Interview with Al Parrish
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Al Parrish, whose office is located in Anchorage, is chief executive for Providence Health & Services Alaska. Providence is the state's largest health care provider, and is the largest private employer in the state. In this wide-ranging interview, Parrish discusses legislation he would and would not like to see in coming years, his concept of health reform, makes a few comments about the respective roles of non-profits and for-profits in the health care field, and says a few things about health care financing that he thinks his Republican friends may not like. This interview was conducted September 15, 2008, and has been edited for length and clarity.
AHPR: In May of this year, the Anchorage Daily News published a commentary you wrote titled, "Regardless of Income, Doors to Healthcare Should Be Open." In that piece you wrote, "We believe that health care is a basic human right and that all people should have access to health care regardless of their social or economic circumstances." I think that's a very powerful statement, so my question is: Do you believe that this right should be a matter of public policy?
Parrish: Yes. It should be the same as education.
AHPR: Just to follow up on that, do you believe that policy could be implemented at the state level, specifically in this state?
Parrish: Yes. In fact I think right at the moment Alaska is blessed probably with being about the only state that really could easily put together a health care reform. We have basically borders that are not connected to any other borders in any other state so that it would not have bleed-over from other states. We have a population base that is manageable as it relates to health care reform. Basically, without federal recipients, we're probably talking about something in the vicinity of maybe 480,000 to 500,000 people. It's like a large neighborhood in Los Angeles.
We have a state that is -- for its population size -- very wealthy, so that if we went down a road that actually was not the exact road we should be on in health care reform, we wouldn't break the bank even if we stubbed our toe a couple of times -- not that we would. I believe that we really have -- not only those of us in health care -- have an obligation, a moral obligation to begin moving health care reform in a constructive manner in the state. The first beginning really is a health care reform commission, and that's where I think it needs to really begin. We attempted to try to get that last year, without having it complicated by other aspects, but we were unsuccessful at doing it, so it's [a] major effort this year.
"This year we're looking to start the stage with one health care reform
commission bill that the governor feels comfortable with, and that we
as an industry can feel comfortable with, and that has yet to come
together. It is our hopes that by the time the legislative session
begins we can have a bill drafted that will do just that."
AHPR: You note in the article that it is critical to "bring the key stakeholders together to develop recommendations for reform. Legislation to establish a health care commission was proposed in this year's legislative session, but it failed to pass." I believe there were actually four separate bills that attempted to do that, and they all failed. If this is so important, and apparently it is because you were really just talking about this, why is it they all failed?
Parrish: Last year we got involved in between the governor and her wishes, and where we felt a health care reform needed to start. Her health care reform bill was based on other components being put into the bill, which was Certificate of Need and the [health care cost and quality] transparency piece of the legislation. Not that we don't believe in transparency, we do believe in transparency. But really, we believe that that should be in the purview of some of the things that come in health care reform that the health care commission should look at.
The Certificate of Need should be a tool, used by the health care commission in reference to health care reform, and it doesn't necessarily have to be done together with the health care reform commission bill. So we attempted to try to do that through just having a health care reform commission, but again, because politics is politics, and [given] the amount of uncertainty that this was the direction by the legislature to go into, there was not yet unanimity within all the groups. It was finally decided that nothing would happen this last year because of just the confusion around it, I think, and the legislators just did not want to deal with it, with the other issues that were before them.
This year we're looking to start the stage with one health care reform commission bill that the governor feels comfortable with, and that we as an industry can feel comfortable with, and that has yet to come together. It is our hopes that by the time the legislative session begins we can have a bill drafted that will do just that.
AHPR: Do you have some idea of where that would come from? Who might write it or who might sponsor it?
Parrish: At this moment, we probably don't want to second-guess who that might be, but we've got several legislators that have indicated in the past they would be willing to do it, if we could get unanimity among all the parts. And by the way, that health care reform commission should also have a guiding set of principles that deal with access [to health care] affordability so that there should be a kind of set of principles that will allow them to operate.
"I believe that you just can't put state representatives on there. I
think that you need to have [representatives of the health care]
industry and policymakers, along with the users and payers. All the
stakeholder groups should be represented in that health care commission ..."
AHPR: What elements or criteria do you believe would make for a successful health commission? For example, the composition of the commission ...
Parrish: I believe that you just can't put state representatives on there. I think that you need to have [representatives of the health care] industry and policymakers, along with the users and payers. All the stakeholder groups should be represented in that health care commission that are willing to take and devote the time and energy in making changes in health care. It can't be made up of just five or seven selected people that are chosen by the governor. That doesn't have all the stakeholders at the table at the same time. Otherwise, you'll never get anything accomplished. It will be fought, and there will be even a chance that people will criticize it. If all the stakeholders aren't there, it'll take on a different dimension than it should.
AHPR: Just one last follow-up question on this particular issue. What do you think ultimately the purview, or the mission of this commission should be, as a statewide health commission?
Parrish: Well the purview would be to set the stage and enact, or have enacted or drafted legislation that will then set in place health care reform so that it becomes inevitably available to all in the state of Alaska. That's a 100,000 foot look at it. They would be the ones, in my mind, that would then move that ball forward.
AHPR: I ask because in some states, for example, the health commissions have regulatory responsibilities in different areas, but it sounds like your concept is more policy-oriented rather than, say, regulatory.
Parrish: Yes, well, regulatory might eventually happen if that becomes a process that's required under health care reform. That could be something that comes out of the health care reform commission later on, but initially going in, it is policy setting. It is setting in place the policies, the programs, the formation of how we get access for all.
AHPR: Now, let's get to those core principles for health reform mentioned in your article. The first is "improvement of health care quality and efficiency." Could you comment on what public policies you believe are necessary to achieve these ends?
Parrish: [For improvement of health care] quality, its transparency. What raises the bar faster than anything else is making sure that the public knows where you are in the quality of the product or the services that you're offering. In health care it's always been kind of difficult to find that information out.
Part of what is happening today is CMS [Centers for Medicare and Medicaid Services] is not publishing those numbers and those statistics which are going to be beneficial. Beginning October 1 they will be a requirement. Prior to October 1 this year, it was voluntarily done, and most of us in the state of Alaska, as far as hospitals were concerned, were all ready producing this information. There are a few hospitals that chose not to until they're required to -- starting October 1.
That also exists in reference to that of patient satisfaction indicators and scores. So not only will you have the quality of the process itself -- in reference to that of the transparency -- which will begin to raise the bar of quality, you also then have the ability to understand what the patient feels about the services that they are receiving within that hospital or [from] a caregiver.
AHPR: So it sounds like you're saying that the policy has already been put into effect.
Parrish: Well, only part way. There are other [health care quality and patient satisfaction] indicators [that will be implemented] in the future. But there has to be, in my mind, further transparency in reference to billings, things of that nature that will then have to come out of that that will raise both quality and become more transparent in reference to how much the services are actually costing the individuals.
AHPR: The second core principle you mentioned is "health care accountability," and you say that we must be transparent about our costs and quality. Is there anything additional you would like to add that you haven't already said in addressing the previous question in that regard, in terms of accountability?
Parrish: Not right at the moment, there may be something that comes to mind as we kind of finish up this interview.
"Health care for all at some basic level we believe will actually reduce
the overall health care costs in the United States, or if it's on the
state level, just in the state."
AHPR: The third principle that you espouse is that "we must improve and expand health care coverage." So what new or revised public policies would you be interested in to achieve these ends?
Parrish: Well, I don't know what exactly a policy would look like or a statute would look like that would enable access for all individuals to have health care at a basic level. But what I can tell you is the end results should be the availability of health care at a basic level for all individuals.
That would be somehow either provided by an employer-based system, [or] if not done by an employer-based system, [then] some sort of a system that allows for those that are unemployed, those that are homeless, things of that nature to be able to be covered by a source such as government -- could be a quasi-government kind of agency.
