UnitedHealth Premium® Designation Program

The UnitedHealth Premium® physician designation program uses evidence-based, medical society, and national industry standards to recognize physicians for providing quality and cost efficient care.

The following designation results are displayed publicly in UnitedHealthcare’s physician directories (e.g., myuhc.com) to support informed decision-making by members when making health care choices and by physicians when making referrals.

Designation information is as follows:

• Quality & Cost Efficiency
• Cost Efficiency & Not Enough Data to Assess Quality
• Quality & Not Enough Data to Assess Cost Efficiency
• Quality & Did Not Meet Cost Efficiency
• Not Enough Data to Assess Quality & Did Not Meet Cost Efficiency
• Not Enough Data to Assess
• Not Evaluated
• Did Not Meet Quality & Cost Efficiency

Innovative Benefit Plan Designs

In addition, employers may offer health benefit programs (e.g., reduced cost-sharing or tiered benefit programs) that provide benefit incentives for members to use UnitedHealth Premium Tier 1 physicians.

Members in health plans that offer tiered benefits may pay lower co-pays and co-insurance amounts for services provided by UnitedHealth Premium Tier 1 physicians.

UnitedHealth Premium Tier 1 physicians have received one of the following Premium designations:

• Quality & Cost Efficiency
• Cost Efficiency & Not Enough Data to Assess Quality

https://www.unitedhealthcareonline.com/b2c/CmaAction.do?channelId=a7b0465138a17210VgnVCM1000002f10b10a____

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UnitedHealth Premium® Physician Designation Program

Summary Methodology

The UnitedHealth Premium physician designation program uses clinical information from health care claims and other sources to assist physicians in their continuous practice improvement and to help consumers make more informed and personally appropriate choices for their medical care.

Evaluation for quality compares a physician’s observed practice to the UnitedHealthcare national rate among other physicians who are responsible for the same interventions. Cost efficiency is assessed by comparing the case-mix adjusted cost of care attributed to the physician to a benchmark and applying a statistical test to determine if the difference is statistically significant.

Quality is the fundamental measurement, demonstrating our commitment to evidence-based practice. The quality designation is separate from the cost efficiency designation. Although the quality and cost efficiency evaluations are performed separately, the results are used together to determine the physician’s designation.

Physicians who meet both the quality and cost efficiency designation criteria will receive the quality and cost efficiency designation. Physicians who meet the quality designation criteria will receive the quality designation regardless of their cost efficiency evaluation. Physicians who meet the cost efficiency designation criteria will receive the cost efficiency designation if they do not have enough data to assess quality.

Quality Assessment

A physician’s quality individual outcome is determined by comparing the number of times his/her patients received recommended care with a benchmark number based on the UnitedHealthcare national rate of the same recommended care for each quality measure.

Cost Efficiency Assessment

Episode cost measurement compares a physician’s observed costs for episodes of care to a peer group’s costs for similar episodes of care, with adjustments for the patient’s severity of illness and the physician’s case mix.

For both episode cost and population cost measurement, the physician’s costs within each set are evaluated against their peer group’s costs by ordering the costs from lowest to highest cost. The costs are converted into percentiles to allow comparison across different types of cases or patients.

Physicians’ costs must be statistically significantly lower than the peer group’s physicians at the 75th percentile performance for all physicians (measured in the same specialty for the same types of episodes in the same geographic area) in order to meet the episode cost measurement criteria.

UnitedHealthcare informs members that designations are intended only as a guide when choosing a physician and should not be the sole factor in selecting a physician. As with all programs that evaluate performance based on analysis of a sample, there is a risk of error.

https://www.unitedhealthcareonline.com/ccmcontent/ProviderII/UHC/en-US/Assets/ProviderStaticFiles/ProviderStaticFilesPdf/Unitedhealth%20Premium/UnitedHealth_Premium_Summary_Methodology_2013-2014.pdf

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Comment:

By Don McCanne, MD

The perennial promise of private health insurers is that their insurance products would bring us higher quality care at lower cost, even though there is a paucity of evidence to support such claims. UnitedHealth now claims to be serious about delivering on that promise with their new Premium Physician Designation Program. They say that “quality is the fundamental measurement.” But let’s sort through their program description to see what the truth really is.

You can consult the websites at the links above for the detailed descriptions of how determinations of quality and cost efficiency are made. Although they state that quality is the fundamental measurement, they combine that with cost efficiency measurements and then use this information to classify each physician in one of the eight categories listed above. There are really only two designations that physicians can receive: quality and cost efficiency. If the physician receives either one or both of these designations, then these honors are displayed publicly in UnitedHealth’s physician directories.

