Extreme Price Variations Could Make Joints Ache

Costs for knee and hip replacement surgeries have varied by as much as 313 percent across 64 U.S. markets, according to an analysis conducted by Blue Cross and Blue Shield (BCBS). The analysis is based on three years of independent BCBS companies’ claims data and serves to inform consumers and employers of extreme price variations and shopping options. The report focused on these types of surgeries because they are emerging as the most prevalent in the United States.

Cost Increase

According to the report, Medicare actuaries expect that through 2023, health care costs will grow by an average rate of almost 6 percent each year. National health spending will increase over the next decade due to the gradual rebound of the economy and the growing numbers of newly insured individuals thanks to Medicaid expansion and affordable health care choices in Health Insurance Exchanges created through the Patient Protection and Affordable Care Act (ACA) (P.L.111-148). As the number of covered individuals grows, so too will health care use and spending. The number of uninsured is expected to decline by nearly 50 percent from 45 million in 2012 to 23 million in 2023 due to the ACA.

Report Findings

The analysis found that not only did knee and hip replacement surgery costs vary across the country, but they also varied within the same geographical areas. The average typical cost for a total knee replacement procedure was $31,000 in the 64 markets that were studied; however, the procedure could cost as little as $11,300 in Montgomery, Alabama, and as high as $70,000 in New York, New York. In Dallas, Texas, a knee replacement could cost between roughly $16,800 and $61,600 depending on the hospital, resulting in a 267-percent cost variation.

The average typical cost for a total hip replacement procedure was $30,100 throughout the 64 markets. In Birmingham, Alabama, hip replacement could cost as little as $11,300, and as much as $74,000 in Boston, Massachusetts, which also experienced the greatest variance within the same market, with costs as low as $17,900 for a 313-percent cost variation.

Benefit of Variation

BCBS notes that “a lack of cost variation within a market can negatively impact consumers when prices are consistently high.” For instance, in Fort Collins-Loveland, Colorado, there was only a less than one-percent difference in the price for a total knee replacement procedure, leaving consumers no choice but to pay the determined cost. Notably, the average hip replacement cost of $56,000 is more than $25,000 higher than the average cost for all 64 markets in the study.

Who Best Serves ACA Enrollees with Plan Decisions?

Only about a quarter of the 900,000 working-age Illinois residents who became eligible for insurance through the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) used the federal Marketplace, HealthCare.gov, during the 2014 open enrollment period, according to an analysis of census data by Illinois Health Matters. The Chicago Tribune reported that many of these Illinoisans pursued information about the ACA through regular insurance agents or brokers instead of through federally funded navigators. Florida, on the other hand, experienced the highest rate of health insurance enrollment using HealthCare.gov than any other state during the first month of 2015.

A March 2014 Urban Institute Health Policy Center survey noted that 7 percent of those looking for coverage used or tried to obtain assistance from navigators, application assisters, certified application counselors, or community health workers, and 12 percent used or tried to use assistance from an insurance agent or broker. Further, the survey reported that navigators had been used by more than one in five adults who looked for information in the Marketplace.  The question arises whether ACA enrollees are better off using navigators or insurance agents.

Navigators

Section 1311 of the ACA requires the federally run Marketplace to make navigators available and authorizes HHS to provide grant funding to assist states to plan and establish their own Marketplaces. A state can use the grant money to plan and administer its navigator program, but navigators cannot be paid by these grants; they are paid through the operational budget of the Marketplace. The navigators complete 30 hours of HHS-approved training, which includes information on qualified health plans (QHPs), insurance options, public outreach activities, Medicaid eligibility, and enrollment processes. Navigators help consumers successfully wind through the Marketplace website and choose the health option that is best for them. Navigators are restricted from asking consumers about specific health issues and from leading consumers to a particular health plan option; thus, there is no financial incentive to steer consumers into higher priced plans. Navigators are specifically trained about the ACA’s coverage options, particularly Medicaid. The disadvantage of using navigators is that consumers must provide personal identity information during the enrollment process, and concerns have been raised in the past regarding navigators’ access to personal information and identity theft.

Insurance Agents

Insurance agents may ask consumers specific questions about their health and are then able to recommend specific plans or insurers that may attend to those health needs. The con, from a consumer point of view, is that insurers pay agents a commission on plans sold (usually a percentage of the premiums), which may incentivize agents and brokers to sell higher-priced plans. Further, insurance agents primarily deal in private health insurance rather than the ins and outs of Medicaid and may not be adequately equipped to help consumers make the right coverage choices.

Is Time Running Out for Navigators?