I don't know. I haven't thought that piece of it through, but the end result should look like that you have access for all. Health care for all at some basic level we believe will actually reduce the overall health care costs in the United States, or if it's on the state level, just in the state.
AHPR: You conclude your list of core principles in this way. You say "Finally, we must strengthen public programs. Government funded health insurance programs play a larger and larger role in the health status of seniors, low income families and children. Those programs, Medicare and Medicaid, must become more patient-centered and focused on meeting patient needs, whatever their stage of life." Would you discuss what new or changed policies would advance these ends?
Parrish: I'd probably start from the younger participants in the society, the children. We now have the children's program that's made up of Denali KidCare, which was a program that started to ensure that we would provide some level of health care for those families that weren't able to provide for themselves or their kids. Now we have a certain threshold dollar-wise on it.
We should [take another look] at all that, to ensure that we have the right families covered and the right kids covered, and so forth. I don't know if we have the formula exactly correct today as it relates to that, so [it is important to become] more robust in reference to how we look at that particular program and the population that it's serving. Is it serving the right population, or should we be serving a larger population?
There are some arguments to say that that would then reduce the exposure on programs that are covered under employer-based health programs. So there's some arguments that you don't want to necessarily to go down too far on that because it takes the onus off the businesses to continue to supply that sort of coverage.
On the other end of life, there are a lot of programs that probably need to be looked at that relate to the whole Medicare piece or the Medicaid piece of it that covers long-term care. And long-term care is a cost-based situation. You get reimbursed for your costs, and not all of your costs, so you end up in the situation where you're constantly subsidizing long-term care out of your acute care delivery system.
So nobody gets into the long-term care settings because there is very little money in it, and if there is any money in it, mostly you'll find not-for-profits that are subsidizing it because they have acute care beds that they've got to take and move patients through to a long term care setting. That is the only way that today you can really justify, in a lot of cases, your long-term care beds in the state.
There's one not-for-profit that's just attempting to try to get one started, trying to run one here in the state, and it's very difficult. So that piece of health care delivery, the long-term nursing home situation, needs to be [looked at again] in the state. There are a series of those kinds of examples that we need to [look at again] as to how best would we make this.
Now, there are some economies of scale too. You don't want to be in a situation where you warehouse long-term care patients, but at the same time you want to create settings that allow for more of a residential feel. There are some terms out there today called the Eden principles, or the Eden model, or the green model which allow for a much more neighborhood kind of setting that also could very well be an answer to how to move people from an acute setting, out of the acute into a long-term care setting. That's much more inviting, much more friendly, much more in keeping with, as much as possible a residential feel, than an institutional long hallway nursing station kind of feel.
"... when you start peeling the onion back, as it
relates to how we look at long-term care in the state of Alaska, it has
been tragic."
AHPR: These aspects of long-term care you've been talking about, can these be addressed and made better, at least in part, by changes in public policy?
Parrish: If nothing but just the reimbursement piece, yes. But there are other pieces of public policy that I think would [be appropriate], that if when you start peeling the onion back, as it relates to how we look at long-term care in the state of Alaska, it has been tragic.
AHPR: Now that seniors are, I think, the fastest growing segment of our population, maybe there will be more political pressure to deal with this.
Parrish: The age cohort 65 and greater is the single largest, fastest growing cohort in the state. Numbers are still small, but percentage-wise, the fastest. The second fastest growing age cohort is those individuals that are 45 to 64. So you kind of have this bubble moving through the situation. We are one of the only states of the union that have all of our age cohorts rising. It shows that these two happened to be the fastest.
AHPR: Here is a question of a little bit different nature, kind of a follow up though. This principle of strengthening public programs seems to fly in the face of those who maintain that there should be less government interference in health care and that the private sector can resolve these problems and meet the needs. Could you give us some view on how this apparent contradiction can or should be resolved?
Parrish: Well, I've been a good Republican for most of my life, and I understand the desire to have business solve its own problems, competitiveness solving those issues. Health care is a different animal so to speak. It doesn't work that way, actually. When you look at health care costs, and you look at how to take care of communities, it's hard to structure a for profit delivery system that then responds to the whole needs of the society.
It's difficult for shareholders of a corporation to take on the same sort of mantel of public good that you have to have in health care delivery for all, because they're not going to want to take care of the unserved or the people that are unable to pay for health care. You can't ask stockholders to do that, and you can't ask shareholders to do that because that's not their role.
But a not-for-profit entity in health care delivery has to have certain protections to ensure that it continues to exist, like Certificate of Need, so there aren't people or organizations or other for-profits that are taking those slim portions of health care delivery that are very profitable and stripping them out. And then if you take advertising that goes into them competing, that's just added cost that has to be absorbed by those people that are paying the bill which are patients or at least the patient is the end payer. It's the insurance companies and businesses in between that are paying for it.
Health care is literally a different model. To be responsive to society's needs for health care or basic health care you have to not put it into a competitive environment necessarily, but you have to create an environment where those things make competition good which are improvements in products and advancement in qualities, but you can't be driven from a shareholders', stockholders', quarterly earnings reporting mentality.
AHPR: Thanks, that's a good explanation.
Parrish: It's an oversimplification of it.
AHPR: Right, right. It's a tough issue, but it comes up all the time. Moving on to a different subject, seniors on Medicare in Alaska have had a very tough time ...
Parrish: That's going to get me in trouble with my Republican friends by the way.
"Medicare patients are getting served; they are just getting served at
the wrong time and in the wrong place. The solution is to move that
wrong place, wrong time to the right place, right time, and the right
caregiver."
AHPR: I've also read recently that you received an award or designation as among the top 25 business leaders in the state of Alaska. That was two months ago, so I think perhaps some of your colleagues should listen to what you have to say. But in any case, seniors on Medicare and Alaska have a very tough time finding primary care providers who will actually see them, particularly new patients.
I understand that even the Providence Family Medical Center stopped taking new Medicare patients. So what are the short-term and long-term policy solutions to this issue that really occurs across the state?
Parrish: Let me make sure that the record is straight. We never in Providence ever stopped taking Medicare patients except at our family practice residency program, which is a clinic that we have on 36th, and that clinic is a residency program for family practice physicians, and has a rural influence.
Being a residency program, you have to see all people. We literally said, "Okay, we will take so many Medicare patients, so many regular patients, because those family docs are being trained on a three year degree program -- it's their last three years of medical school." We had to cap the Medicare because it wasn't just geriatrics or internal issues. We had to see all the population.
Now to get to the second part of the question. There are several models being proposed here in Alaska on how we can begin to increase the number of Medicare patients being seen on a primary care level. One is being run by and set up by the physician Dr. George Rhyneer who happens to be the principal, who is really driving it.
It is a model that will see a lot of Medicare patients in a day. In that process, hopefully, we'll be able to see through extenders -- such as PAs [physician assistants] and nurse practitioners -- rather than a primary care doctor -- except for just the first three or four minutes when the extender would then take care of the rest of the visit. This particular model is being now proposed, and may be one of the solutions.
There are other solutions in reference to where we get together and say, "Look, we need to really move the primary care entrance for Medicare from the hospital emergency rooms to a clinic situation." Rather than waiting until they get sick enough to come in into an emergency room, we get them into primary care earlier so health care costs are reduced.
Then you get them into a primary care situation where large institutions in health care systems like ours would then work with programs like Anchorage Neighborhood Health and put it into a neighborhood health kind of clinic for seniors that are on Medicare. We're working at trying to develop that sort of a model, in assistance with Anchorage Neighborhood Health, so that we are looking for alternatives other than the emergency rooms of hospitals.