Those designations might be nice, but what the patient really wants to know is if their physician is a Tier 1 physician. In plans that offer tiered benefits – very commonplace today – plan beneficiaries pay lower co-pays and co-insurance when they use Premium Tier 1 physicians. So what determines whether on not a physician is in Tier 1?

Of the eight categories listed, only the first two will qualify the physician as Tier 1. Either the physician must receive the designations of “Quality & Cost Efficiency” or “Cost Efficiency & Not Enough Data to Assess Quality.” Although quality is the “fundamental measurement” and is determined before cost efficiency, it is important to note that the third category – “Quality & Not Enough Data to Assess Cost Efficiency” – will not qualify a physician for Tier 1. The only way to become a Tier 1 physician is to be cost efficient; quality does not count.

It is also important to understand that even if all or almost all physicians are actually cost efficient, they are compared to their peers. “Physicians’ costs must be statistically significantly lower than the peer group’s physicians at the 75th percentile performance for all physicians.” It is impossible, no matter how efficient they are, for all physicians to gain Tier 1 status.

Further, the health care market in the United States is by far the most expensive of all nations, not only because of our prices but also due to our inefficiencies, especially our profound administrative waste. Favoring prices at the lower end of a highly inflated health care market falls far short of what we need to do to improve efficiency in our health care purchasing.

Thus UnitedHealth, for Tier 1, is selecting the cheapest physicians in an overpriced and inefficient market, regardless of the quality of their care. “Higher quality at lower cost” is a fraudulent marketing slogan of the private insurance industry. We need to throw these con artists out and replace them with our own efficient, quality-driven single payer national health program. The sooner the better.

UnitedHealth Premium® Designation Program

The UnitedHealth Premium® physician designation program uses evidence-based, medical society, and national industry standards to recognize physicians for providing quality and cost efficient care.

The following designation results are displayed publicly in UnitedHealthcare’s physician directories (e.g., myuhc.com) to support informed decision-making by members when making health care choices and by physicians when making referrals.

Designation information is as follows:

• Quality & Cost Efficiency
• Cost Efficiency & Not Enough Data to Assess Quality
• Quality & Not Enough Data to Assess Cost Efficiency
• Quality & Did Not Meet Cost Efficiency
• Not Enough Data to Assess Quality & Did Not Meet Cost Efficiency
• Not Enough Data to Assess
• Not Evaluated
• Did Not Meet Quality & Cost Efficiency

Innovative Benefit Plan Designs

In addition, employers may offer health benefit programs (e.g., reduced cost-sharing or tiered benefit programs) that provide benefit incentives for members to use UnitedHealth Premium Tier 1 physicians.

Members in health plans that offer tiered benefits may pay lower co-pays and co-insurance amounts for services provided by UnitedHealth Premium Tier 1 physicians.

UnitedHealth Premium Tier 1 physicians have received one of the following Premium designations:

• Quality & Cost Efficiency
• Cost Efficiency & Not Enough Data to Assess Quality

https://www.unitedhealthcareonline.com/b2c/CmaAction.do?channelId=a7b046…

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UnitedHealth Premium® Physician Designation Program

Summary Methodology

The UnitedHealth Premium physician designation program uses clinical information from health care claims and other sources to assist physicians in their continuous practice improvement and to help consumers make more informed and personally appropriate choices for their medical care.

Evaluation for quality compares a physician’s observed practice to the UnitedHealthcare national rate among other physicians who are responsible for the same interventions. Cost efficiency is assessed by comparing the case-mix adjusted cost of care attributed to the physician to a benchmark and applying a statistical test to determine if the difference is statistically significant.

Quality is the fundamental measurement, demonstrating our commitment to evidence-based practice. The quality designation is separate from the cost efficiency designation. Although the quality and cost efficiency evaluations are performed separately, the results are used together to determine the physician’s designation.

Physicians who meet both the quality and cost efficiency designation criteria will receive the quality and cost efficiency designation. Physicians who meet the quality designation criteria will receive the quality designation regardless of their cost efficiency evaluation. Physicians who meet the cost efficiency designation criteria will receive the cost efficiency designation if they do not have enough data to assess quality.

Quality Assessment

A physician’s quality individual outcome is determined by comparing the number of times his/her patients received recommended care with a benchmark number based on the UnitedHealthcare national rate of the same recommended care for each quality measure.

Cost Efficiency Assessment

Episode cost measurement compares a physician’s observed costs for episodes of care to a peer group’s costs for similar episodes of care, with adjustments for the patient’s severity of illness and the physician’s case mix.

