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"CHIP": THE CONSUMER HEALTHCARE

INFORMATION PROGRAM

JUNE, 1994

Kenneth W. Arnold

Certified Employee Benefits Specialist

2034 Liberty Lane

Gurnee,lL 60031

Telephone: 847-263-6351 (H)

847-782-1688 (W)

THE PROBLEM:

Many problems exist in our country's health care system as documented within the current debates in the media -- and in Congress. Such problems as the following abound:

1) High costs.

2) Duplicate resources in a particular geography.

3) Cumbersome paperwork.

4) Inefficient application and overutilization of high technology.

5) Unnecessary, or detrimental procedures performed.

With well over 10% of our entire GDP devoted to health care in this country, and with

the future baby boomers really having a need for increased health care starting around

the year 2010, the United States can neither afford such a large sector of its

economy to be so inefficient nor have the entire system become untenable just

when we need it most.

BACKGROUND CONSIDERATIONS:

Like any other sector of our free market economy, CONSUMER KNOWLEDGE IS

VITAL TO THE EFFICIENT USAGE OF RESOURCES. We do not purchase

automobiles without knowing such things as the price and various features. In this way,

we may compare them to other providers and determine, as consumers, which product

gives us the greatest utility. WHY SHOULD HEALTH CARE CONTINUE TO BE SO DIFFERENT?

In the past, perhaps, there were some excuses. The lack of computers and

centralized, standardized databases was a major obstacle given the multitude of

ailments a person could have. And, yes, there was resistance by Doctors to have

ANY review of their methods or their resultant costs/mortalities by outside parties. But

today, the former is fully existent and the later is already greatly changed by the

powerful, unrelenting forces of the free market in such areas as managed care corporations.

Already existing in formats of ICD-9 codes are computer databases of U.S. health care

provider's charges. They reside with the Social Security Administration (Medicare), the

respective State Medicaid Program administrators, and the major health care plan

providers around the country. Items such as the cost of a particular event, its outcome

as it pertains to mortality, and whether there were complicating factors (comorbidities)

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as it pertains to mortality, and whether there were complicating factors (comorbidities)

with the particular case would be able to be gleaned from such databases. These

databases may presently be in different technical formats. However: all gather these

type data items to pay and administer health care benefits to their customers and

health care providers.

A MAJOR SOLUTION TO THE HEALTH CARE CRISES:

There is no single magic answer to the Health Care crises. However, the solution with

the BIGGEST effect has got to be to put the power of information in the hands of the

consumer. Economics dictates that consumers, when given all appropriate information, WILL

make rational and efficient economic decisions. And Health Care is not the single exception.

Giving consumers knowledge on the Quality of a particular provider, and their local

competitors, will directly and indirectly attack all of the problems cited at the beginning of

this white paper. Not only will consumers rest easy in the knowledge that a particular

provider is a low cost provider AND won't kill them -- but they'll know which providers

are butchers (i.e. have high mortality ratings). As a recent RAND Corporation study

found, the quality of health care providers is NOT correlated to their costs. They found

as many high cost butchers as low cost butchers. This system, hereafter called the

"Consumer Healthcare Information Program (CHIP, for short), will show both types

of providers to the consumer. They can then "vote" with their dollars elsewhere.

WHATS NEEDING TO BE DONE?

To give consumers this information, it is proposed that the U.S. Department of Health

and Human Services' Agency for Health Care Policy and Research be instructed to

initiate the following project steps:

A) Request a monthly computer tape from the Social Security Administration, State

Medicaid Administrators, and the top 10 private health care insurers in the country.

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This monthly report on all claims processed in that month would have the various

healthcare-related information previously outlined.

B) Develop computer programming to reformat each tape into a standard format to be

loaded into the brand new, central Social Security Administration super-computer

system.

C) Develop computer programming for combining all ICD-9 codes under each health

care provider with the provider's average cost and mortality probability over a rolling

one year period being depicted. This data would be illustrated to the user graphically

and quantitatively on remote Personal Computers hooked up via modem. It would

also, in stage one, not consider any cases having comorbidities (e.g. a lung transplant

patient also having bone cancer). This would enable them to, within an estimated 1 1/2

year time period, go on-line without any potential inaccuracies from wholesale inclusion

of comorbidity cases. Adding within two years thereafter all cases having

comorbidities by "severity-adjusting" these particular cases merely fine tunes the

results and completely eliminates the argument otherwise made by some providers

that: "The reason my costs are higher than your costs is because I treat sicker

patients." (NOTE: The private sector is already doing this per the attached.)

