New Insurance CO-OPs Off to a Sluggish Start

New Insurance CO-OPs are off to a sluggish start in the health insurance market based on recently released data.  According to the National Association for State Health CO-OPs, a national trade association, the recently closed Obamacare health insurance open enrollment period saw over 400,000 people sign up for CO-OP coverage.   On an aggregate basis the number sounds good, but with CO-OPs in just 23 states, that comes to less than 18,000 CO-OP members per state on average.  In the health plan world, less than 18,000 members statewide makes you a tiny player and being a tiny player can spell trouble for a health plan.

For the uninitiated, a CO-OP is a non-profit consumer oriented and operated plan organized under provisions of the Affordable Care Act (ACA) to offer health insurance as competition to private health plans.  Under provisions of the ACA, the federal government has provided over $2 billion of loan support to help launch CO-OPs operating in 23 states.  Among various governance and operational requirements set forth in the ACA, qualified CO-OPs are expected to devote any profits towards lowering premiums, improving benefits or enhancing care for their membership.

Without having to pad their premiums to cover profits and income taxes, in theory CO-OPs should be very price competitive with private insurers, all other things being equal.  Unfortunately for CO-OPs, all other things are not equal.  Membership size matters a great deal in the real health insurance world and right now few, if any, of these new CO-OPs have enough membership size to compete effectively. 

The reality in health insurance is that taxes and profits only account for a few percent of the premium dollar, so not having to worry about them provides little edge to CO-OPs.  The key cost driver, by far, for health insurers is the cost of member medical claims, which eats up eighty percent or more of each premium dollar.  After medical claims costs, health insurers will typically see another fifteen percent or more of its premium dollars consumed by their administrative costs.   These administrative costs include all of the expenses associated with the people and systems infrastructure needed to build and manage provider networks, pay medical claims, manage utilization, service customers, distribute products and ensure compliance with a complex set of state and federal regulations.

At the end of the day, health insurance is a capital intensive business where economies-of-scale give a significant advantage to big membership plans.  Big plans can absorb fixed administrative costs more easily and, more importantly, they have serious bargaining power when negotiating medical service rates with healthcare providers.   In healthcare, as in most businesses, suppliers are prone to giving their best rates to the biggest buyers.  And with not much buying power, small insurers rarely get the best medical service rates from providers. Combine higher medical service rates with a proportionally greater administrative cost burden and the financial picture for small insurers is not so good.  Health insurance is a very tough business for the small guy.

Industry participants have known for a long time that bigger is better in health insurance, which is why the industry has seen significant consolidation over the past twenty years.  Small player after small player has exited the business over that past two decades, either through mergers, acquisitions and even plan terminations.  Right now the new insurance CO-OPs are small fry in the health plan business.   It is still too early to write them off as relevant players in the health insurance market.  But if these new CO-OPs want to thrive, they must achieve significant membership growth over the next 3 to 5 years.   Otherwise, many will suffer the same fate that so many other small health plans experienced over the past twenty years.

Is the Internet Giving Old-Fashioned Physician House Calls a Shot in the Arm?

Is the Internet Giving Old-Fashioned Physician House Calls a Shot in the Arm?  At least one innovative healthcare company is hoping to do just that.  As profiled in several commentaries here, internet and smartphone technologies are disrupting healthcare delivery in many ways.  We've got online doctors, online doctors for the webcam challenged, online dermatologists who can treat most skin conditions remotely and a growing number of web and smartphone enabled monitoring and testing devices (like a smartphone ekg) now available to consumers.  Driven by growing demand to make healthcare more convenient and more affordable, innovative companies are busy developing solutions and services that are reshaping consumer expectations about healthcare delivery.

So far a common theme in these new web and smartphone enabled solutions is the absence of any real contact with a healthcare practitioner.  To be sure, many of these new service options involve real-time webcam consultations where patient and provider interact.  And for some common conditions and for some consumers, that degree of interaction will suffice.  However, for many consumers a webcam consultation, even if only used for diagnosing and treatment of minor health conditions, seems inadequate.  We all know that a certain amount of good doctoring requires a tactile examination and more than a two-dimensional visual inspection.