Medicare patients are getting served; they are just getting served at the wrong time and in the wrong place. The solution is to move that wrong place, wrong time to the right place, right time, and the right caretaker. That happens to be in a primary care situation where they can come in and take care of themselves before they get so sick that they have to go to the emergency room.
That [explains] part of the skyrocketing costs, and I can't tell you that's it's a lot of it right now, but it is going be more and more [in the future in] Alaska. [We are going] to see that situation having more pressure put on it because even with the bump that the senator was able to provide with Medicare reimbursements for the physicians, it still isn't enough to really make it at a level where they feel good about it. That's how I'm understanding it from primary care docs.
"It has to be kind of like schools. I hate to say this but it has to be
like our educational process. You want to blend your needs with the
amount of buildings that you need to have and beds that you need to
have and try to drive the quality equation."
AHPR: What is or should be the proper role of the Certificate of Need in the state, and why has the governor been so determined to eliminate the Certificate of Need process despite the fact that the Certificate of Need negotiated rulemaking committee appointed by her then commissioner, wanted to keep the Certificate of Need?
Parrish: Well, you've got multiple questions in that one question, but let me say that I can't answer on behalf of the governor, but I would suggest to you that there is a need for the Certificate of Need for a number of what we would consider to be delivery centers. Hospitals, as an example, should have a Certificate of Need before you build the hospital -- especially a hospital, a long-term care center, an ambulatory surgery center.
I'm not so sure today that imaging centers and things of that nature are really worth the fight anymore. You've got things that are under the threshold like CTs [Computerized Axial Tomography] today that are less than $1 million. The threshold is $1,150,000 today for the Certificate of Need triggering, but the imaging world is changing so dramatically and rapidly that to continue to fight that battle -- we've probably lost it already.
But other things that are larger, like ambulatory surgery centers, hospitals -- especially hospitals, long-term care centers, as I mentioned earlier, those types of facility should have Certificate of Need. Otherwise the continuing costs of having unused medical services continues to then to add to the overall burden of health care costs.
If you have something that is only running 50% occupied, and as an example let's just say a hospital that's 50% occupied, that reimbursement for that particular hospital, because it's running less occupancy might be higher than what it would be if it was over here centered with some other part of the delivery system that is at 70% occupied. Your cost per unit goes up, and your overall health care costs begin to go up because you have unused inventory.
What you really want to do is blend your inventory with the need that's in the community for health care. It has to be kind of like schools. I hate to say this but it has to be like our educational process. You want to blend your needs with the amount of buildings that you need to have and beds that you need to have and try to drive the quality equation.
What competition does is try to keep pricing down and tries to keep the competitiveness in the marketplace. Try to create a different way of being able to do that under a model that doesn't have a lot of excess in it. Because you don't want to have excess, you don't want to have five machines when it takes you three machines to do it or two machines to do it.
AHPR: And this, you are implying, is the role of the Certificate of Need?
Parrish: Yes it is. And again, I think we probably have lost the imaging argument sometime back, because the cost of imaging today has gone down substantially. Let competition take care of itself maybe in that field.
"It's our intention to try to work with the nurses association and get
those compromises made as we move into this next legislative session so
that we can come out of there with a bill that serves their purpose,
it's well written, and it's better balanced."
AHPR: Moving on to something a bit controversial, I wonder if you could comment on SB 28: An act relating to limitations on mandatory overtime for registered nurses and license practical nurses in health care facilities. My understanding is it died in committee, but I was wondering if you could talk about your position on this bill.
Parrish: We as an industry had taken the position that the bill was poorly written and there needed to be some changes in there. We had suggested some changes that we could live with -- a compromise piece of legislation. It's our intention to try to work with the nurses association and get those compromises made as we move into this next legislative session so that we can come out of there with a bill that serves their purpose, it's well written, and it's better balanced. There was some bad public policy involved with that piece of legislation. We think that what their end result would be, could be done and achieved in a different way that wasn't creating bad public policy, and we're willing to work with them on that.
AHPR: So it sounds like we can expect a new version, at least one new version in the coming session.
Parrish: It would sure be our hopes that it would be. Yes, very much so. In fact we probably will be working on that with Senator Davis in [the] structuring of [a new version]. We know that she is very supportive of some sort of [legislation] that would reach the objective of what the nurses would want. It's our interest to do the same thing. We'd be more than prepared to work with them to get that, and our people are now devoting their time to figure out how to do that.
AHPR: I apologize for jumping around, but there are so many issues of interest in health care. I wonder if you could comment on the issue of the medical care workforce shortages in Alaska. My impression is, for example, in the last few years UAA has certainly put on a lot of additional training for various practitioners.
The PAs have doubled the size of their program, WWAMI [a collaborative medical school among universities in five northwestern states] doubled the size of it's program, but I wonder beyond this are there any public policies that you think are needed to address this problem, perhaps in the coming session. Are there any pieces of legislation you think that should be added?
Parrish: Well this isn't a legislative fix, this is a funding fix. We're just running out of health care workers for the amount of population that we have today, especially as the [baby boom generation] bubble rolls and their health care requirements go up as we age. You have to look for alternative ways to be able to address health care, and you have to do that through things like electronics.
As an example, here at Providence we have installed an electronic ICU [Intensive Care Unit], which will allows us to increase the number of beds that an intensivist has to cover in our ICUs. So today we have the ability to monitor probably up to 70 ICU beds from our electronic ICU unit. [This provides] a higher level of coverage than they have, in many cases, been able to provide ICUs in Fairbanks today or in Central Peninsula Hospital.
Electronically, where cameras [are in place] at the bedside and the monitoring devices are set up, that same information that you are able to get right in that room, you are able to electronically get [from] miles away and in real-time. [In conjunction] with that the protocols come up for whatever has happened to that patient at that time. [For example,] if heart rate has been going up, and there's sweating going on, and there's some other sign, then all of a sudden that triggers certain things. There is a [treatment] protocol that actually kicks out of the electronic equipment that indicates this is what most likely is going to happen to this patient if you don't take these steps with in the next few minutes.
Now again, oversimplification, but that's basically what happens. That particular doctor in that particular ICU, E-ICU unit, can then communicate with that nurse with assurances that they've got the most current information at their fingertips as it relates to symptoms that this individual is showing.
It is an amazing piece of equipment. In fact, we're just putting in the pharmacy protocols now, [and] we'll be able to utilize that with other hospitals that do not have the capability today of even having an intensivist in their ICU units. [Currently] they are being done by the doctor that typically has admitted to the ICU in Central Peninsula Hospital [or] in Fairbanks, and they are not there covered with an intensivist that really has devoted his life or her life to the function of taking care of people who are in the ICU units.
That's what has to change so that we have different ways of looking at health care -- and serving health care -- than just the traditional model of having nurses and technicians and therapists and so forth. We've got to look at it from different ways. That doesn't stop the fact that we need more therapists, that we need more nurses, and we need more pharmacists, that we need more physicians. Certainly we need those individuals. That comes from funding sources and having medical schools open up their ability to take more graduate students, or more students into their programs.
Here at the University of Alaska we are very fortunate to have a partnership with the university on the nursing program. We've advanced the nursing program because of the underwriting the industry has been able to provide, along with the university willing to open up more classroom space and devote more of our energy to the nursing program.
Today we are able to take just about every graduate that comes out of that program -- not that it satisfies all the needs of the state because we have now nurses that are leaving, that are advanced nurses in ICU and the OR [operating room] or the ED [emergency department], and these entry level nurses that are coming in, even though they are coming in into a pretty high level, they're still not ICU nurses. It still takes two or three years, and additional training.
AHPR: One policy matter that keeps coming up in this regard is the whole question of loan repayments perhaps sponsored by the state. Is that something of interest to you?
