide hospitals with advice on how to maximize the revenue from optimized classification and appeals of Medicare billing.  Large Insurers (UHC's Optum) have purchased their way in to this consulting area (OptumInsight purchased Executive Health Resources).  But UHC also provides private Medicare Advantage (MA) is a private provider administered health insurance plan providing access to Medicare benefits.  It was originally enacted as part of BBA Medicare + Choice or Part C plans.  The government funded the plan with an annual fee, based on age and severity of the subscriber's medical conditions, rather than FFS.  When a Medicare eligible person enrolls in a MA plan the government pays the private provider a set amount each month.  The participant pays the Medicare part B premium and if required a part C premium each month.  The MA plans offer a PCP who coordinates care.  And the plans have an annual limit on out-of-pocket expenses unlike traditional Medicare.  When they obtain treatment they will have to pay a copayment which may be quite high for some specialists.  It is the health plan's responsibility to contract the physician network that will provide the care, leaving the risk with the insurer.  About 36% of Medicare beneficiaries are enrolled with Medicare Advantage by 2019.  The ACA introduced quality outcome and patient satisfaction based differential payments into MA.  To measure the performance it added a five-star quality rating scheme.  MA plans report their quality and patient satisfaction data to CMS annually and based on the results are awarded one to five stars.  The highest rated plans are provided with large additional payments.  It was assumed that subscribers would shift to the highest rated plans and the other plans would improve or drop out of MA.  And the ACA eliminated subsidies which the federal government used to establish Medicare Advantage.  However, the Obama administration has used a $8.5 Billion demonstration project to maintain this funding.  It is intended that it will eventually taper off so that the cost of Medicare Advantage coverage will be equivalent to standard Medicare. 
plans and argues that is provides quality care at a lower cost which introduces a conflict of interest with its work for HHS is the U.S. Department of Health and Human Services.  .  And Optum is a main HealthCare.gov contractor. 

Pressure for narrow networks

Insurers (Wellpoint for example) should benefit from narrow networks - When all health insurance plans are comparable on line people are expected to choose narrower less costly plans.  This has the effect of encouraging providers and PCP to compete to be part of the narrow plan by reducing their charges and driving down the prices of the plans.  By limiting the number of providers/doctors offered in the plans the few that are included should get more business.  Across the US in 2015 39% of health plans offered in public exchanges are narrow (30 - 70% of areas providers) or ultra-narrow (30% or less of providers).  In large cities narrow networks are even more common.  Typically if consumers go outside of the choices offered in their narrow network they will be responsible for the high bills.  There are problems induced by narrow network constraints:
  • Queuing issues - while a surgeon and a hospital may be in-network other agents in an operation, such as anesthesiologists or anesthetists, may not have the same set of insurance contracts.  Even if a subset do, once these are allocated to a task the hospital must then manage a complex set of resource constraints to keep its ORs running.  If it does this by ignoring the 'out of network' status of these necessary resources the patient will be impacted by a high bill.  
  • Success is more likely when the plan maintains a broad list of PCPs but a narrow list of specialists and hospitals (Oct 2016). 
increasing their power with providers.  The implementation of the ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
    • Children, allowed to, stay on their parents insurance until 26 years of age. 
  • Medicare solvency improvements. 
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
  • Qualifications for ACOs.  Organizations must:
    • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    • Participate in the MSSP for three or more years. 
    • Have a management structure. 
    • Have clinical and administrative systems. 
    • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
    • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
  • A requirement that chain restaurants must report calorie counts on their menus. 
drives consumers to join narrow networks. 

The ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
    • Children, allowed to, stay on their parents insurance until 26 years of age. 
  • Medicare solvency improvements. 
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
  • Qualifications for ACOs.  Organizations must:
    • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    • Participate in the MSSP for three or more years. 
    • Have a management structure. 
    • Have clinical and administrative systems. 
    • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
    • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
  • A requirement that chain restaurants must report calorie counts on their menus. 
mandates Americans take out health insurance.  As of 2013 insurance policies on the web site are hard to compare or assess for cost and coverage failure risk.  The mandates have forced a major shift in strategy at Wellpoint.  Both Anthem (was called Wellpoint) and Aetna are increasing their power by merging with other large health plans in 2015.  HHS is the U.S. Department of Health and Human Services.   2015 audit indicates that federal insurance cooperatives are losing money and may have difficulty repaying startup loans to the government. 
HHS is the U.S. Department of Health and Human Services.   research Jul 2015 found increased insurer competition on 'HealthCare.gov' reduced premiums.  California's health care exchange 'Covered California' announced 4% growth in insurance premiums for 2015.  This is far better than the 10-40% proposed by insurers participating in other exchanges.  Over the long term preventative savings may be illusionary (Aug 2015/May 2016).  The Obama administration is asking the states to limit the high premiums requested by insurers for 2016.  The five year trend from 2015 - 2015 in deductibles shows a major increase reducing the use of unnecessary care but probably also some necessary care. (Sep 2015)

The legislative drive to integrate the health care value delivery system into a continuum offers payers include four types:
  • From the 1930s the insurers Blue Cross and Blue Shield catalyzed health care activity by paying a daily per diem to hospitals for the diagnoses and treatments the hospital's dispensed.  At their inception in 1966 Medicare and Medicaid followed this reimbursement model. 
  • From 1983 Medicare and Medicaid switched to the PPS reimbursement mechanism.  This forced alignment of the supplier, diagnosis, treatment, billing and reimbursement processes.  The health care network is still structurally aligned around PPS.  Under scrutiny of ProPAC and its successor MedPAC,  as well as pressure of the BBA after 1997, the payments per DRG have been steadily reduced until it was below the cost of care, forcing hospitals to seek margin from their other payers.  Medicare outlier payments benefited hospitals that inflated charges and thus became eligible. 
  • Employers as they experienced cost shifting from the hospital's increased product charges moved their employees over to managed care based payment. 
  • Private payers pay hospitals directly for their diagnosis and treatment.  Typically this group has little power.  There are default rates for private payers - typically 40% of billed charges that are not covered by a fixed payment or a fee schedule.  For the uninsured poor until 2004 they obtained little discount on the hospital's chargemaster list price, because insurers and CMS required to be charged the lowest value offered to any patients.  Medicare has now relaxed this constraint. 
opportunities to push for lower cost strategies.  Potential cost of Medicaid is the state-federal program for the poor.  Originally part of Lyndon Johnson's 1965 Bill, eligibility and services vary by state.  Medicaid currently pays less for care than Medicare, resulting in many care providers refusing to participate in the program.  Less than 10 percent of Medicaid recipients, those in long-term care including nursing homes where 64% are dependent on Medicaid, use one-third of all Medicaid spending which is a problem.  The ACA's Medicaid expansion program, made state optional by the SCOTUS decision, was initially taken up by fifty percent of states.  As of 2016 it covers 70 million Americans at a federal cost of $350 billion a year.  In 2017 it pays for 40% of new US births. 
for aging baby boomers drives states' strategic shift to managed long-term care.  During discharge planning - have costly handoff problems reviewed by project BOOST.  When discharge takes too long it ties up acute bed space which can result in adding up to 30% more (unnecessary) capacity when improved discharge would translate into additional revenue.  Various interventions aim to improve the execution of the process including: CTI, TCN and RED for discharge to outpatient; InterAct for discharge to SNFs and BPIP to HHAs.  Discharge information can include:
  • Patient info
  • Behavioral summary
  • Treatment history
  • Medical history
  • Treatment objectives
  • Insurance policy
  • Discharge plans
 FFS is fee-for-service payment.  For health care providers the high profits were made in hospitalizations, imaging and surgery.  Due to its inducing excessive treatment activity it may be replaced by FFV bundled payment.   payers are incented to push for low cost PAC providers is a Post-Acute Care provider.  A three-day hospital admission and discharge are prerequisite requirements to receiving Medicare PAC services.  Acute care hospitals become portals to the PAC business.  Referrals are key.  PAC includes different types of facility focused on different severity of illness (high to low):
  • Long term care Hospital (LTCH),
  • Inpatient rehabilitation facility (IRF),
  • Skilled nursing facility (SNF),
  • Home health agency (HHA) - most acute care hospitals and EMR providers have strategies for integration with home based care,
  • Outpatient rehabilitation.  SNF and HHA represent 80% of discharges and expenditures.  Assisted living is not part of federal Medicaid, but states often include it through a waiver. 
. 

