From the Contributor’s Corner: When Disaster Strikes…Call Me, Maybe? Part I

Health Wolters Kluwer Law & Business will periodically feature posts from outside contributors who are members of our Advisory Board. Today’s post comes from Allan P. DeKaye, MBA, FHFMA.

Like many of my neighbors living in the South Shore of Long Island, NY, I heeded the warning…”Hurricane Sandy was coming!” The news tracked her path with every broadcast, except when breaking for commercials featuring the latest iPhone and other newer technologies. I began the fulfillment of my emergency checklist: batteries, bottled water, canned food and ice. Don’t forget cash! Cellphone charged–check, gas tank in the car full–check. I found the box in the basement marked “retired” and blew the dust off my battery-operated radio and a telephone–you know–the kind that plugs directly into a jack. It’s what baby boomers call land lines,” no electricity required.” My arsenal was complete.

Hurricane Sandy, (conveniently reclassified as “Superstorm” Sandy–deeming “flood damage” a policy exclusion resulting in an uninsured loss for many) hit. It’s been about a month since Sandy wrecked havoc on our shores. Those with power witnessed firsthand the tragic reality captured on television and the Internet: Homes burned to ground, elderly trapped in top floor buildings, tunnels inundated with raging flood waters, and hospital evacuations. While the advance evacuations were planned as part of a well-choreographed ballet, a major New York City medical center faced a far more daunting opera. Due to the river’s flood waters cascading over the highway and street, the basement generators blew out. It was an eerie sight watching the news (while I still had power) to see hundreds of ambulances lined up on nearby streets awaiting transfers of patients from the darkened and stricken hospital. The nurses holding newborns wrapped in warm blankets awaiting transport to a safe and powered location. The term “back-up” generator seemed obsolete.

I was one of the lucky ones, only without power for 4 days. However, my mother-in-law’s home was not as fortunate. Having lived in her home for almost 60 years without a drop of water damage, the shock and surprise of water soaked carpets, lifeless appliances and no electrical current, and car cup holders filled with sea water was almost too much to believe. I quickly shifted roles from observer status and riding out the storm to first responder in order to help my family. Calls needed to be made and a game plan had to be crafted. Cell phone service was spotty at best and texting revealed hours of delayed messaging. Where was technology when you needed it?

In a society driven by smartphones and technology, I found myself almost powerless, literally. Upon returning to my home, my survival kit lay on the table waiting for use. I plugged in my plain-ole telephone into the jack which allowed us to file insurance claims for my mother-in-law’s home and car. The battery operated radio warned that cold weather and a Nor’easter was approaching; adding insult to injury we were advised that major sewer treatment plant was flooded, knocking out all of its capabilities. However, the irony wasn’t that the old-fashioned radio and telephone proved to be my most valuable assets; it was the paradox wasted on listeners reminding people to call various “800″ numbers and different websites. “Call us at 1-800 or visit us at www….” I wish I could if I had any service!

We take for granted all of today’s modern conveniences. When the lights don’t go on with the flick of a switch, and the gas pumps stop pumping, we can become inventive and resourceful. The gas grill became a source for cooking food and beverages. Gas powered utilities made taking a hot shower possible. Having a 5-gallon gas can (or two or three) got you enough fuel to drive around or run the generator—albeit while enduring a 1-3 hour wait on the gas lines.

Once power was restored, it made making an online FEMA application possible—although, there were a number of FEMA sites established to allow people to register in person when their homes were uninhabitable and sheltering options limited. I must say with 24/7 phone operators available, and a large cadre of boots-on-the-ground staff, they provided my mother-in-law and thousands of others with much needed grant assistance for home repair and temporary housing. Their response and presence earns kudos!

While Sandy preparedness was good in some regards, it showed us our vulnerabilities and weaknesses—especially regarding our power grid, and its far-reaching impact and consequences that slowed recovery. Now would be a good time to get started on strengthening these Achilles heels. I’d like to think there was an “App” or “Apps” for better handling the various types of emergencies that so many faced—and will no doubt face again—unless we invest in eliminating these vulnerabilities. An ounce of prevention (although estimates place it at perhaps a ton or two)—would be a good way to start.

Check back tomorrow for Part II!

Allan P. DeKaye, MBA, FHFMA, has over 40 years of experience in the healthcare field. He is President and CEO of DEKAYE Consulting, Inc., a national firm specializing in Revenue Cycle Management. Mr. DeKaye has an MBA in Healthcare Administration from Baruch College of the City University of New York. He currently serves on the editorial advisory boards of several industry publications. He is a Fellow in HFMA, and has received several of their merit awards, including its Medal of Honor.

He is the author of the well-respected text, The Patient Accounts Management Handbook. He has written many articles appearing in various industry publications. Mr. DeKaye’s Emphasis on Education(sm) programs have been attended by over 7,000 participants, and he is a frequent speaker at national, regional and local trade association conferences. DEKAYE Consulting, Inc., also maintains strategic alliances with data, decision support and technology companies.

