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Summary  The line between health plan and provider continues to evolve: the Aetna-Carilion deal exemplifies providers backward integrating into insurance (and contrasts with other providers exiting commercial insurance business e.g. art part of last year’s Coventry deals) The Aetna-Carilion alliance appears to have compelling, multi-layered business logic and there will surely be more of these sorts of couplings in markets where there is a strong provider brand and a health plan with low share but deep capabilities and ambition. Using the provider brand to sell insurance creates challenges for health plans looking to sell products centered on… Read More

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Summary Health plan profits will be down dramatically in 2011 due to MLR rules Providing care management services to providers building out ACOs and medical homes can open new revenue streams outside the MLR constraints System profitability (health plan + provider) can be enhanced if the health plan allows providers to keep more of the savings from ACOs while requiring larger fees for its care management services * * * Could this be part of the plan behind Coventry’s touted close provider relationships and plans to acquire more health plan subsidiaries from major delivery systems? Coventry Health has… Read More

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Remember the idea that coordination will improve care? Well, if physicians do not get timely reports from other providers, their patients seem to have lower costs!!!  This from a new study out from the Center for Studying Health System Change.  More importantly, this paper throws cold water on the idea that providers generate a lot of unnecessary cost to fill up excess capacity in the delivery system.   As you know, conventional wisdom driven by the Dartmouth Atlas and other studies has it that that care utilization and cost can vary sharply across regions without being tied to better outcomes, e.g. when… Read More

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New MedPAC report on Medicare fee for service utilization finds large geographic variation not explained by underlying risk or better outcomes. Another indicator of our HC system gone haywire.    A couple of overarching datapoints highlight the variation.  Only 25% of Medicare enrollees live in regions where Medicare spending is within 5% of the national average (looking only at utilization the # is 30%) Spending in top decile region was 55% greater than spending in the bottom decile region (looking only at utilization, the # is 30%) But that is not the end of the story!  The… Read More

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Prediction 1: Despite all the beating of drums we do not think there will be any major legislative changes between now and 2012. controlling the house but not the senate and the White House does not give Republicans sufficient clout to fundamentally change the bill it is politically advantageous for the Republicans to keep the Democrats on the defensive on health care through the 2012 election cycle Prediction 2: Administrative proceedings with implementation of the big milestones will continue though there will be considerable friction and much name calling some of the thorniest issues will be kicked into… Read More

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A friend of mine pointed out some shocking data from a report released today from the Office of Inspector General. More than a quarter of Medicare hospitalizations result in adverse events, half of them “serious” (meaning prolonged hospital stay, permanent harm, need for life sustaining intervention, death).  Strikingly, almost half these situations arise are preventable.  In other words they are the result of medical errors, sub-standard care, lack of patient monitoring and assessment and hospital acquired infections!  According to the study, these cost the taxpayer over $4 billion in 2008 (which is when the sample was taken from). Here’s a… Read More