Individual users of the government health insurance exchanges have unknown medical histories and they include relatively unhealthy individuals who were blocked from health care coverage by prior legislation replaced by the ACA.  Required coverage means the insurers offering plans on the exchanges are taking on significant risk, illustrated by Oscar (Jun 2016).  This is a key area of conflict between Democrats and Republicans. 

US public corporations have far less need to offer health care incentives to capture and maintain staff.  They are shifting to reduce health care commitments.  For example U.P.S. pushed coverage of employed spouses onto their employer.  This will increase the complexity of treatment for families and will require effective addmitance RCM is either:
  • Restrictive cardiomyopathy, a rare disease where scar tissue makes the heart muscle rigid and reduces the efficiency.  Or
  • Revenue Cycle Management aligns treatment with reimbursement.  Customer service will be involved.  IT will architect the core billing, decision support and ad-hoc services, constructed by RCM vendors, into systems to support RCM.  The Hospital's central business office will aim to maximize cash recoveries.  As per Deming, mistakes in the RCM pipeline result in rework and lost cash flow and revenue of between 4 - 12%.  The staff must be trained and fully engaged in the design and operation of the pipeline.  The front end processes are best placed to capture all the information needed to make the cycle successful.  The activities include:
    • Scheduling and Appointments - where visits and procedures are booked and demographic and insurance information is collected.  If this information is incorrect it is likely the claims will not forward to third party payers.  When resources and their states are accurately known an optimal set of plans can be constructed to efficiently and effectively flow patients through the system.  But that is difficult to guarantee because of a number of interrelated problems:
      • Scale - as the number of resources increases the ability of a central scheduling system to represent all of them accurately and reliably becomes impossible. 
      • Ubiquity - a CAS strategy for ensuring availability is to have an over-abundance of equivalent resource that can be used for schedule allocation.  But often these resource levels are set by local decision makers who all respond at about the same time to imposed funding changes.  The effect is to suddenly and unpredictably undermine the guarantee of over-abundance.  Sometimes the assumption of equivalence also fails as in the desire of a patient to see only a specific surgeon. 
      • Changes can ripple through the plans requiring coordination meetings and notifications or guaranteed receipt of status updates. 
    • Verification checks for:
      • Referral - Is there PCP authorization?  Is the PCP referred service covered by the patient's plan,
      • Authorization - obtain Insurance authorization if required, and
      • Pre-certification - is there 'need' for inpatient care or other care before admission by the MCO.  Otherwise could introduce problems including not obtaining/verifying the insurance name, number and eligibility, not securing pre-certification and pre-authorization with time limits, not copying the insurance card, not checking for secondary coverage, not detecting expired referral or authorization,
    • Pre-registration - provide advice about their financial obligations and what documents to bring to the procedure.  If there is a copay or an outstanding payment to be paid these should be processed,
    • Registration - some patients are scheduled outside of the main admitting process (by OP clinic or E.D.) and this must be detected and the scheduling verification and pre-registration process be performed,
    • Time of service payments - co pays and self pays,
    • Coding - identify diagnosis (ICD 9 -> ICD-10 codes) and treatment (CPT) activities and charges for the episode.  More than 80% of hospital cases are coded in error. 
    • Demographics and billing data entry - enter charges and adjust capitated charges,