For both episode cost and population cost measurement, the physician’s costs within each set are evaluated against their peer group’s costs by ordering the costs from lowest to highest cost. The costs are converted into percentiles to allow comparison across different types of cases or patients.

Physicians’ costs must be statistically significantly lower than the peer group’s physicians at the 75th percentile performance for all physicians (measured in the same specialty for the same types of episodes in the same geographic area) in order to meet the episode cost measurement criteria.

UnitedHealthcare informs members that designations are intended only as a guide when choosing a physician and should not be the sole factor in selecting a physician. As with all programs that evaluate performance based on analysis of a sample, there is a risk of error.

https://www.unitedhealthcareonline.com/ccmcontent/ProviderII/UHC/en-US/A…

The perennial promise of private health insurers is that their insurance products would bring us higher quality care at lower cost, even though there is a paucity of evidence to support such claims. UnitedHealth now claims to be serious about delivering on that promise with their new Premium Physician Designation Program. They say that “quality is the fundamental measurement.” But let’s sort through their program description to see what the truth really is.

You can consult the websites at the links above for the detailed descriptions of how determinations of quality and cost efficiency are made. Although they state that quality is the fundamental measurement, they combine that with cost efficiency measurements and then use this information to classify each physician in one of the eight categories listed above. There are really only two designations that physicians can receive: quality and cost efficiency. If the physician receives either one or both of these designations, then these honors are displayed publicly in UnitedHealth’s physician directories.

Those designations might be nice, but what the patient really wants to know is if their physician is a Tier 1 physician. In plans that offer tiered benefits – very commonplace today – plan beneficiaries pay lower co-pays and co-insurance when they use Premium Tier 1 physicians. So what determines whether on not a physician is in Tier 1?

Of the eight categories listed, only the first two will qualify the physician as Tier 1. Either the physician must receive the designations of “Quality & Cost Efficiency” or “Cost Efficiency & Not Enough Data to Assess Quality.” Although quality is the “fundamental measurement” and is determined before cost efficiency, it is important to note that the third category – “Quality & Not Enough Data to Assess Cost Efficiency” – will not qualify a physician for Tier 1. The only way to become a Tier 1 physician is to be cost efficient; quality does not count.

It is also important to understand that even if all or almost all physicians are actually cost efficient, they are compared to their peers. “Physicians’ costs must be statistically significantly lower than the peer group’s physicians at the 75th percentile performance for all physicians.” It is impossible, no matter how efficient they are, for all physicians to gain Tier 1 status.

Further, the health care market in the United States is by far the most expensive of all nations, not only because of our prices but also due to our inefficiencies, especially our profound administrative waste. Favoring prices at the lower end of a highly inflated health care market falls far short of what we need to do to improve efficiency in our health care purchasing.

Thus UnitedHealth, for Tier 1, is selecting the cheapest physicians in an overpriced and inefficient market, regardless of the quality of their care. “Higher quality at lower cost” is a fraudulent marketing slogan of the private insurance industry. We need to throw these con artists out and replace them with our own efficient, quality-driven single payer national health program. The sooner the better.

Opinion of the Court

Supreme Court of the United States, June 30, 2014

BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL. v. HOBBY LOBBY STORES, INC., ET AL.

and

CONESTOGA WOOD SPECIALTIES CORPORATION ET AL., PETITIONERS 13–356 v. SYLVIA BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.

Justice Alito delivered the opinion of the Court.

We must decide in these cases whether the Religious Freedom Restoration Act of 1993 (RFRA), 107 Stat. 1488, 42 U. S. C. §2000bb et seq., permits the United States Department of Health and Human Services (HHS) to demand that three closely held corporations provide health-insurance coverage for methods of contraception that violate the sincerely held religious beliefs of the companies’ owners.

In holding that the HHS mandate is unlawful, we reject HHS’s argument that the owners of the companies forfeited all RFRA protection when they decided to organize their businesses as corporations rather than sole proprietorships or general partnerships. The plain terms of RFRA make it perfectly clear that Congress did not discriminate in this way against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs.

Since RFRA applies in these cases, we must decide whether the challenged HHS regulations substantially burden the exercise of religion, and we hold that they do.