Study Finds the Cost of Birthing Babies Skyrocketed Between 2004 and 2010

A recent study of the Marketscan Commercial and Medicaid databases noted that giving birth is one of the most expensive health care expenditures in the United States (The Cost of Having a Baby in the United States, January 1, 2013). The study measured “cost” as the amount employers, Medicaid managed care plans, Medicaid programs and others pay to hospitals, clinicians, and other service providers. The study found for women and newborns with employer-provided health insurance that the average charges for a vaginal and cesarean births were $32,093 and $51,125, respectively. For mothers and newborns with Medicaid coverage these costs are only slightly lower; vaginal birth costs were $18,329 and cesarean birth costs were $27,866. Newborns that stayed in neonatal intensive care units (NICUs) had significantly larger average payment levels compared to payments for all newborns. The study also found the average total maternal care costs for women with employer-provided insurance in 2010 varied widely between states.

The study estimated that for vaginal births, the primary insurer paid approximately 87 percent of all costs, out-of-pocket costs were 12 percent, and secondary insurers paid approximately 1 percent. These figures did not change much for cesarean births, where primary insurers paid approximately 90 percent of all costs. The study noted that Medicaid pays approximately 99 percent of all costs for vaginal births and 98 percent for cesarean births. The large percentage of payments went to facilities and maternity care providers, with the remainder to providers of anesthesiology, radiology/imaging, laboratory, and pharmacy services.

The study also found that for newborns that stayed in NICUs, insurers paid significantly larger average payment levels in comparison to payments for all newborns.

The average total payments for maternal-newborn care by commercial payers was approximately double the average Medicaid payment for both vaginal births ($18,239 vs. $9,131) and cesarean births ($27,866 vs. $13,590). From 2004 to 2010, average commercial insurer payments for all maternal care increased by 49 percent for vaginal births and 41 percent for cesarean births and the average out-of-pocket payments for all maternal care covered by commercial insurers increased almost four times for vaginal births and cesarean births.

Cutting Health Care Spending: What Can Congress Do?

The continuing debate over the federal budget has brought health care spending into the spotlight again. Some argue that Medicare and Medicaid spending is too high. Others believe that the high cost of health care generally drives up spending on federal health care programs. Where is the “fat” in health care spending? And what can Congress do about it?

This  high cost of health care in the United States compared to other countries and the findings of the Organization for Economic Cooperation and Development (OECD) that our health outcomes don’t match our spending have been discussed before. A new study published in the Annals of Internal Medicine found that higher spending on healthcare services  is sometimes associated with better outcomes,but at other times, not so much. And sometimes expensive care can be harmful.

Another study in the same journal discussed ways to reduce “low-value care.” Just as encouraging the use of evidence-based practices improves outcomes, the authors believe that discouraging the use of low-value care would be an important step toward improvement of health outcomes. “Low-value care” is the use of testing, procedures or drugs that are likely to do more harm than good or that aren’t effective enough to justify both the cost and the risk to the patient. For example, according to the Centers for Disease Control (CDC), pap smears to test for cervical cancer are of low value for women over age 65 who have had normal screenings in the past and those who have had a total hysterectomy, which includes removal of the cervix. The CDC noted that testing has not been shown to reveal vaginal cancer, which is very rare, and that three major organizations have recommended against screening for these women. The minimal benefit is outweighed by the risk of false positives, which result in anxiety and unneeded invasive procedures.

A recent study funded by the Robert Wood Johnson Foundation (RWJF) tested the use of interventions that encouraged physicians in five California practice groups to omit unnecessary, unhelpful services. Four groups focused on reducing the use of emergency department services, one on replacing brand name drugs with equally effective generics. The group working on increasing use of generics saw improvement in each of the three classes of drugs it studied. Two of the four other groups saw a reduction in use of the emergency department; the others did not. Still, the authors estimated that each dollar spent on the intervention saved at least $2 in expenditures, perhaps up to $14. All five groups found the intervention useful and continued to implement activities they had tested.

There is a wide range of estimates of the amount or percentage of health care spending is waste. The Institute of Medicine estimated that $765 billion of the $2.5 trillion spent on health care in 2009 was wasted—30 cents of every dollar spent. Unnecessary services accounted for $210 billion, unnecessary administrative costs for $190 billion, $130 billion for inefficiently delivered services, and $105 billion for inflated prices. The CDC and the RWJF referred to findings published elsewhere that between 30 percent and 40 percent of our spending on health care is wasted due to administrative or operational inefficiency, fraud, or inappropriate services. Price Waterhouse Cooper estimated that up to half of all health care dollars are wasted. Its analysis includes the effects of avoidable illness resulting from behaviors such as cigarette smoking, alcohol or substance abuse, or physical inactivity.

Congress has limited control over waste resulting from inefficiency or inappropriate services. It already has begun to move away from the fee-for-service model, in which providers are paid for each item or service they provide, and to use payment policies to create incentives for evidence-based decisionmaking and prevention of avoidable readmissions. It can direct CMS to base its payments for services on accurate cost data— avoiding, for example, Medicare payment of 900 percent of the market price for a commonly used back brace. It will take time for these changes to produce savings that can be documented, and there will be resistance to transparency in pricing and any requirement to apply evidence-based practices.  What should Congress consider as it tries to cut health care costs?