    • Patient statements - submit primary and secondary claims (following HIPAA formats) with or without involvement of a clearinghouse, produce patient statements including time of service, outstanding balance, charged amount with codes, insurance details, forms used (UB 92/04 and HCFA 1500).  A paper based claims filing has a rejection rate of 30%.  Duplicate claim payment rates of 1 - 2% of medical expenses are common.  Duplicate claims detection is often not part of the process.  Payer's goals are in conflict with Provider goals.  
    • Collections and payment posting - Post all payments and adjustments and deposit money into the bank,
    • Denials and appeals - resubmission and appeal of claims, denial analysis and bad debts and write offs.  To reduce denial rates and appeals the reimbursement contracts payer processes and actual denials must be analyzed and understood. 
    • Account follow up - Patient inquiries, resubmission of claims and issue refunds. 
    • Financial counseling;
 and ED is emergency department.  Pain is the main reason (75%) patients go to an E.D.  It has traditionally been part of an acute care hospital but recently is being deployed standalone as a catchment funnel to the owning hospital.  The EMTALA legislation requires E.D. treatment to stabilize every person seeking treatment by most hospitals.  Unreimbursed care is supported from federal government funds.  E. D. profitability has been helped by hospitals contracting with 3rd party companies who are able to improve margins through surprise billing.  The standalone E.D. competes with the positioning and brand power of lower cost urgent care clinics.  Commercial nature of care requires walk-ins to register to gain access to care.  With the focus on treatment of pain, E.D.s are a major distributor of opioids (5% of opioid prescriptions) and a major starting point of addiction in patients but are cutting back (Jun 2016). 
(AB1203 is an act that requires non-contracted general acute care hospitals (not E.D.) billing HMOs for post-stabilization services to on stabilization:
  • Seek the name and contact information of the patient's health care service plan
  • Call the plan
  • Upon request provide the patients diagnosis, and other information required by the plan so it can decide on authorizing post-stabilization care or require transfer of the patient. 
  • Request the patient's medical record from the health plan. 
  • The non-contracted health plan must
    • Be available 24/7 to respond to AB requests within 30 minutes.
    • Arrange for and effect transfer promptly. 
    • Pay for all authorized services, and for all services provided prior to transfer. 
, RAC is recovery audit contractor program created by the MMA of 2003.  It is intended to identify and recover invalid FFS Medicare claims payments.  ) processes at hospitals.  While private payer include four types:
  • From the 1930s the insurers Blue Cross and Blue Shield catalyzed health care activity by paying a daily per diem to hospitals for the diagnoses and treatments the hospital's dispensed.  At their inception in 1966 Medicare and Medicaid followed this reimbursement model. 
  • From 1983 Medicare and Medicaid switched to the PPS reimbursement mechanism.  This forced alignment of the supplier, diagnosis, treatment, billing and reimbursement processes.  The health care network is still structurally aligned around PPS.  Under scrutiny of ProPAC and its successor MedPAC,  as well as pressure of the BBA after 1997, the payments per DRG have been steadily reduced until it was below the cost of care, forcing hospitals to seek margin from their other payers.  Medicare outlier payments benefited hospitals that inflated charges and thus became eligible. 
  • Employers as they experienced cost shifting from the hospital's increased product charges moved their employees over to managed care based payment. 
  • Private payers pay hospitals directly for their diagnosis and treatment.  Typically this group has little power.  There are default rates for private payers - typically 40% of billed charges that are not covered by a fixed payment or a fee schedule.  For the uninsured poor until 2004 they obtained little discount on the hospital's chargemaster list price, because insurers and CMS required to be charged the lowest value offered to any patients.  Medicare has now relaxed this constraint. 
premiums are growing more slowly (4-5%) in 2013 they are still growing faster than wages (3%).  The 40% excise tax on cadillac plans will encourage further reductions in employer provided benefits (Jul 2015). 

