Healthcare Industry Labors Mightily, Brings Forth a Mouse

Three weeks ago, a coalition of health industry groups reportedly told President Obama they could cut $2 trillion in healthcare spending over 10 years. A few days later, the American Hospital Association and America’s Health Insurance Plans appeared to be backpedaling, saying that cutting the annual spending growth rate by 1.5 percentage points was merely a target. Critics pointed out that it didn’t really matter, since there was no way for the government to ensure that the healthcare industry fulfilled its promise, anyway.

Today, the same six groups, representing hospitals, physicians, insurers, pharmaceutical companies, device manufacturers, and healthcare workers (in the guise of the Service Employees International Union), sent the President a joint letter that fleshed out their commitment. This time, they said, “we will do our part to achieve your Administration’s goal of decreasing by 1.5 percentage points the annual health care spending growth rate – saving $2 trillion or more.” While this was a less resounding promise than the original, it was accompanied by a number of more-or-less specific proposals.

The proposals of the industry groups, some of which are already being considered by Congress, would cut costs by improving quality, reducing overutilization, lowering administrative costs, and promoting better health. While a few good ideas are lurking here, most of it is self-serving pap trotted out to head off the prospect of meaningful healthcare reform. Here is my quick-and-dirty summary of the industry’s ideas:

America’s Health Insurance Plans: AHIP wants to “standardize and automate” administrative transactions, including claims submissions, eligibility, claims status, payment, and remittance. The insurance industry terms this a “watershed” event that could save $500 billion-$700 billion over 10 years. Of course, this is what the HIPAA transaction set that came out several years ago was supposed to accomplish. It didn’t, and one reason was that health plans were unwilling to invest in reprogramming their computers to accept standardized transactions directly from providers. AHIP proposes to get over this little obstacle in two ways: First, it wants HHS to require all plans, providers and suppliers to use a set of rules developed by the Coalition for Affordable Quality Healthcare—which, so far, has made fairly slow progress on this front. Second, AHIP would have all public and private payers use a single website in each region for administrative transactions with physicians. That’s a great idea, and multi-payer portals are already taking root. But software vendors will also have to cooperate so that practices won’t have dual data entry; some firms may be reluctant because of the money they make off of electronic clearinghouses, which would go away if this ever occurred.

American Hospital Association: The AHA says it’s on board with the concept of cost reduction, but most of its proposals are so vague as to be meaningless. Example: “Facilitate hospital and health system performance improvements that have meaningful quality improvement and associated cost savings.” Hmm…I could have thought of that, too. The AHA will “demonstrate the commitment of those in the hospital field to achieve these improvements,” including a list of safety goals that seem to have been copied from the Joint Commission and Institute for Healthcare Improvement websites. Longer term, the AHA’s initiative is supposed to improve the coordination of care, prevent patient falls, improve perinatal care, and cut supply costs. I kid you not!

American Medical Association: The AMA’s biggest advance is to admit that there is a problem with physicians overutilizing services. (If you haven’t read it yet, see Atul Gawande’s masterful treatise on this subject in the latest issue of The New Yorker.) While maintaining that some of this is due to defensive medicine, the association says that the AMA-convened Physician Consortium for Performance Improvement (PCPI) is developing measures of overuse in areas like back pain, cardiac care, maternity care, and imaging tests. Similarly, in an effort to reduce hospital readmissions, the PCPI and specialty societies have developed a set of measures to improve transitions from hospitals to other care settings. This is all admirable, but why didn’t we hear about it until the AMA was facing the possibility of major healthcare reforms?

Advanced Medical Technology Association and PHRMA: The device makers, along with the pharmaceutical industry, are finally admitting there is a need for comparative effectiveness research (although PHRMA insists on calling it “clinical effectiveness research,” perhaps in the hope that comparatively useless drugs won’t be weeded out). After having earlier opposed the Obama Administration’s $1 billion investment in CER, they now say they support the Baucus-Conrad bill, which would set up a CER institute that would be a private entity governed by a public/private board. (Somehow I smell a fix.) The device manufacturers also support AMA’s effort to root out overutilization and say they’ll contribute to the Joint Commission’s campaign to reduce medical errors. PHRMA wants more public health funding to reduce the need for their products, but also wants to increase profits by making sure that patients take their meds. Finally, PHRMA reminds us that drugs can prevent hospitalizations and that pharmaceutical firms need money to develop new drugs for costly illnesses like Alzheimers. Long live pharma!