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Ginsburg, J., dissenting

Importantly, the decisions whether to claim benefits under the plans are made not by Hobby Lobby or Conestoga, but by the covered employees and dependents, in consultation with their health care providers. Should an employee of Hobby Lobby or Conestoga share the religious beliefs of the Greens and Hahns, she is of course under no compulsion to use the contraceptives in question. But “[n]o individual decision by an employee and her physician — be it to use contraception, treat an infection, or have a hip replaced — is in any meaningful sense [her employer’s] decision or action.” Grote v. Sebelius, 708 F. 3d 850, 865 (CA7 2013) (Rovner, J., dissenting). It is doubtful that Congress, when it specified that burdens must be “substantia[l],” had in mind a linkage thus interrupted by independent decisionmakers (the woman and her health counselor) standing between the challenged government action and the religious exercise claimed to be infringed. Any decision to use contraceptives made by a woman covered under Hobby Lobby’s or Conestoga’s plan will not be propelled by the Government, it will be the woman’s autonomous choice, informed by the physician she consults.

http://www.supremecourt.gov/opinions/13pdf/13-354_olp1.pdf

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Comment:

By Don McCanne, MD

Allowing an employer to deny coverage of family planning services for employees, strictly on the basis of the employer’s own religion, is yet one more flaw in our highly dysfunctional system of health care financing – a system that is being perpetuated by the Affordable Care Act. If we had a single payer national health program, the employer would not be involved.

As Justice Ginsburg stated in her dissent, a woman’s use of family planning services should be “the woman’s autonomous choice, informed by the physician she consults.” If religious beliefs enter into that decision, it should be the religious beliefs of the individual and not anyone else.

Opinion of the Court

Supreme Court of the United States, June 30, 2014

BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL. v. HOBBY LOBBY STORES, INC., ET AL.

and

CONESTOGA WOOD SPECIALTIES CORPORATION ET AL., PETITIONERS 13–356 v. SYLVIA BURWELL, SECRETARY OF HEALTH AND HUMAN SERVICES, ET AL.

Justice Alito delivered the opinion of the Court.

We must decide in these cases whether the Religious Freedom Restoration Act of 1993 (RFRA), 107 Stat. 1488, 42 U. S. C. §2000bb et seq., permits the United States Department of Health and Human Services (HHS) to demand that three closely held corporations provide health-insurance coverage for methods of contraception that violate the sincerely held religious beliefs of the companies’ owners.

In holding that the HHS mandate is unlawful, we reject HHS’s argument that the owners of the companies forfeited all RFRA protection when they decided to organize their businesses as corporations rather than sole proprietorships or general partnerships. The plain terms of RFRA make it perfectly clear that Congress did not discriminate in this way against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs.

Since RFRA applies in these cases, we must decide whether the challenged HHS regulations substantially burden the exercise of religion, and we hold that they do.

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Ginsburg, J., dissenting

Importantly, the decisions whether to claim benefits under the plans are made not by Hobby Lobby or Conestoga, but by the covered employees and dependents, in consultation with their health care providers. Should an employee of Hobby Lobby or Conestoga share the religious beliefs of the Greens and Hahns, she is of course under no compulsion to use the contraceptives in question. But “[n]o individual decision by an employee and her physician — be it to use contraception, treat an infection, or have a hip replaced — is in any meaningful sense [her employer’s] decision or action.” Grote v. Sebelius, 708 F. 3d 850, 865 (CA7 2013) (Rovner, J., dissenting). It is doubtful that Congress, when it specified that burdens must be “substantia[l],” had in mind a linkage thus interrupted by independent decisionmakers (the woman and her health counselor) standing between the challenged government action and the religious exercise claimed to be infringed. Any decision to use contraceptives made by a woman covered under Hobby Lobby’s or Conestoga’s plan will not be propelled by the Government, it will be the woman’s autonomous choice, informed by the physician she consults.

http://www.supremecourt.gov/opinions/13pdf/13-354_olp1.pdf

Allowing an employer to deny coverage of family planning services for employees, strictly on the basis of the employer’s own religion, is yet one more flaw in our highly dysfunctional system of health care financing – a system that is being perpetuated by the Affordable Care Act. If we had a single payer national health program, the employer would not be involved.

As Justice Ginsburg stated in her dissent, a woman’s use of family planning services should be “the woman’s autonomous choice, informed by the physician she consults.” If religious beliefs enter into that decision, it should be the religious beliefs of the individual and not anyone else.

Department of Health and Human Services, June 19, 2014

This proposed rule would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the Exchange, beginning with annual redeterminations for coverage for plan year 2015.