HDHP is a high-deductible health plan which has lower premiums and a higher deductable than traditional health insurance plan such as a HMO plan or PPO plan. 
s and HSA is
  • An employee health savings account which uses a person's health score to calculate the costs of reimbursement and insurance coverage necessary to cope with expected medical costs.  HSAs are an expansion of MSAs that existed in 20 states since the 1990s.  HSAs were enacted as part of MPDIMA.  Each HSA has an insurance policy to handle the risk of catastrophic illness.  Policy holders can withdraw funds untaxed when they are used for paying eligible medical costs including: long-term-care insurance premiums and medical care during retirement.  Employer contributions can be diverted to increased insurance payments if the employee's actions result in a low health score.  HSAs are federally tied to HDHPs and can't be used with Medicare.  It is argued that HSAs are very useful to the wealthy as a tax shield.  The poor would depend on the catastrophic insurance limiting the financial impact of cancer treatment or major surgery.  Or it is a
  • Hospital service area - a local health care market for hospital care as used in the Dartmouth Atlas.  
s have been growing in use (Sep 2015), especially among the higher paid and older. 

Other key employers are initiating disruption of the general hospital.  Wal-Mart is shifting planned operations to centers of excellence.  General Electric is working directly with hospitals and physicians and encouraging the shift to PCMH is patient centered medical homes:
  • Describes a reorganization of the health care delivery system to focus on the patient and care giver supported by EHR infrastructure and some form of process management which will be necessary to coordinate interventions by each of the functional entities resources to treat the patients specific problems.   The disadvantage of a PCMH is the administrative and technology cost needed to support its complex processes.  The PCMH
  • Was promoted as a way to incent more PCP which had been seen as a low reward role by medical students.  HCI3 argues this use of PCMH is flawed.  PCMH is driven by the medical home models of the ACA.  In this model the PCMH is accountable for meeting the vast majority of each patients physical and mental health care needs including prevention and wellness, acute care, and chronic care.  It is focused on treating the whole person.  It is tasked with coordinating the care across all elements of the health care system, including transitions and building clear and open communications.  It must ensure extended access and availability of its services and patients preferences about access.  It must continuously improve quality by monitoring evidence-based medicine and clinical decision support tools (NCQA).  Many argue that to be effective it must be connected to a 'medical neighborhood'.  The PCMH brings together the specialized resources and infrastructure required to develop and iteratively maintain the care plans and population oriented system descriptions that are central to ACA care coordination. 
    •  
. 