If you happen to be a consumer who likes the idea of more convenient doctor visits, but are wary of the virtual consultation, keep an eye on service solutions like the one offered by Medicast.  The Medicast model allows a consumer to set up an account online or through a mobile app and then request a house call from a participating primary care physician.  After a house call request is made, a Medicast participating physician will call the consumer for a preliminary review of the consumer's symptoms and to arrange a specific time for a visit.  Physician house calls are made within 2 hours and are arranged at the consumer's home or office, or even a hotel room if the consumer happens to be visiting from out of town.  Services provided range from check-ups to urgent care, including the issuance of prescriptions and the administration of intramuscular injections. 

The Medicast service is available 24 hours a day.  Services can be purchased on-demand or on a monthly subscription basis.  Depending on the subscription plan purchased, monthly subscribers are entitled to a set number of free doctor house calls each year, stipulated discounts on additional house calls and services and certain other benefits.

Right now the Medicast service solution is only available in Miami.  However, the Company is indicating that it will be launching its services in Los Angeles/Orange County and the Kansas City markets in the next few months.  And it is actively working on plans to launch its service in the New York City and San Francisco markets in the not too distant future.

Medicast is an early entrant into this space, but it is unlikely to be the last.  In various markets around the country consumers can already use telephone-based services to arrange physician house calls.   Expect many of these service-providers to soon be integrating internet and smartphone based technologies into their platforms, giving the old-fashioned physician house call service model a shot in the arm.

Got the Itch? An Online Dermatogist Can Help

Got the Itch?  An Online Dermatologist Can Help.  As discussed last month in Your Online Doctor Will See You Now, growing demand for more convenient, less costly health care delivery has given rise to a movement toward online medical treatment.  For a variety of minor, common health conditions, consumers can now use web and smartphone enabled services to connect, at their own volition, with board certified physicians and other primary care providers in their State of residence for treatment plans and prescriptions, when medically necessary.

While companies like MeMD, American Well and Zipnosis have focused on facilitating online treatment for colds, allergies, ear infections and a variety of other common ailments, other innovative companies have honed in on specialty care areas that depend heavily on a visual diagnosis.  A prime example is dermatology.  DermatologistOnCall, Direct Dermatology and DermLink are among several companies that connect patients online to board-certified dermatologists for diagnosis and treatment of a wide variety of skin diseases and disorders.  While there is some minor variation between service solutions, in the basic model a patient sets up an online account, answers general health questions, uploads photos of their skin condition and then submits this information for review by a dermatologist.  A consumer can usually initiate a consultation 24/7, but these solutions are not live webcam consultations.  Instead, submitted photos and health information are reviewed by a dermatologist in the consumer's State of residence on a delayed basis, so it can take anywhere from 24 hours to several business days, depending on the service provider, for a treatment plan to be ready for a consumer.  If a prescription is involved in the treatment plan, it can be sent electronically to a pharmacy near the consumer's residence for fulfillment.  If the consulting dermatologist deems that an in-office procedure (like a biopsy) is needed, the consumer can arrange a referral to local dermatologist for further evaluation.

Using a similar online delivery approach, other innovators like YoDerm and PocketDerm have an even narrower focus.  These two services aim specifically at acne diagnosis and treatment, connecting consumers online to dermatologists for acne care and prescription medication.

 

Using telecommunications to remotely diagnose and treat skin diseases and disorders might seem novel, but it has actually been around since the 90's in one form or another.  The historical teledermatology (yes, there is such a term as Teledermatology) model has been aimed at serving patients who, for whatever reason, have poor physical access to a dermatologist.  Through a provider controlled telemedicine service, the patient is connected to a dermatologist for an online or mobile device consultation.  These provider controlled teledermatology service solutions remain prevalent to this day.  In fact, even the American Academy of Dermatology sponsors its own teledermatology program, called AccessDerm, that connects it member dermatologists to under-served populations in the U.S. via the internet and mobile platforms.  So the concept behind using the internet and mobile platforms to service dermatology patients is not a new one.  What makes these newer services, like DermatologistOnCall and DermLink, noteworthy is that they are providing a platform where consumers, rather than providers, initiate web-enabled  medical treatment for skin conditions and disorders. 