Parrish: Well, there's probably some thought that if you were able to take a student from Alaska that goes outside for training in health care in some sort of a degree program that reimbursement might help bring them back to the state of Alaska. That's possible. I'm just not a believer in having government do that necessarily, but in cases where that has to be done for a period of time, maybe that becomes one of the answers.
That could be part of what the health care commission looks at and says, "Okay, we really need to hire a number of practitioners in the state of Alaska. We need to commit to providing some sort of a loan repayment program if they come back and work in the state for a number of years, five years, ten years, whatever the amount is." That may be part of what the health care reform commission may use as a way to solve the issue in reference to practitioners or technicians or clinicians coming back to the state of Alaska. That would be where I would expect that the health care commission would say "Yes, this is one of the things we need to have. We suggest $2 million, or $5 million," whatever it might be in the budget.
"We have a responsibility in our mission to serve the poor and
vulnerable. We describe the vulnerable as anybody that happens to be
vulnerable. You can be the wealthiest person in the world and you could
still be very vulnerable ..."
AHPR: This again is a question that's a little off to the side, but I think that there are a lot of people interested in your answer on this. You are the chief executive of Providence Health and Services Alaska which is the state's largest private employer and includes the states largest hospital, yet Providence is a nonprofit organization.
How would you characterize the roles of nonprofit and for-profit health care sectors in Alaska? What space do they occupy or should they occupy? In other words, is there a difference between what not-for-profit health care providers and for-profit health care providers should be doing, or are doing?
Parrish: Well let me [discuss what they are doing], and not admit what they should do. We are the only health care system [that] because of the size, we are able to provide a continuum of care from basically the time that you begin life, your first breath until last moments of your life through our hospice and our palliative care programs.
We do it through a whole series of different settings from acute hospitals to long-term acute-care hospitals, to long-term care facilities; nursing homes to assisted living facilities. We do it through clinics, we do it through adolescence treatment programs for mental health, we do it through our CRC, we do it through our mental health programs inside of our hospital in-patient wise, and we do it through [a variety] of different settings. We do it through all sorts of different buildings and structures. Some of them are profitable, [and] some of them take a subsidy.
Now, for-profit doesn't think like that. We have a responsibility in our mission to serve the poor and vulnerable. We describe the vulnerable as anybody that happens to be vulnerable. You can be the wealthiest person in the world and you could still be very vulnerable as it relates to health care or the time of your life in reference to how your health conditions are, so you can be vulnerable.
We also have a caveat in reference to the poor. Our mission is to take care of the poor and vulnerable. I don't think if you were to walk into a for-profit entity you'd find the same sort of mission that we have in reference to how we accept our responsibility as an organization today -- health care, and the health care needs of this community or of this population. So, our role is much broader, much higher, [and] we have a larger purpose to serve than what a for-profit would be.
A for-profit is driven not on what kind of community benefits it provides, but it is driven off of the ability to generate net income so that shareholders will receive a dividend, or their price in their stock will increase. That's not bad. That's what the American system is all about, or a good portion of what it's about, and it should not be forgotten that that is good.
In health care I think it's just misplaced a little bit because I believe that health care has to take a broader look at what the population is. It has to be more like education. We have to look at health care like education. If we don't, we're going to end up in the situation that we are going to continue to be in. There are countries like Sweden, like Switzerland, like Germany, like England, like Thailand, like Singapore, even in Taiwan. Those countries all have health care delivery that has changed -- and especially some more recently than others have changed -- in mental attitude as it relates to how health care should be thought of. Health care is a basic right, and it should be thought about as the same thing you think about education.
AHPR: Education in terms of the predominance of public sector involvement?
Parrish: Correct. It is a universal right to have our kids educated in this country. It should be a universal right to have health care. I don't know how we'd pay for it yet, that's for somebody else much smarter than I am to have to figure this thing out. [Whether] it's done through employer-based programs, or if it's done in some other method, but everybody should have the right to basic health care. My Republican friends are going to dislike me, but it's going to be hard for them to fight that, though.
"I think you can take and mirror and marry the health care system that
provides access for all, with an employer-based payment system that is
rewarded for what the right reasons would be in reference to how
insurance companies would then help fund it or help manage that payment
system."
AHPR: I've heard you mention in public that you support a single-payer system. Would you please clarify what that means to you and why you support it?
Parrish: I'm not quite sure that a single-payer system is exactly how I meant it to sound. To me, the reimbursement model needs to be put together to address how to get access coverage for all. If the best model might be an employer coverage mixed with a government coverage of some sort -- be it state or federally funded -- then the employer base side of it could be based upon the ability to do it as we are now doing it with a multiple payer system.
A single-payer system, similar to what maybe England has, and its health care model is a much more socialistic way of looking at health care payments. I think you can take and mirror and marry the health care system that provides access for all, with an employer-based payment system that is rewarded for what the right reasons would be in reference to how insurance companies would then help fund it or help manage that payment system. You can get efficiencies in the management of that system through how well somebody is able to manage the resources of that insurance side of it.
That may be overly complicated in how you may want to eventually simplify health care delivery in the United States. There might be a possibility that that might work. I think there's the Massachusetts plan that we're going to know more about here at the end of September.
We're bringing [to a conference] the person that helped formulate that program in Massachusetts. We're bringing in some other experts in the United States in reference to single-payer system philosophy. We are going to know a lot more at the end of September after we get through the ASHNHA [Alaska State Hospital and Nursing Home Association] conference.
We'll come out of there with hopefully a better understanding of how health care reform is actually looking in certain states, and [they have] actually begin to try some mandatory employer-based insurance coverage programs; some philosophy in reference to what single-payer situations may look like; and how far down do you want to go on that road.
In my speeches, I have indicated that I, as a good Republican, might have to get to the point some day where a single-payer system may be the right system to go to. I don't think that should take away from the fact that the overriding principle is having access for all to basic health care. If it takes that to get there then we have to sacrifice, and that's more in keeping with what my gut and my intellect tell me.
If that's the end result, then [we have to do] whatever it takes to get there. If there are other ways to get there besides that, that still gets us the same thing, I don't have any hesitation. My inevitable goal is to ensure that [what] I can do as a human being is to try to get health care access, basic health care access for all. I'm going to work on that until I probably die. That's a mission to me.
AHPR: Apart from what we may have already discussed, what key legislation will you be monitoring, watching for, or perhaps promoting during the coming legislative session?
Parrish: Well, there will be the focus on the health care reform commission, which is the primary target for this year's session. In addition to that there will be monitoring and assistance where we can, in reference to the support of the university's budget on those things that are health care related, both capital and working capital, and their operating budgets. That is being proposed by the university, and we are working with the university on [these issues] today.
If we can come to an agreed-upon piece of legislation that effectively achieves what the Alaska [Nurses] Association and ASHNHA and others feel is appropriate in reference to the overtime issue, we will be supporting and working and watching that piece of legislation, if we can come to terms, as to what that piece of legislation looks like. Certificate of Need is not necessarily on our agenda. If it comes on our agenda, it will be there because somebody else introduces it. At least at this juncture today in our planning strategy that's the case.
"I really think that the answer to the situation today is how do we
start and put together this health care reform commission that then
takes what is incorporated in that piece of legislation and uses that
as the tool to begin the health care reform."
AHPR: Is more comprehensive reform, such as Senator Hollis' SB 160, of interest?
Parrish: Well, any place where we can open up the dialog on health care is great for me. If that helps open up further dialog, which I think it will -- and I've been supportive of that, I've told him that. I don't think that's the answer to the situation today. I really think that the answer to the situation today is how do we start and put together this health care reform commission that then takes what is incorporated in that piece of legislation and uses that as the tool to begin the health care reform.
To me, the structure has to be put in place to get health care reform into place rather than just putting pieces of it together through what maybe that piece of legislation does. [I support] any place where we can open up the door in reference to conversations on health care, and what it would mean to the society here in Alaska to have health care access for all.