Drug price increases are having significant effects

Specialty drug prices have been growing rapidly (> 10% per annum).  Amgen's Blincyto continues the trend in 2015.  PBM is pharmacy benefit manager.  These companies, such as Caremark, were often originally PPMs.  PBMs are used by payers, such as insurance plans, to manage drug provision from pharmacies to the payer's plans subscribers.  PBMs can constrain drug flow to the pharmacies: CVS, Rite-Aid, Walgreens; through the PBM's formularies. 
s (Express scripts, CVS Caremark, etc.) have started to exclude costly drugs with alternatives from their formularies.  As the PBMs become integrated into retail drug distribution companies they have the ability to block access to consumers.  Consequently CVS, Walgreens, Rite-Aid etc. have been expanding their drug distribution channel control to limit ways for drugs to flow around their control points.  It seems to be working for diabetes includes type 1 and type 2.  Common side effects include: increased heart disease, hypertension, kidney disease, vision loss, nerve damage, and infections. 
drugs (Oct 14).  Everyone is watching to see if the strategy will undermine the price of Gilead's Sovaldi (sofosbuvir) is Gilead Sciences hepatitis-C drug.  It is the first effective cure with acceptable side effects.  Sofosbuvir was originally developed by Pharmasset which sold the rights to Gilead for $11 billion.  In 2014 Sovaldi costs $84,000 for a typical course of treatment. 
.  The structure did force Gilead into steeper discounts (Sep 2015).  Drug companies have responded by paying the copayments is a fixed payment for a covered service after any deductible has been met.  It is a key strategy of the ACA to make subscribers aware of the costs of treatment and to put pressure on high cost health services.  As such suppliers and providers are keen to undermine the copayment: value based health insurance, Paying the copayment (Oct 2015), Place on the USPSTF list of preventative services (Sep 2016);
 to undermine the ACA is the Patient Protection and Affordable Care Act amended by the Health Care and Education Reconciliation Act of 2010 (Obama care).  In part it is designed to make the health care system costs grow slower.  It aims to do this by: increasing competition between insurers and providers, offering free preventative services to limit the development of serious illnesses, constraining patients' use of expensive services, constraining the growth of payments to Medicare providers and piloting new ways for PCPs to manage patient care to keep patients away from costly E.D.s.  It funds these changes with increased taxes on the wealthy.  It follows an architecture developed by Heritage Action's Butler, Moffit, Haislmaier extended by White House OMB health policy advisor Ezekiel Emanuel & architect Jeanne Lambrew.  The Obama administration drafting team included: Bob Kocher; allowing it to integrate ideas from: Dartmouth Institute's Elliot Fischer (ACO).  The ACA did not include a Medicare buy in (May 2016).  The law includes:
  • Alterations, in title I, to how health care is paid for and who is covered.  This has been altered to ensure
    • Americans with preexisting conditions get health insurance cover - buttressed by mandating community rating and
    • That they are constrained by the individual mandate to have insurance but the requirement was supported by subsidies for the poor (those with incomes between 100 & 400% of the federal poverty line).  
    • Children, allowed to, stay on their parents insurance until 26 years of age. 
  • Medicare solvency improvements. 
  • Medicaid expansion, in title II: to poor with incomes below 138% of the federal poverty line; an expansion which was subsequently constrained by the Supreme Court's ruling making expansion an optional state government decision. 
  • Hospital Readmissions Reduction Program (HRRP) which was enforced by CMS mandated rules finalized in 2011 and effected starting Oct 2012.  
  • Medical home models.  
  • Community transformation grants support the transformation of low income stressed neighborhoods to improve their lifestyles and health. 
  • Qualifications for ACOs.  Organizations must:
    • Establish a formal legal structure with shared governance which allows the ACO to distribute shared savings payments to participating providers and suppliers. 
    • Participate in the MSSP for three or more years. 
    • Have a management structure. 
    • Have clinical and administrative systems. 
    • Include enough PCPs to care for Medicare FFS patient population (> 5000) assigned to the ACO. 
    • Be accountable for the quality and cost of care provided to the Medicare FFS patient population. 
    • Have defined processes to promote: Evidence-based medicine, Patient-centeredness, Quality reporting, Cost management, Coordination of care; 
    • Demonstrate it meets HHS patient-centeredness criteria including use of patient and caregiver assessments and individualized care plans.  
  • CMMI Medicare payment experimentation.  
  • Requirements that pharmaceutical companies must report payments made to physicians (Sunshine Act). 
  • A requirement that chain restaurants must report calorie counts on their menus. 
use of direct contributions to provide the population with a direct signal, is an emergent capability which is used by cooperating agents to support coordination & rival agents to support control and dominance.  In eukaryotic cells signalling is used extensively.  A signal interacts with the exposed region of a receptor molecule inducing it to change shape to an activated form.  Chains of enzymes interact with the activated receptor relaying, amplifying and responding to the signal to change the state of the cell.  Many of the signalling pathways pass through the nuclear membrane and interact with the DNA to change its state.  Enzymes sensitive to the changes induced in the DNA then start to operate generating actions including sending further signals.  Cell signalling is reviewed by Helmreich.  Signalling is a fundamental aspect of CAS theory and is discussed from the abstract CAS perspective in signals and sensors.  In AWF the eukaryotic signalling architecture has been abstracted in a codelet based implementation.  To be credible signals must be hard to fake.  To be effective they must be easily detected by the target recipient.  To be efficient they are low cost to produce and destroy. 
of the benefits and costs (Oct 2015). 

State governments are also interested in controlling the cost of Sovaldi.  Their yearly balanced budget requirement is threatened by Sovaldi's treatment model (just a few months) and pricing.  Congress is responding (Jul 2015). 

Drug price increases and regulatory changes have pushed independent oncologists to affiliate with hospitals.  Oncologists have responded by releasing a framework for evaluating cancer is the out-of-control growth of cells, which have stopped obeying their cooperative schematic planning and signalling infrastructure.  It results from compounded: oncogene, tumor suppressor, DNA caretaker; mutations in the DNA.  In 2010 one third of Americans are likely to die of cancer.  Cell division rates did not predict likelihood of cancer.  Viral infections are associated.  Radiation and carcinogen exposure are associated.  Lifestyle impacts the likelihood of cancer occurring: Drinking alcohol to excess, lack of exercise, Obesity, Smoking, More sun than your evolved melanin protection level; all significantly increase the risk of cancer occurring (Jul 2016). 
drugs on benefit and price (Jun 2015). 

Medication spending may only be 10% of health spending in the US but increases in drug prices have an outsize effect on patients because:

































































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