In paragraph (j)(1), we propose that if an enrollee remains eligible for enrollment in a QHP through the Exchange upon annual redetermination, and the product under which the QHP in which he or she was enrolled remains available for renewal, consistent with 45 CFR §147.106, such enrollee will have his or her enrollment in a QHP under the product renewed unless he or she terminates coverage, including termination of coverage in connection with voluntarily selecting a different QHP, in accordance with §155.430. In this situation, we propose that the QHP in which the enrollee will be renewed will be selected according to the following order of priority: first, in the same plan as the enrollee’s current QHP, unless the current QHP is not available; second, if the enrollee’s current QHP is not available, the enrollee’s coverage will be renewed in a plan at the same metal level as the enrollee’s current QHP; third, if the enrollee’s current QHP is not available and the enrollee’s product no longer includes a plan at the same metal level as the enrollee’s current QHP, the enrollee’s coverage will be renewed in a plan that is one metal level higher or lower than the enrollee’s current QHP; and fourth, if the enrollee’s current QHP is not available and the enrollee’s product no longer includes a plan that is at the same metal level as, or one metal level higher or lower than the enrollee’s current QHP, the enrollee’s coverage will be renewed in any other plan offered under the product in which the enrollee’s current QHP is offered in which the enrollee is eligible to enroll.

http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/508_CMS-9941-P-OFRv-6-26-14.pdf

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Exchange Plan Renewals: Many Consumers Face Sizeable Premium Increases in 2015 Unless They Switch Plans

By Elizabeth Carpenter
Avalere, June 26, 2014

Under the Affordable Care Act, federal premium assistance is tied to the second lowest cost silver plan (“benchmark plan”) in a given region.  Subsidized exchange enrollees who select a more expensive plan must pay the difference—dollar for dollar—between the benchmark plan premium and their selection.  In six of nine states analyzed by Avalere, the 2014 benchmark silver plan will lose benchmark status in 2015. Further, in seven of the nine states, the lowest cost silver plan will also change in 2015. 

“Most enrollees in 2014 chose a plan based on the monthly premium. However, the lowest cost plans in 2014 may no longer be low cost in 2015,” said Elizabeth Carpenter, director at Avalere Health. “Before consumers renew their 2014 plan, they should consider the tradeoff between continuity of care and lower monthly premiums.”

“Two-thirds of people enrolling in silver plans are choosing one of the two lowest cost silver options,” said Caroline Pearson, vice president at Avalere. “The competitive landscape for plans is changing in 2015. However, the premium subsidies are tied to the benchmark plan and a percentage of income. Consumers have to pay the difference if they enroll in a plan more expensive than the benchmark.  Those receiving federal premium subsidies may need to switch plans in 2015 to avoid paying more than the limits established by the ACA, and the impact will be more profound for lower-income consumers.”

http://www.avalerehealth.net/expertise/managed-care/insights/exchange-plan-renewals-many-consumers-face-sizeable-premium-increases-in-20

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Comment:

By Don McCanne, MD

Acknowledging the complexity of the administration of the exchanges under the Affordable Care Act, HHS has decided to simplify the process by making renewal of plan enrollment automatic unless the enrollee decides on a different option. It is estimated that about 95 percent of enrollees will qualify for automatic renewal, and undoubtedly many will passively accept this hassle-free option. That may not be a wise choice.

The Avalere report indicates that the benchmark silver tier plan – the plan with the second lowest premium in the silver tier – will change in many of the exchanges since premium bids are changing for most plans. Since the enrollee is responsible for the full balance of the premium above the benchmark plan, net premiums for the enrollees could increase significantly unless the person opted to change to next year’s benchmark plan or a plan close to it.

As Avalere director Elizabeth Carpenter states, “(consumers) should consider the tradeoff between continuity of care and lower monthly premiums.” This means that those current enrollees who do not passively accept higher premiums will be forced to choose between higher premiums or a change in their narrow provider networks, the latter likely resulting in disruption of continuity of care.

Further, according to the HHS rule, the individual could be transferred to a different metal tier, thereby losing eligibility for the subsidies for cost sharing, though that would likely occur only in exchanges that have few choices.

Even something as simple as “automatic renewal” becomes complex when you try to rely on market dynamics to satisfy private insurers. Imagine if at renewal time you didn’t have to make a decision on what premiums you could afford, or on what provider networks you would choose when none of them quite fit, or where you might fall based on subsidy eligibility redetermination.

Imagine instead if the concept of renewal did not even exist – you were simply automatically enrolled for life. We really do need to replace this boondoggle with a single payer national health program – quality health care for everyone at a price we can afford.

Department of Health and Human Services, June 19, 2014

This proposed rule would specify additional options for annual eligibility redeterminations and renewal and re-enrollment notice requirements for qualified health plans offered through the Exchange, beginning with annual redeterminations for coverage for plan year 2015.