D) Establish hardware specifications for the computer users and, where required, be

the central supplier for such hardware to all nationwide Social Security Administration

offices. (NOTE: Existing Social Security Office PCs could do the job if one is so

designated within each office. Those few offices unable to designate one could

request an additional PC for such purposes. Est. cost: $ 1,500 per PC purchased.)

How Would C H I P Operate?

In operation, CHIP would be used as follows:

A) A consumer would go to his local Social Security office when wishing to determine, for a particular ailment, who the quality health care providers are in his area – or any other geography of their specification.

B) At the Social Security Office, the consumer would look up the appropriate ICD-9 code he wishes information on. His private doctor could also have already given him the appropriate code.

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C) He then, sitting at a personal computer conveniently located within that office, would

input his home zip code (or other if he wishes providers around a different locale) along

with the designated ICD-9 code.

D) The computer would then give him a graphical depiction of data by provider (i.e. bar

charts with cost in one bar and mortality rate in the other). The provider list would be

all providers within a 20 mile radius of the consumer's zip code. If there are not three

providers or more, the computer would expand the search until the minimum of three

health care providers is found. If greater than 10, the user would initially receive the

one's having the most favorable cost/mortality statistics. He could then elect to see the

others on additional screens and printouts.

E) The consumer can now elect to receive a printout of data (not the graphs) which

would provide, in addition to the cost and mortality statistics of a provider, the provider's

address and telephone number.

F) The consumer is then free to further investigate any of the illustrated providers by

such means as on-site tours or discussions with his private physician.

In none of the above system features would the individual consumer be charged. All

services would be provided free. All healthcare providers, however, would be

charged moderate user fees. For this, however, they would get comprehensive

computer reports across all coded ailments (this feature may very well make the

program pay for itself).

THE MANAGED CARE SECTOR

Because of the increasing share of all health care delivery which is being done through

Health Maintenance Organizations (HMOs), one needs to consider this sector of our

nation's health care delivery system. The proposal outlined above would generally

mesh well with this structure of health care delivery.

In an HMO model, it is the HMO and not the individual consumer who manages health

care delivery relationships. It is the HMO that reviews various health care providers

for being efficient and effective health care providers and then chooses the facilities or

physicians who meet their criteria to join their network. HMO members then merely

pay their set dollar copays regardless of which provider in that network they go to.

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Because of the operation of HMOs mentioned above, HMO participants would not

directly utilize the consumer health care information database. It would be their HMO

who would well utilize this database in selecting, or maintaining, their panels of health

care providers. Like other physicians and providers, HMOs could request

comprehensive reports on any health care facilities desired.

One last point of consideration is that of the "closed model" HMO. This HMO structure,

less prevalent than some other type HMO models, has company-owned

facilities/Doctors who only service members of that particular HMO. They do not treat

the general public. Although the strong current trend with them is to develop and/or

further refine their internal systems of identifying costs; there are a minority of HMOs

who still do not have cost information by ICD-9 code because it is not strictly required.

They have no Medicare/Medicaid patients and no outside insurance carrier is

reimbursing their expenses.

Despite the current status of databases with these "closed model" HMOs, they would

still get some level of relevant information on other providers using the proposed

database. Moreover: the speed at which they flesh out their databases to get even better

knowledge of their own costs would be greatly accelerated by this initiative. Closed

model HMOs would want to sooner, rather than later, know even more precisely how they

stack up as a health care provider versus their competition and, similarly, provide such

data for public use within C H I P.

CONCLUSION:

Utilizing presently existing databases, already operating government super-computers,

and established/convenient Social Security Administration offices and equipment

makes all of the present, expensive and complex health care reform proposals look

almost ridiculous in comparison. Make no mistake, there are other items being

discussed in Washington that also will do good. But with a proposal like this that

could be online in 1 1/2 to 2 years and only cost an estimated $3 to $5 million; this

initiative's near-term horizon, low cost, and overall efficiency would be a model of

government using an efficient, simple solution where others would throw billions of

dollars at the problem.