We live in a society where we took that element off of our table for discussion. It was there if you needed health care -- you went down to the doctor and got it. That's what I believe health care should be all about. Somebody has to pay for that, but how we pay for that becomes the question.
AHPR: And finally, the very last question. Is there anything else you'd like to say to the readers of Alaska Health Policy Review?
Parrish: Support health care reform and support dialog on health care so that people begin to understand the real need in the community [to a greater extent] than what they do today. Most of us are blessed to have some sort of health care coverage in what we do, so we are able to have health care and the immediate need is not there. But for the poor, the elderly, the segment of our community, the 20% that are not covered, this becomes a real worry and concern to them. And it adds to the cost of health care by putting a hidden tax on those that are able to afford health care.
What we need to do is we need to figure out how to solve the situation so that those 20% of the population in Alaska and other parts of the nation are able to get coverage and the cost of taking care of them becomes less because they are seeing the right physician at the right time and in the right settings. So, keep on talking about health care. Keep on making it a dialog around the dinner table and making it a dialog around conversation with friends so that the awareness for health care reform begins to take shape in our society here in Alaska.
AHPR: Thank you so very much for your time and your comments.
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Interview with Jeff Ranf
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 Jeff Ranf is the immediate past president of the Alaska Association of Health Underwriters (AAHU). In this interview he discusses why the vice president of External Advocacy for GlaxoSmithKline spoke at the last AAHU convention, why the AAHU membership has not supported Senator French's health reform bill (SB 160), and his views on the concentration of ownership of the health insurance industry in the state of Alaska. In addition, he goes into some detail about the new health care plans he has developed in conjunction with the Foraker Group for employees of Alaska nonprofit organizations. This interview was conducted September 9, 2008, and has been edited for length and clarity.
AHPR: Please tell me what your occupation is, the firm you work for, and what that firm does.
Ranf: I am part owner of Wallace Group Services. Wallace Group Services has been in existence for about 36 years. Their claim to fame is the Alaska Federation of Native association benefit plan. We offer seven different plans on the medical side. We offer a couple different medic plans, a couple different dental plans, four different life plans, short term disability and long term disability.
AHPR: And you yourself are a licensed broker?
Ranf: I am a licensed broker consultant here in the state of Alaska. I've been in the business for approximately 25 years. I started in Montana and eventually moved here in 2001.
AHPR: And you also played a role in the Commonwealth North working group that produced a document on health reform two or three years ago.
Ranf: Yes I did.
"The purpose of our organization is to be an advocate for the consumer.
That's our primary purpose. We are advocating choice for the consumer."
AHPR: I understand that you are the immediate past president of the Alaska Association of Health Underwriters. Would you please explain what types of organizations and/or individuals comprise the membership of this organization, and explain what the purpose of the organization is?
Ranf: I am immediate past president, my tenure ended at the end of June of this year and Juna Penney, who is now employed at Providence Health Care System, is the new incoming president as of July 1. We are an organization that is a chapter of the national Association of Health Underwriters, which is based in DC. We are approximately 23,000 members nationwide strong. Our membership is primarily made up of insurance brokers, agents, and consultants around the country. We have approximately 100 members here in the state of Alaska, mostly here in Anchorage because the only chapter is in Anchorage, but we have members that are outside of Anchorage. We do have some members that are not a part of the health-insurance industry. We have two members that are hospitals here in the area. [It] is great to be able to have them share their concerns about health care and health insurance that we might not otherwise see in our own industry.
The purpose of our organization is to be an advocate for the consumer. That's our primary purpose. We are advocating choice for the consumer.
AHPR: What is the Alaska Association of Health Underwriters Benefits Expo, and what happens there?
Ranf: It's our annual convention. This year it's September 30, we have approximately 80 to 90 people that attend. We have speakers from all over the country that will come and speak to our group primarily. It's not closed to the public, but we don't advertise it to the public. It's an educational forum for us. The speakers that we have come in are providers. This year, our theme is costs, access, and quality in health care, and what are the challenges that we have in those three areas.
The speakers that we have this year [include] Al Parrish with Providence Health Care. Dennis McMillian, with Foraker, is going to come and talk about the challenges that nonprofits have in seeking health insurance and thus eventually healthcare. We have a number of speakers that are going to address all those issues in their various areas. It's totally educational for one full day. We bring all of our group together and we meet over at the Millennium Hotel, and we have great discussions.
AHPR: I was looking at the agenda for the 2007 Expo, and I noticed that the keynote speech was by the vice president of External Advocacy for GlaxoSmithKline. There was another presentation titled, "Pharmacy in the Alaska insurance market." What are the issues of importance in the nexus between the prescription drug market on the one hand, and the interests of the members of the Alaska Association of Health Underwriters on the other?
Ranf: The biggest challenge that we have as consultants -- to employer groups and individuals -- is to find the best possible, most competitive product that we can. What are the challenges facing individuals and employer groups when they go out and purchase a particular health insurance product that might involve a pharmacy benefit? The VP from GlaxoSmithKline walked through all the challenges of bringing drugs from the research stage to the market, and the total cost of that. His whole talk was based on why drugs are so expensive in this country.
Now, whether or not you buy that, that story is not necessarily material, [but] we need to understand what the industry is saying whether we believe them or not. Then the other person that we had come in talked specifically about the cost of drugs on the pharmacy benefit manager side, and the challenges of pricing those drugs in a health insurance plan so that they are competitive for the consumer, but not costing the plan so much money, thus [pricing] their premiums out of the market. This is a constant balancing act, and [we are constantly] encouraging our consumers to always go to generic, because generics is going to be substantially less. GlaxoSmithKline hates to hear that message because they want to push their own drugs.
"SB 160 [Senator Hollis French's health reform bill] was the one bill
that we paid very close attention to this last year ... We felt that the bill did not
address the actual true costs of implementing the whole process."
AHPR: The Alaska Association of Health Underwriters has a legislative committee that monitors legislative interests to the organization's members. Specifically, I wonder if you could talk about what pieces of legislation have been of particular interest in the last session, and why?
Ranf: SB 160 [Senator Hollis French's health reform bill] was the one bill that we paid very close attention to this last year. SB 160 more or less mirrored the bill in Massachusetts. The premise of the bill was to provide health care for all Alaskans. We felt that the bill did not address the actual true costs of implementing the whole process. We were against the unintended consequences that it could cause if something like that is implemented all of a sudden, like in Massachusetts, where they underestimated the cost by 50%, which is the last estimate that I saw from Massachusetts.
AHPR: When you say "the cost," are you talking about the cost to the state, the cost to families, or the cost to individuals?
Ranf: We were looking at [all that]. I don't think that they truly identified what the cost of providing the health care was going to be [or] the cost of administrating was going to be, although he did put a lot of figures in there, we didn't feel that it totally addressed all of that. We felt that there was a lot missing. One of the things I might say is that [representatives of] two of the think tanks that came here last year [at Senator French's invitation], both said the same thing. They were saying the same thing we were saying, and that is that this plan is just a shell of a plan that needs a lot of work, and it going to be years before it can actually become something.
So we watched that plan, and we felt that we did not come out in favor or against it. But we did talk to [Senator] French and [Senator] Ellis about it, they did come to our organization and talked at our Expo last year, and we had a lot of people stand up and ask a lot of questions, a lot of really good questions. I would say that Ellis and French did a reasonable job of answering the questions. However, again, going back to the bill, there wasn't really anything for us to be against or for because it still isn't enough of a bill. I think it could go somewhere in the future.
AHPR: So just to get clarify: Are you saying that not enough research was done on the costs, the total costs of this bill if it were implemented?
