An Innovative Solution to Rising Healthcare Costs

The Problem

Health care costs are soaring. After many failed attempts to control these costs, it’s time to rethink the word “health care” by putting more emphasis on health and less on care. A paradigm shift is needed, and this starts by seeing ourselves as consumers of health care who are in control of what our dollars purchase, and not as patients who passively accept what’s offered by physicians or an employer’s health plan.

The Cause

Consumers have a big role in getting health care spending under control, but most health care users don’t understand how their choices have contributed to the current challenge. They don’t understand the true costs of their lifestyle choices and the impact those choices have on the cost of health care

Did you know that from 1998 to 2004, the average cost of an abdominoplasty (tummy tuck) rose by 19%, only slightly faster than the rate of inflation? By comparison, per capita health care spending increased by 49% over that same period. A tummy tuck is an elective surgery not covered by insurance; those who decide they want or need the procedure pay for it out of their own pockets. Because it’s their money they’re spending, they’re unlikely to make frivolous decisions-they won’t, on a whim, run to a plastic surgeon to undergo a costly and invasive procedure without first doing their homework. Medical procedures paid for with consumers’ hard-earned money are carefully researched, considered, and weighed against other options. It’s what an informed health care consumer does.

In contrast, most consumers are unaware of the actual costs of the health care services covered by their insurance plans. When billing and payment are arranged between doctors and insurance companies, consumers don’t think twice about going to the doctor or getting a prescription filled. For most consumers, it’s just a co-pay.

Simply put, when there isn’t a “real cost” associated with medical care, consumers won’t take the time to consider the cost or whether they really need the service they’re seeking – this kind of behavior leads to unnecessary use of health care and drives up cost.

The Current Solution

The difference between using traditional managed-care techniques to reduce costs and helping consumers monitor their own behaviors and health care spending is driven by one major factor: motive. Consumers are focused on saving money, especially when it’s their own. Their focus on money is tempered by attention to their health. By becoming better informed about the care they receive and the lifestyle choices they make every day, consumers not only avoid using the system unnecessarily but also guarantee their health is the #1 priority for them and their families. That mindset benefits their employers and the insurance companies underwriting their risk.

A New Approach

Consumer-driven health plans (CDHP) are health insurance plans that combine a lower premium, high deductible health plan (HDHP) with a health care account. The tax-preferred money contributed to a health care account, combined with some out-of-pocket expenses, covers health care spending up to the amount of the annual deductible. This health insurance solution is highly effective because of its philosophy, which is governed by three principles: transparency, responsibility, and opportunity.

Principle One: Transparency

In a traditional health insurance plan, a consumer goes to a health services provider without considering the visit’s cost. In most cases, all the consumer pays toward the cost of the service is his or her co-pay. The inherent design of this health insurance product hides the rest of the cost from the consumer. Without knowing the true costs, consumers have no incentive to consider their options and choose the most appropriate, cost-effective treatment.

Principle Two: Responsibility

With knowledge comes responsibility. Consumers have a responsibility to live a healthy lifestyle and mitigate health risk issues (i.e., diet, exercise, sleep and stress). They also have a responsibility to understand the value of the health services they receive – it’s up to them to make informed decisions about how they use them and carefully consider their options in a non-emergency situation. A responsible decision about using health services could be as simple as speaking to a nurse or taking a day off work to rest instead of making a trip to the doctor. In most cases, consumers can access the health insurance company’s nurse help lines for medical advice instead of going to the emergency room for non-emergencies. The help lines are staffed by registered nurses specifically trained to answer symptom-based questions and provide guidance.

Principle Three: Opportunity

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Stocks Surge Due To Healthcare Ruling

The Supreme Court upheld the 2010 health care overhaul law on June 28th, 2012 which caused shares of hospital operators to jump. The court ruled the health care law constitutional by a 5 to 4 majority. The vote includes a provision that requires most people to have health insurance or pay a fine for not having insurance. The law is be expected to help hospitals see more patients and more bills will be covered by insurance companies.

The Patient Protection and Affordable Care Act was signed by President Obama in March 2010, but not without a lot of intense debate. The law will allow parents to keep their children on their insurance policies until the child turns 26 and prohibits insurers from dropping members from plans who have become ill. The law also prohibits insurers from excluding children under the ages of 19 who have had pre-existing health conditions, requires insurers to spend a certain percentage of their “premium dollars” on medical care and it also authorizes the Food and Drug Administration to approve generic versions of biotech drugs. The push for more generic versions of biotech drugs is to drive down the rising costs of pharmaceutical drugs to consumers.

Health insurers won’t be able to exclude people with pre-existing health problems or make them pay higher premiums and consumers will be able to buy health insurance through exchanges by 2014. Parts of the health care law are being phased in.

After news of the health care law being upheld, hospital stocks rose. HCA Holdings Inc., the biggest hospital chain, rose $1.89 to $28.50, or 7.1%. Many other hospital chains also saw rises in their stocks because of the health care law. Part of the reason these stocks are rising is because hospitals will see more patients and insurers will pay the hospitals for fees. With more patients in the hospitals, there will be more fees for the hospitals to collect from the insurers.

Since many of the mandates don’t start until 2014 and when they do, most Americans will be required to carry insurance or pay the penalty. The penalty will start at $95 a year or up to 1% of a person’s income, whichever is greater.

The increased number of insured people also means that the number of patient records will also increase. Healthcare organizations will also need to stay compliant with HIPAA security standards which states that organizations need to implement layered security to prevent unauthorized access to patient records. Since many healthcare organizations have electronic health records for their patients, they need to protect them in a secure way.

An effective way for healthcare organizations to protect their electronic healthcare records is to incorporate a two factor authentication solution using one time passwords. This solution is effective, cost efficient and is a layered security solution. The most effective form of two factor authentication using one time passwords is using a login, as one factor, and a one-time password sent to a mobile phone, as the second factor. The reason this form of two factor authentication is so effective is because it uses an out-of-band authentication method to authentic users. This means that a separate channel is used to authenticate a user from the main channel.

For example, a doctor trying to access a patient record can use his login and password on a computer login screen as one form of authentication and also receive a one-time password sent to his mobile phone as a second factor of authenticating him. The mobile phone is the out-of-band authentication channel because the password isn’t being sent from the computer, but rather from a separate server which sends it to the mobile phone. It’s effective because if a hacker were to steal this doctor’s username and password, they still wouldn’t be able to login because they wouldn’t have the mobile phone which receives the one time password. It’s cost efficient because there is no more hardware to deploy or software to install.

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