Whether enrollees use navigators or insurance agents is a personal decision, but the need for navigators may be short-lived. For instance, Kaiser Health News reported that Illinois is spending about $25.8 million in federal funding for more than 900 navigators for the open enrollment period ending February 15, 2015. The expense has motivated Get Covered Illinois, the state’s Health Insurance Exchange, to invest $150,000 to help 13 insurance brokerages pay for co-branded marketing materials, said Jennifer Koehler, Get Covered Illinois’ executive director. The site getcoveredillinois.gov currently lists approximately 150 insurance agents who have completed state training courses in Medicaid and data security. It is possible that in the future, enrollees may not have a choice in who assists them with Marketplace enrollment as other states could expend more money to engage more insurance agents.

CMS Used Consumers’ Personal Data to Streamline, Improve HealthCare.gov

CMS has undertaken a review of the privacy policies, contracts for third-party tools, and URL construction after it became publicized that HealthCare.gov sent consumers’ personal data to private companies. In a press release, a CMS official said HealthCare.gov used consumers’ information to streamline and improve the consumer experience—to gain data regarding “when consumers are having difficulty, or understand when website traffic is building during busy periods.” The official also said it used the information to educate the uninsured about the importance of health coverage, the role of the Health Insurance Marketplace, and available financial assistance through targeted digital media and advertising.

Personal Information Sent to Contractors

Reportedly, the types of information sent to third-party contractors may include age, income, ZIP code, smoker status, and whether a consumer is pregnant. Contractors may have also received information such as computers’ internet addresses, which can make it possible to identify a person’s name or address. The Obama Administration has said that the contractors are barred from using the consumers’ information for their own business interests, though it has not specified how it ensures the companies are following such rules.

Improving Protection of Privacy

In the release, Director and Marketplace Chief Executive Officer Kevin Counihan stated that the agency is determining whether additional steps are needed to improve the protection of consumers’ privacy but that many tools available on HealthCare.gov do not require consumers to provide their names or fill out an application to receive information. URLs of pages requiring the provision of sensitive information are encrypted so that third parties are not able to view the data entered by the consumer.

“While we have taken steps to improve HealthCare.gov, we know building and maintaining a website is an evolving process,” Counihan said. “[T]hat’s why we will continue this review and take any concerns raised about privacy seriously and will work to address them head on.”

Nurse Practitioners to the Primary Care Shortage Rescue?

As the U.S. population grows and health insurance coverage expands, the demand for primary care is steadily increasing, giving rise to a shortage in primary care physicians (PCPs). In answer to this shortage, Kaiser Family Foundation (KFF) suggests filling the gap with increased use of nurse practitioners (NPs).

ACA Provisions

The Patient Protection and Affordable Care Act (P.L.111-148) (ACA) contributes to health coverage growth across the country and provides incentives to PCPs to address Health Professional Shortage Areas (HPSAs). Not only does the ACA offer a 10 percent Medicare payment bonus for five years to physicians and general surgeons practicing in HPSAs, the ACA also allows the HHS Secretary to award three-year grants to eligible entities to operate NP programs as part of a training demonstration program. Grant awardees will enroll and employ graduates of NP programs and provide one-year training for careers as PCPs in HPSAs. In 2012, HHS awarded $15 million in such grants to support 10 clinics.

Shortage

KFF notes that at least 58 million Americans reside in geographic areas or belong to population groups that are considered HPSAs, in which the supply of PCPs relative to the population falls below federally defined standards. The proportion of Americans living in HPSAs varies from state-to-state, with a little over 1 percent in Nebraska to 57 percent in Mississippi. In 19 states, the proportion is at least 20 percent and in six states, it exceeds 30 percent (Alabama, Arizona, the District of Columbia, Louisiana, Mississippi, and New Mexico). It is estimated that by 2020, there will be a shortage of 20,400 PCPs.

Power of NPs

NPs are registered nurses who have completed Master’s degrees or higher-level nursing degrees. Nearly 90 percent of all NPs are trained in primary care and able to prescribe medications. NPs are more likely to practice in urban and rural areas and serve a high proportion of uninsured patients and other vulnerable populations. Research shows that NPs can manage 80 to 90 percent of the same care provided by PCPs, although NPs achieve training in fewer years than PCPs (an average of six years of education and training versus 11 or 12 years, respectively).

Barriers

Unfortunately, there are some barriers to the extended use of NPs. Some states require NPs to have a regulated collaborative agreement with a PCP in order to provide patient care and limit NPs’ engagement in at least one element of NP practice, according to KFF. Only 20 states allow NPs to have full-practice authority.

In its 2011 report, “The Future of Nursing: Leading Change, Advancing Health,” the Institute of Medicine (IOM) specifically noted, “Remove scope-of-practice barriers” as one of its first recommendations to solve the PCP shortage. The IOM report called for a Federal Trade Commission (FTC) review of state regulations and for the Department of Justice (DOJ) to identify states with unjustified anticompetitive effects.