Ranf: I don't know if research is the right word, but it didn't seem to us that there was enough thought and study to really determine what is this really, really going to cost. We felt that there really wasn't enough effort put into what is the true cost of health care and why. The governor put together a task force last year, and their whole idea behind the governor's push was to find a solution for all of Alaskans. They determined that health care is really, really expensive in Alaska. And I don't believe that the French-Ellis bill really went far enough to really determine what that expense is and why it is so expensive.
AHPR: Was there any other legislation that the legislative committee last year was interested in, other than SB 160 that you recall?
Ranf: There were two other bills that we were looking at. Some of them were parity bills.
AHPR: Mental health parity.
Ranf: Yes, mental health parity, which we were in favor of. There were other bills that I can't recall. They were fairly small in the spectrum of what was going on in the legislature.
"All it is is just an educational meeting. We do not go down and lobby
the legislators for anything. We are just there to educate them that we
are resource for them."
AHPR: The legislative committee sponsors "Juneau Day on the Hill." What does that involve?
Ranf: That means that five to ten members of our organization traveled to Juneau for a day and a half, two days, to meet with legislators that are interested in health care issues, and to talk to them about how they feel about the issues and to educate them on where we stand on the issues and why. And then to give them the material on health insurance as we see it, health care as we see it, and the cost and the access issues.
We also give them position papers that our national organization has taken. All it is is just an educational meeting. We do not go down and lobby the legislators for anything. We are just there to educate them that we are resource for them. We are not the only resource, but we are a resource as it relates to health insurance.
AHPR: I was just pondering the question of: How are you are received by these legislators?
Ranf: I would say that they are thrilled to see us, because health care is in the back of their minds. They know that it's a problem. They know it's really, really expensive. They know that we have a number of uninsured and underinsured in the state of Alaska, but they don't know what to do about it. We're trying to educate them that there are solutions to the problems to some of the uninsured that they may not have been aware of.
There are solutions to that in the marketplace, and all we're doing is providing that as a resource to them, so that when they go back to their constituents, they can say, "Well, have you talked to a member of the Alaska Association of Health Underwriters?" Not all brokers are members of our organization. We feel that we represent the most professional of all those individuals that are representing health insurance.
" ... if this whole process were just to be stopped today and it was turned
over to the government, I think the costs would even be higher than
that, because I believe that competition drives them to try to be more
and more competitive."
AHPR: I wanted to address the bigger picture now. Depending on how it is calculated and which players are included in the calculations, the health insurance industry contributes anywhere from 10% to 40% to the total cost of health care in the United States in terms of administrative costs. So, in light of these very significant administrative costs, what value is contributed by the health insurance industry to the health care of the people?
Ranf: Well, the number that you're showing there is, 10% I believe is low, 40% I believe is very, very high; however, I can't dispute the number that you're putting down there because I don't know where you got your data. But I would say that for health insurance as a whole, the administrative costs are going to be somewhere between 13% on the low side -- you can possibly find some lower -- up to about 18% to 20% on the high side.
What constitutes administration or administrative costs in a health plan, obviously, is the adjudication of claims. The process is getting more and more expensive, although they are doing more and more electronically which should cut down on the costs. What goes into it is you are paying for the reinsurance of those claims, you're paying for the commission to go to the brokers, you're paying for anything that has to do with trying to determine how a claim is going to be paid goes into that number. The average is going to be somewhere between 14 and 16% for my data.
Those are plans that I've worked on over the past years and I believe that the value is significant. I believe that this is an extremely valuable service, and I'm saying that because I believe that if this were turned over, if this whole process were just to be stopped today and it was turned over to the government, I think the costs would even be higher than that, because I believe that competition drives them to try to be more and more competitive.
AHPR: Let me just take one more stab at it, if I may. For example, the administration of Social Security or the administration of Medicaid and Medicare, the administrative costs are generally thought to run around 3 to 5%. But the administration of health insurance by the private sector, generally runs, as we were talking before, by your own estimation, say between 15 to 20%.
I've seen other calculations that include the administrative costs that physicians offices and that people in their own homes have to deal with in terms of paperwork that can run at up to perhaps 40%. So it seems that if the government actually directly runs a health insurance program there's a lot less overhead than if the private sector does it. That's really the main thrust of my question.
Ranf: Well if you're not providing any choice, if you're not providing any incentive, if you're not providing any of those things that consumers enjoy in health insurance, if you're not providing any of those things, then all you have is just a straight cookie cutter. I could see where the administration costs would drop dramatically.
I believe that Medicare and Medicaid -- let's not use Medicaid, Medicaid is a different animal -- but Medicare is, in my opinion, somewhat of a cookie cutter administration piece, and besides that they're cutting back on what they're reimbursing every year. So more and more doctors are getting out of it. So I'm not seeing the correlation between that and what the private sector is currently offering.
Am I admitting that the private sector could trim some fat in there? Yes, I believe that we could probably trim some fat. I think that we should trim some fat, but we need to make it less and less complicated for claims to be adjudicated. We need to make it less complicated for the consumer; we need to make it less complicated for the insurers and for the providers. The system that is in place right now is so much more complicated than Medicare, that I don't believe that the government can do it and be good at it and still provide what it is we have today, for that price.
"I believe that it would be healthier if we had more competition in the
state of Alaska, but with a population of 600,000 and the geographic
challenges that we have in this state, the sheer cost of health care, I
believe, scares many insurers away."
AHPR: My recollection is that the health insurance industry in Alaska is one of the most concentrated in the United States, perhaps the most in the sense of the near monopoly control over health insurance that Premera has, the Blue Cross Blue Shield organization in Alaska shared with the state of Washington. I think it controls something like 60% of all the health insurance in the state, maybe more.
I'm wondering if you could comment on that. Is that an issue we need state regulation for? How does that play into your concept of competition?
Ranf: I believe that it would be healthier if we had more competition in the state of Alaska, but with a population of 600,000 and the geographic challenges that we have in this state, the sheer cost of health care, I believe, scares many insurers away. So, in the open market system Premera has merely taken advantage of what's there. They have been the only ones that have truly stepped up to the plate and said -- you may not agree with this, you may not like them -- but they're the only ones that have stepped in and really brought a lot of options to the table that other insurers did not. So the natural way for that business to flow was to Premera.
Now Premera had gigantic increases [in the cost of health insurance premiums] this year, both here and in Washington, and we are now starting to see competition starting to ramp up a little bit because it's like sharks in the water. They smell blood; they're going to take advantage of that. So we're starting to see a lot of competition starting to move into the marketplace. Aetna has become a little bit more aggressive. ODS Alaska has become fairly aggressive. But we won't really know with the increases that Premera has had whether or not they were absolutely justified and if they were totally reflective of what was going on in the cost of healthcare.
AHPR: I'd like to talk about health reform for a moment. This was an issue discussed at your last Alaska Association of Health Underwriters Benefits Expo by a couple of invited legislators. In terms of policy and legislation, what do the members of your organization want to see as the concept of health reform moves forward, and what do the members of your organization not want to see?
Ranf: I believe that our members want to see those that are truly uninsured -- those that for one reason or another lost coverage due to losing their employment or they slipped through the cracks somehow, they are not covered tri-care, they are not covered by the VA, they are not covered by Medicare, and they're not covered by Indian Health Service -- we want to see every man, woman, and child in the state covered by some sort of health insurance.
If that takes form in some sort of legislative reform, where there has to be legislation to cause this to happen, then we are for that. We are going to be for it [if] it's still continuing to be providing a choice to groups and individuals, but we would like to see all those that are uninsured and underinsured get covered or have better coverage. That would be our goal. We don't feel that the government just taking over the system is necessarily the right way to go. Even though I think the government has to eventually intervene at some level, we don't believe that that is going to be the best direction for our country to move.
"There are two plans in the Foraker Group; one is a high deductible,
$1500 high deductible plan that accommodates a health savings account.
The second one is a $2500 deductible, what we would call catastrophic
coverage."