In paragraph (j)(1), we propose that if an enrollee remains eligible for enrollment in a QHP through the Exchange upon annual redetermination, and the product under which the QHP in which he or she was enrolled remains available for renewal, consistent with 45 CFR §147.106, such enrollee will have his or her enrollment in a QHP under the product renewed unless he or she terminates coverage, including termination of coverage in connection with voluntarily selecting a different QHP, in accordance with §155.430. In this situation, we propose that the QHP in which the enrollee will be renewed will be selected according to the following order of priority: first, in the same plan as the enrollee’s current QHP, unless the current QHP is not available; second, if the enrollee’s current QHP is not available, the enrollee’s coverage will be renewed in a plan at the same metal level as the enrollee’s current QHP; third, if the enrollee’s current QHP is not available and the enrollee’s product no longer includes a plan at the same metal level as the enrollee’s current QHP, the enrollee’s coverage will be renewed in a plan that is one metal level higher or lower than the enrollee’s current QHP; and fourth, if the enrollee’s current QHP is not available and the enrollee’s product no longer includes a plan that is at the same metal level as, or one metal level higher or lower than the enrollee’s current QHP, the enrollee’s coverage will be renewed in any other plan offered under the product in which the enrollee’s current QHP is offered in which the enrollee is eligible to enroll.

http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/50…

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Exchange Plan Renewals: Many Consumers Face Sizeable Premium Increases in 2015 Unless They Switch Plans

By Elizabeth Carpenter
Avalere, June 26, 2014

Under the Affordable Care Act, federal premium assistance is tied to the second lowest cost silver plan (“benchmark plan”) in a given region.  Subsidized exchange enrollees who select a more expensive plan must pay the difference—dollar for dollar—between the benchmark plan premium and their selection.  In six of nine states analyzed by Avalere, the 2014 benchmark silver plan will lose benchmark status in 2015. Further, in seven of the nine states, the lowest cost silver plan will also change in 2015.

“Most enrollees in 2014 chose a plan based on the monthly premium. However, the lowest cost plans in 2014 may no longer be low cost in 2015,” said Elizabeth Carpenter, director at Avalere Health. “Before consumers renew their 2014 plan, they should consider the tradeoff between continuity of care and lower monthly premiums.”

“Two-thirds of people enrolling in silver plans are choosing one of the two lowest cost silver options,” said Caroline Pearson, vice president at Avalere. “The competitive landscape for plans is changing in 2015. However, the premium subsidies are tied to the benchmark plan and a percentage of income. Consumers have to pay the difference if they enroll in a plan more expensive than the benchmark.  Those receiving federal premium subsidies may need to switch plans in 2015 to avoid paying more than the limits established by the ACA, and the impact will be more profound for lower-income consumers.”

http://www.avalerehealth.net/expertise/managed-care/insights/exchange-pl…

Acknowledging the complexity of the administration of the exchanges under the Affordable Care Act, HHS has decided to simplify the process by making renewal of plan enrollment automatic unless the enrollee decides on a different option. It is estimated that about 95 percent of enrollees will qualify for automatic renewal, and undoubtedly many will passively accept this hassle-free option. That may not be a wise choice.

The Avalere report indicates that the benchmark silver tier plan – the plan with the second lowest premium in the silver tier – will change in many of the exchanges since premium bids are changing for most plans. Since the enrollee is responsible for the full balance of the premium above the benchmark plan, net premiums for the enrollees could increase significantly unless the person opted to change to next year’s benchmark plan or a plan close to it.

As Avalere director Elizabeth Carpenter states, “(consumers) should consider the tradeoff between continuity of care and lower monthly premiums.” This means that those current enrollees who do not passively accept higher premiums will be forced to choose between higher premiums or a change in their narrow provider networks, the latter likely resulting in disruption of continuity of care.

Further, according to the HHS rule, the individual could be transferred to a different metal tier, thereby losing eligibility for the subsidies for cost sharing, though that would likely occur only in exchanges that have few choices.

Even something as simple as “automatic renewal” becomes complex when you try to rely on market dynamics to satisfy private insurers. Imagine if at renewal time you didn’t have to make a decision on what premiums you could afford, or on what provider networks you would choose when none of them quite fit, or where you might fall based on subsidy eligibility redetermination.

Imagine instead if the concept of renewal did not even exist – you were simply automatically enrolled for life. We really do need to replace this boondoggle with a single payer national health program – quality health care for everyone at a price we can afford.

