Cost control remains key issue of new law

As a longtime advocate for health care reform, what does Washington state Insurance Commissioner Mike Kreidler think the 2010 law left undone?

Cost control. “I wish there had been more specificity for how to bend the cost curve down,” he said.

Karen Keiser, a state senator who advised the White House as it drafted the 2010 reforms, agreed. The 2010 law contains numerous provisions to make health insurance coverage more available and more affordable for consumers. But it “did not do anything innovative,” she said, to change the cost of medical care itself. “It is up to the states to do that,” she said.

Washington state’s Health Care Authority manages health coverage for state employees, plus health programs such as Medicaid for low-income people.

With medical costs exploding and state revenue shrinking, the HCA has had an incentive to make fundamental moves toward cost control. Its response? Eighty percent of its Medicaid clients have been moved from a traditional fee-for-service system to a managed care system.

Fee-for-service, medicine’s traditional reimbursement model, pays for each procedure. The more procedures a surgeon or a laboratory performs, the more money they receive. And the more the system spends.

But managed care changes the reimbursement system. The most common technique is to pay provider networks based on the number of patients they enroll, not the number of procedures they perform. If a network provides preventive care and nips health problems in the bud, its patients stay out of hospitals and emergency rooms and the network saves money.

MaryAnne Lindeblad, who served this spring as HCA director, explained: “When an organization is at risk for someone’s care, they have an incentive to make sure the person has the conversation with a doctor about issues like stop smoking, lose weight, exercise. But in a fee-for-service world, you don’t have that relationship or that conversation.”

The latest innovation, she said, is to assign patients to a “health home.” The health home is a buzzword, not for a doctor but for a team of care coordinators who know the patient: a nurse practitioner, for instance, or a social worker. These coordinators ask chronically ill patients whether they’re taking their medications, checking their blood sugar and making it to their appointments, for example.

Techniques like these have huge potential for cost control, Keiser said: “We spend 80 percent of the cost on 20 percent of the people.” If the chronically ill understand a treatment plan to keep their disease under control, and if front-line care providers help them stick to the plan, costly emergencies can be averted.

The new federal law offers grants to encourage states to try managed-care techniques.

What about insurance carriers?

They face market incentives, if not mandates. The way they’ll use those incentives, however, is an open question.