AHPR: I would like to discuss your relationship with the Foraker Group. How did you become involved with them, and could you talk about the project you have been working on with Foraker?
Ranf: I started working with Dennis McMillian on this, I believe in 2002, not too long after I moved to Alaska. Dennis McMillian had started the Foraker group with the Rasmuson Foundation in 2001. Dennis had been working on creating a health plan for nonprofits for about the last 25 years. He started with the United Way in that process, and for various reasons could not bring that to any fruition. So after creating Foraker, he decided he would reintroduce the idea and approached my company at the time, Brady & Co., to see if we would be interested in helping them put that together.
We worked on it for approximately four years and eventually put a proposal together that included all the regulations that the state of Alaska had put forth as it related to multi-employer welfare arrangements. Around the year 2001 the state had adopted a number of new regulations for self-funded, multi-employer organizations that wanted to put together a self-funded health plan. When we started the process we looked at all the insured ways to do it. Insured means that the insurance company would be on the hook for all the claims and on the hook for everything, and we could not find an insurer to take on that risk.
So we decided to go the direction of self funding which meant that we were going to have to deal with the state's MEWA laws, Multiple Employer Welfare Arrangements. And to date, I'm not sure if the state has really ever put one together from start to end. We were the first that the state had worked on, I do know that. We were a beginning organization going through the process and so there was a learning curve for them as well as for us.
Foraker hired an actuary out of Wisconsin. We looked for one all over the country and we found this guy in Wisconsin, and he worked on this for I think about a year or so, year and a half maybe. We put together a proposal and when it came down to it, it was more expensive for us to actually offer a health care in the self-funded MEWA then anybody could purchase off the street, so we threw it down the toilet. We didn't move along with it.
Fast forward to after I left the firm I was with, Brady & Co., and then was eventually purchased by Marsh. I left them and joined Wallace Group Services a little over 2 1/2 years ago. I was approached again by Dennis McMillian to see if there was a way that we could put this together. He came up with the idea of incorporating a health savings account type plan, to where most of the groups that would enroll would be in a health savings account, or HSA.
I took it out to market, and I marketed it to numerous insurers. Premera Blue Cross was the only one that was interested in even looking at it. Most companies shy away from associations, and most all companies shy away from nonprofits, so we had two things going against us to start with, but Premera said, "Yeah, we would take a look at it."
I met with their actuaries, their underwriters, and their management team and we started going through the process. They agreed that they would underwrite it. The Rasmuson Foundation has agreed to fund the first three years of the health risk management portion of it along with contributing a matching contribution to employees that participate in the health savings accounts. There are two plans in the Foraker Group; one is a high deductible, $1500 high deductible plan that accommodates a health savings account. The second one is a $2500 deductible, what we would call catastrophic coverage.
The second plan I mentioned is a typical health insurance plan with a deductible co-insurance maximum amount out of pocket. The difference is it has office visit co-pays, $25 per office visit. It has a typical prescription drug card with three tiers of co-pays, with generic, brand name, and non-preferred drugs, and that's it. The difference is it's much higher out-of-pocket. The point of offering the two plans is prevention, and both plans have a hundred percent paid preventive benefits that allow individuals to go get physicals, to get certain screenings that are paid 100% by both the $1500 and $2500 deductible plans.
Where we are right now is that we are "going live" October 1, 2008. Dennis McMillian and I have been traveling all over the state introducing this to all the nonprofits and training all the brokers and consultants around the state so that they can understand how the plan works, how the incentives work, and what is expected of the partner organizations of Foraker, because there are several requirements that Foraker partners must adhere to in order to participate in the plan. One of which is they need to be in good standing with Foraker, second is they are required [to make] a minimum contribution to the employee for the premium amount, and they are also required if they participate [to make] a minimum contribution for dependent coverage.
The market does not require that employers pay a certain amount for dependent coverage whereas we do. Our plan does require that, and there's a couple reasons. One is association plans notoriously don't last very long because the rules are lax, and adverse selection usually takes hold and they implode upon themselves because only the sick groups end up staying in and the healthier groups end up bailing out. So we're trying to spread the risk by requiring that the employers pay for a minimum amount of the dependent coverage.
We've had a lot of pushback on that and a lot of nonprofits don't like that, and we're not pretending to say that this is for every group, but for the long run we feel that this will be an advantage to the group. The other incentive I might mention is that Rasmuson is contributing monies to the HSA [Health Savings Account] for two years for those groups that have employees that participate in HSA.
The premise around this entire plan is to create a healthier group of people. We could very easily just go along our way and say we're going to have a lot of bodies that will participate in this plan, and because of the number of bodies that premiums will eventually go down because we're spreading the risk, [but] that's not true -- all that's the furthest from the truth that you could possibly get. We feel that in order to have a competitive plan the population must get healthier, and to get healthy what I'm talking about is requiring that every group participates in a robust and comprehensive health risk management program that Premera Blue Cross is sponsoring.
WebMD, the company that is conducting the health risk assessment for employees, is where they can log on and take an assessment on their own health condition and they get immediate feedback on where they are in the health paradigm. [WebMD] is partnering up with Blue Cross to provide this very robust health risk management program. Every employer is required to participate in it. If the employers do not adhere to the requirements of what we've set up in the Foraker plan, then they would lose the incentives and very likely be terminated from participating in the plan.
We feel that we're not going to see any results in this, if we're successful, for probably five years, three maybe at the soonest, five is more realistic, but in five to ten years, if we are successful, we are expecting to see much, much lower increases in premium dollars than anybody else in the marketplace just because we are doing this. I'll also say that this has not been done anywhere in the country, Foraker Group is plowing brand new territory, brand new ground with this undertaking.
AHPR: What makes it new?
Ranf: It's new because no other nonprofit organization that we're aware of in the country is undertaking this project. As a matter of fact, I've received several phone calls from organizations in mid-America and the east coast to ask what it is we're doing, and how it is we've been able to do this. Nobody to date that we are aware of in the nonprofit sector has done this.
As a matter of fact, no one in the associations has put together a plan where they required that health risk management be a tool that groups must participate in [in order] to partake in the plan, so it's new in that regard. And this would not have happened if the Rasmuson Foundation had not decided to put up some money to help fund this endeavor because it's costing a lot of money, it costs probably $200,000-$300,000 the first time around with this.
"In order to take advantage of the benefits that the association offers,
you must belong to the association. In order to get a proposal, you
must belong."
AHPR: So let's say that there is an interested nonprofit organization. Who do they contact or what do they do if they want to pursue this and find out more about it and whether it's going to work for them?
Ranf: Well the first step that most of them take is to contact the Foraker Group, if the group does not have a broker. What we're trying to do is that we're trying to locate those 5,000 or 6,000 employees that are working in the nonprofit sector that have no coverage at all, to see if we can provide an alternative for them for coverage. I have been contacted by a number of them already. They normally contact Foraker Group, the Foraker Group then has them contact me, and then I walk them through what's involved and I tell them that in order to participate in the plan they must join the Foraker Group.
That's got to be one of the requirements. That's the state law. In order to take advantage of the benefits that the association offers, you must belong to the association. In order to get a proposal, you must belong. I walk them through that process and then I give them possibly a list of brokers that they can call, because I'm not brokering any of this. If the broker has been trained, the broker can then walk them through what's going to be involved for them to get a quote and a proposal.
[I wanted to say earlier that] Blue Cross decided to offer this [plan by underwriting] within their small community pool. They have a roughly 32,000 to 33,000 lives in their community pool. Blue Cross has a community pool which, most of their small groups -- 2 to 199 employees -- are put into. That's where they take the demographics of the group, possibly health statements, from the group. They look at the experience of the pool, of that small community pool, and there they established a premium, a rate. That will be the same here. They will get the same basic rate by enrolling in the Foraker plan today as if they were to just go out on the street; the rate would be the same.