Shifting toward Defined Contributions — Predicting the Effects

By Kevin A. Schulman, M.D., Barak D. Richman, J.D., Ph.D., and Regina E. Herzlinger, D.B.A.
The New England Journal of Medicine, June 26, 2014

When Representative Paul Ryan (R-WI) attracted national attention by joining Senator Ron Wyden (D-OR) in proposing a sweeping privatization of Medicare, he was variously vilified and praised for suggesting that Medicare should be converted from a defined-benefit program to a defined-contribution program. Although there has been little congressional action to advance the Wyden–Ryan plan, defined-contribution programs are becoming increasingly prevalent in employer-sponsored health insurance and may ultimately bring about substantial changes in U.S. health care.

A defined-benefit program provides specific benefits to enrollees when those benefits are needed. For example, a defined-benefit pension program provides payments of specified amounts to retirees. Defined-benefit health insurance, such as Medicare and most private plans, pays for specific health care services when eligible beneficiaries demand such services. In contrast, a defined-contribution program — like most typical 401(k) retirement plans — provides certain financial support to beneficiaries before any benefits are consumed, and beneficiaries then spend those funds to meet their eventual expenses. In defined-contribution pension plans, only the financial contribution is defined, and the extracted benefits are determined by the payment and investment preferences of the beneficiary.

Economists have posited that defined-contribution health insurance plans offer two key benefits. First, enrollees in such plans receive more choice than they would in the one-size-fits-all plans typically offered by employers. They can thus consider the quality of plans and express their preferences for various features of benefits packages, such as open or limited provider networks and low or high deductibles. Second, defined-contribution plans can give employers greater certainty about costs, insulating them from unpredictable health care inflation. Such plans might also curb or reverse the trend toward employees’ passively shouldering the growing costs of employer-based defined-benefits plans. (Between 2003 and 2013, employer spending increased by 77%, while employees’ costs increased by 89%.1) In a competitive labor market, with the transparency of a defined-contribution plan, employers would have to compensate employees through higher wages for any shifting of additional health care costs, although increased compensation might only need to match employees’ perceptions of the value of the lost benefits.

One largely overlooked attraction of defined-benefit plans is related to the political economy of firms. Because the tax exemption for employer-provided health insurance often hides what employers pay for employees’ health insurance, many employees demand costly plans without realizing that the employer’s contribution ultimately reduces their own take-home pay. A defined-contribution plan, in contrast, makes insurance premiums more transparent, thereby inducing employees to demand more affordable health plans because they are aware of the full amount they pay. For example, when human resources consultancy Aon Hewitt helped companies implement insurance plans under a defined-contribution system in 2013, 42% of employees purchased less expensive plans, 32% purchased coverage similar to what they had previously had, and only 26% bought more expensive coverage.

The intellectual appeal of the Wyden–Ryan plan rested on this logic. Its supporters argued that because the risk of higher-than-expected health care inflation would be shifted onto Medicare enrollees, who would be empowered to exercise consumer choice, the market dynamics would change. On one hand, there would be greater cost consciousness behind consumer demand; on the other hand, supply would reflect greater competition for consumers’ premium dollars.

If Medicare reforms do not adequately address the excessive costs of health care, converting the program to a defined-contribution plan could leave many seniors uninsured or exposed to unaffordable health care bills, thereby undermining one of the fundamentals of the Medicare program — protection against financial risk — while leaving providers with major revenue shortfalls.

Although Medicare seems unlikely to be transformed into a defined-contribution program in the immediate future, the private insurance market is shifting toward defined contributions. Many large companies — including IBM, Duke Energy, and Time Warner — are now pursuing defined-contribution strategies for their retirees; others, including Walgreens, are doing so for current workers. Some companies have designed private insurance exchanges through which workers and retirees can purchase insurance plans, and others may encourage retirees to purchase insurance through private exchanges or the public exchanges established under the Affordable Care Act. A recent survey suggests that 58% of employers have confidence in private exchanges as a viable alternative to the plans they currently offer employees and that “employers are intrigued by the potential of private exchanges to control cost increases, reduce administrative burdens and provide greater value.”

Some observers have expressed legitimate concerns that employers could limit their payments for health benefits by increasing wages by amounts less than those of employees’ medical costs. In theory, a competitive labor market would ensure that total employee compensation remained at competitive levels, thereby preventing employers from using defined-contribution mechanisms in this way. But competitive labor markets require compensation to reflect productivity. In rigid sectors of the economy, defined-contribution strategies could burden employees disproportionately with the weight of medical inflation.