Colonoscopies No More?

Colonoscopies No More?  That is a question that came to mind as I read about a new at-home colon cancer screening test that is nearing FDA approval.  An FDA advisory panel recently gave its unanimous recommendation to the FDA that the agency approve the Cologuard Colorectal Cancer Screening Test from Exact Sciences Corporation for use in the United States.  As of today, the FDA has not signed off on Cologuard, but given the advisory panels support the odds of approval are pretty strong.  So what is Cologuard and what would its approval mean to the good, old-fashioned colonoscopy that everyone over 50 should have done, yet which so many try to avoid?

Cologuard is a novel approach that looks for certain DNA mutations in a stool sample that are caused by precancerous polyps or cancerous tumors.  Examining stool samples for cancer induced bleeding in the digestive tract are integral to the fecal immunochemical test (FIT), which is one of the more established colon cancer screening tests. The stool DNA approach taken by Cologuard performed exceedingly well in an extensive clinical trial that encompassed almost 10,000 participants.  All trial participants provided samples for Cologuard stool DNA and FIT screenings and then underwent a colonoscopy.  The trial results (which are discussed in this article - Multitarget Stool DNA Testing for Colorectal-Cancer Screening) found the Cologuard stool DNA screening test to materially outperform the FIT at detecting colon cancer and precancerous polyps.  In the study, Cologuard detected colon cancers 92% of the time as compared to 74% for the FIT.  Its sensitivity to detecting precancerous polyps was not as good as its effectiveness at detecting cancer, but it outperformed the FIT by a wide margin at these tasks too.  Based on these trial results, it is easy to see why the FDA expert panel is recommending approval.

So what happens when Cologuard, or another stool DNA test, gets FDA approval?  Probably not much at the outset.  Many physicians will be compelled to prescribe it instead of the FIT because of its better accuracy.  Of course, until health plans agree to cover stool DNA tests, patients will resist paying out of pocket for it.  In due time, health plans will come around and agree to cover these new tests and once that happens, stool DNA tests will likely take market share from the blood based screening tests.

While the Cologuard clinical trial results indicate that it outperforms the FIT as a colon cancer screening test, no one should expect it to diminish the use of the conventional colonoscopy any time soon.  Even as good as stool DNA screening results appear to be, they fall short of what a colonoscopy can do at detecting colon cancer and precancerous polyps.  Stool DNA tests could put a dent in colonosopy volume one day if, with further refinement, they could get closer to 100% accuracy at screening for cancer and precancerous polyps, but that day is not is not imminent.  Until then, the conventional colonoscopy will remain the gold standard for colon cancer screening.

For more information about your colon cancer screening options, visit the Colon Cancer Alliance.

Online Doctor Service Now Nationwide

One of the companies profiled in our Your Online Doctor Will See You Now commentary was MeMD.  The Company announced earlier this week that its online doctor service is now available in all 50 states.  MeMD users can set up an online medical consultation with a MeMD participating provider and obtain an e-prescription, when medically appropriate, from anywhere in the United States, including the District of Columbia. The Company offers single-use and monthly membership-based options for consumers and businesses seeking telehealth services and health benefits. The MeMD service, like other online doctor services, is aimed at common, minor health conditions that can be safely diagnosed and treated in a virtual environment.  The common cold, the flu, allergies, bronchitis, earaches, sinus infections, urinary tract infections, pink eye, and sore throats are among the many minor health conditions treated by an online doctor service.  With MeMD, users can consult online with a MeMD Provider who is licensed and has prescriptive authority in a patient’s particular state of residence.

For more details, visit the MeMD Blog.