Yet the appeal of defined-contribution plans — whether as part of Medicare reform or in the form of changing benefits for retirees and workers — remains potent. Defined-contribution strategies reveal to employees and health insurance customers any cost increases that exceed the growth of wages, and individuals purchasing insurance on exchanges have shown a growing preference for lower-priced plans that increase cost sharing for health expenditures. In 2013, for example, Aon Hewitt found that the proportion of employees who selected high-deductible plans (most of which included a contribution to a health savings account) increased from 12% to 39%, while enrollment in preferred provider organizations decreased from 70% to 47%.

Defining the contributions to health care expenditures before containing health care costs might be placing the cart before the horse. On the other hand, making such inflation visible and painful to consumers is one tool for bringing costs under control.

Whether or not providers and consumers are ready, defined-contribution benefit plans are growing in popularity. They will unquestionably have both short- and long-term consequences for providers. They will bring greater transparency to health care costs and health care inflation, and they will probably give insurance purchasers greater motivation to attend to insurance prices, stimulating the provision of lower-cost insurance.

Because insurance premiums are ultimately the primary source of revenue for providers, cost consciousness among consumers will impose new fiscal constraints on providers. For some highly leveraged providers — especially those who expanded costly infrastructures that relied on lucrative fee-for-service revenue models — even small changes in the private health insurance market could have substantial financial effects. In this world, providers’ future success will depend on their ability to sustain themselves on a flattening allowance.

Over the long term, greater consumer sensitivity to insurance premiums will affect all providers. It is a truism that the growth of health care costs — or, phrased differently, the growth of provider resources — will be bounded by the growth of health care revenue. A dramatic shift in the revenue available to providers will impose strong cost pressure. And such pressure, in turn, can be seen as a new opportunity for developing more cost-efficient delivery mechanisms.

http://www.nejm.org/doi/full/10.1056/NEJMp1314391

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Comment:

By Don McCanne, MD

This article from the prestigious New England Journal of Medicine should alarm anyone who cares about ensuring that everyone has access to health care. We are now seeing a rapid conversion of health care financing from defined benefit (paying for appropriate health care) to defined contribution (paying a specific dollar amount while placing upon the beneficiary the responsibility of using those funds to find affordable care, if possible). This places the burden of health care inflation most heavily on those who have the greatest health care needs when these individuals and families are already over-burdened with our deficient system of health care financing.

Look at the explanation that these authors give as to why defined contribution is a superior method of financing health care:

• Patients would not be stuck with a one-size-fits-all plan of comprehensive benefits that covers their essential care but rather would be allowed to forgo crucial health care services that they could not afford (permitting them to accept suffering, disability and even death as a small price to pay for not selecting a plan that they couldn’t afford).
• They would have the right to plans that exclude from provider networks physicians and hospitals that they might need in the future but would not be able to afford.
• They would have the right to enroll in plans with high deductibles that have been proven to impair access and create greater personal financial hardships.
• They can rest assured that their employers will be insulated against future increases in health care costs, while graciously accepting for themselves the costs of unpredictable health care inflation.
• They can personally experience the ongoing deterioration in labor markets as employers decline to provide as wage increases the savings in the costs of their health benefit programs – a valuable lesson in the differences between market ideology and the actual application of market dynamics.
• They need not understand the value of their lost benefits (i.e., “increased compensation might only need to match employees’ perceptions of the value of the lost benefits” – the fools know not what they are deprived of).
• With greater transparency in premiums under defined contribution, employees would be in a position to demand only the lower premium plans that they could afford, even though that can be disastrous should health status change for the worse. (Employees choose low premium plans not because they want less coverage but rather because they cannot afford the higher premiums of more comprehensive plans.)
• Employees can be reassured by the fact that their “employers are intrigued by the potential of private exchanges to control cost increases, reduce administrative burdens and provide greater value” – for the employers that is. There is nothing like a work environment that takes good care of the employers.

Perhaps there is a limit to what the employee/patient/beneficiary/consumer may support in this transition to defined contribution financing of health care. According to these authors, “Defining the contributions to health care expenditures before containing health care costs might be placing the cart before the horse. On the other hand, making such inflation visible and painful to consumers is one tool for bringing costs under control.”

Ah ha! We need to switch to defined contribution financing because it will make health care inflation “visible and painful to consumers.” Clearly there had to be more advantages than just those listed above. There ain’t no gain if there ain’t no pain.

Regina Herzlinger is an icon in the consumer-directed policy community. They are winning the battle, and the people are losing. If you like the policies listed above, you don’t need to do anything. Regina and her friends will take care of it for you.

For the rest of you, get over the lousy satire and go out and fight the battle for health care justice for all.