The "why somebody would want to enroll in it" would be because it's going to force them to participate in the health risk management program; it's going to provide them, [and] they're going to get a matching contribution from the Rasmuson Foundation, and they are going to get a mere $10 discount per tier for enrolling in the Foraker plan. The discount is tied to the health risk management program where the assumption is made that 100% of the employees are going to participate in the health risk assessment. That's how Blue Cross does it.
So there's three things that are going to get by enrolling in it, but the rate is not going to be really much different. What they're going to gain is possibly some experience as to how to set up a wellness program inside their organization and that in and of itself is going to make them healthy, and therefore they're going to be participating in a group that is also healthy. Once we become 1500 employee lives, which we don't think will take long, and we have enough experience behind us that it looks likes it would be a good idea for us to flip over and become our own association, that's what will take place. That won't happen for approximately a year to year and a half, minimum.
AHPR: Can you give us some idea of what kind of cost we're talking about to a nonprofit?
Ranf: I don't know what the premiums are going to be because each group is going to be underwritten on their own as if they are going out on their own in the community pool. So if a group of five or a group of 50 were to go and have their broker walk them through the process the premium is going to be probably the same as if they already had the plan in place.
Some groups that are already enrolled in Blue Cross are rolling to the Foraker plan and they can do that anytime and they will just get a new rate based on the new effective date with the new HSA or the new $2500 deductible plan. But I can't tell you what the premium is because every group is going to be, is going to have a different premium.
The premiums that we have seen come out of the plan for the high deductible $2500 plan have been $350 for a single employee up to $425, that's what I have seen. I don't know if that's going to be representative of a group but that's been the range we've seen thus far.
Eventually, when we become our own association, the premiums will probably be more in a composite basis and thus somebody that has a high claim is not going to suffer with a super high renewal, at renewal time because they are going to be part of a group that hopefully is healthier, to keep the premiums low.
AHPR: I want to ask you one thing that I'm kind of concerned about, and this is not just this plan but any high deductible plan. I've seen two studies now that discuss the issue that the high deductible plans are specifically targeting low- to medium- income families on the one hand, but on the other hand what appears to be happening is that a fairly large percentage of these families who are purchasing high deductible plans actually don't have the assets to get past the deductible to the insurance part, where the insurance actually kicks in. I'm, quite concerned about that issue happening in this case too. I wonder if you could address that.
Ranf: That's a great question, and [it is] one of the things with the Foraker plan that I believe we have addressed. One of the incentives with the Rasmuson Foundation is a matching fund of $250 into their HSA account via the Foraker Group. But that won't take place unless the employer is also [contributing] $750 or 50% of the employees deductible along with coming up with a matching program for dependent care, because the deductible times two is a $3000 deductible with the HSA high deductible plan. So potentially the employee would have $1500 contributed into their HSA, along with $250 from Rasmuson, so $1750 [deducted from] the $3000 would leave $1250 deductible for a family.
AHPR: That's the plan where the deductible is not as high as the other plan, is that correct?
Ranf: Right. And the other plan that I mentioned is not an HSA plan, it's a straight health insurance program. It's an indemnity plan that once you get through the deductible it starts paying, and it's a high deductible, it's $2500. So to answer your question, yes that is a problem and that's what we have found. All the national pundits, and all the legislative wonks that have been talking about this, that's the biggest complaint that they have come out with, which is one of the reasons why they have been advocating universal health care because these high deductible plans don't address the true need, and that is to get health care to people right away.
We feel that two things are happening with the Foraker Group. One is we are focused on getting people healthy, and two, we are making groups contribute money to the employees' HSA plan to eliminate some of that financial burden on the deductible, and three, Rasmuson Foundation is also contributing money into the HSA for the first 2000 employees participating in the Foraker plan. So that's what we're doing to answer that question because that is an issue and that was a huge concern of ours.
"We are hoping that within five years our plan is going to be considered
competitive in the marketplace and that more and more nonprofits are
going to have an alternative to health care, health insurance I should
say, to pay for health care that they have not had in the past."
AHPR: Where do you think this project with Foraker will be in say five years? What do you estimate?
Ranf: Well, as I mentioned before, we feel that if we are successful, and I did say that this is somewhat of an experiment -- it hasn't been done so we are breaking new ground. We are hoping that within five years our plan is going to be considered competitive in the marketplace and that more and more nonprofits are going to have an alternative to health care, health insurance I should say, to pay for health care that they have not had in the past.
So we're hoping that within five years this plan is going to be well underway and that were going to have thousands and thousands of nonprofit employees participating. Foraker has approximately 22,000 lives that participate, that are members of Foraker -- that includes all nonprofits large and small -- out of about 30 some thousand nonprofit people that live and work here in the state of Alaska.
AHPR: And finally, do you have any additional issues you want to bring up, or any final comments you would like to add for the readership of Alaska Health Policy Review?
Ranf: I am very excited about the Foraker Group benefit plan. I believe that that is going to be a model that the state of Alaska can emulate and possibly copy. We believe in the nonprofit sector. We believe that getting our population healthy is a really, really good first step in moving into health insurance independence, if you want to call it that.
Of the big industrial nations, our country is the least healthiest of any of those countries that have universal healthcare. Does that mean that universal health care has made them healthy? No. Does that mean that our insurance plan that we have right today, that's in place today, is that making our population unhealthy? No, it's our lifestyle. It is an unhealthy lifestyle. We're sedentary in nature, and we go to fast food restaurants, and we simply do not take care. We're a young country and we just simply do not take care of ourselves. We are looking for a fast fix; we're looking for a pill to fix us. Our goal is to get Alaskans on track with understanding what their health is, and becoming healthier.
AHPR: Thank you very much.
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| Commentary: Alaskan Nurse Practitioner Restriction Impacts Safety Net |
Prepared by the Alaska Primary Care Association
A curious state regulation restrictive to nurse practitioners (NPs) established in 2004 was brought to the Alaska Primary Care Association's attention recently. As health centers, private practice offices, and other clinics are discovering the regulation is on the books, compliance is interrupting the health care workflow, jeopardizing patient safety, and increasing costs. The regulation in question restricts all nurses (including NPs) from delegating certain nursing functions to unlicensed personnel -- namely delegating the administration of injectable medications. Because of this regulation, NPs are not permitted to delegate the administration of immunizations and other injectable medications to medical assistants (MAs) and health aides (HAs).
In Alaska, the MAs and HAs are not regulated/licensed. UAA and UAF as well as Charter College and Career Academy have nationally certified programs for the MAs, but a few MAs in the state are trained in-house by physicians. CHCs are primarily hiring those that have gone through certified training. HAs may receive certification through the Community Health Aide Program Certification Board.
There are no regulations that prohibit physicians or physician assistants (PAs) from delegating this duty (administration of injectable medications) to MAs or HAs.
The Board of Nursing has indicated to the APCA that the regulation is in place to promote public safety. The APCA requested documentation regarding the safety concern, but the Board of Nursing was unable to provide any written documentation. Board of Nursing Chair Cathy Giessel indicated that the Board did not intend to change the regulation, but if the Alaska State Medical Board were to regulate/license MAs, then NPs would be permitted to delegate to them. No solution was offered regarding HAs. With the Alaska State Medical Board's full workload, limited staff and budget, it is not likely that they will be eager to take on the oversight of MAs.
In conversations with NPs and leaders in the MA field in Alaska and the nation, the APCA learned that the shortage of LPNs is a large factor of consideration regarding this issue -- there simply are not enough nurses to replace all the MAs and HAs. MAs and HAs are needed to assist in the ambulatory setting; this is the precise work for which they are trained.
CHCs take seriously the responsibility of ensuring that the MAs and HAs are carefully and very closely monitored upon hiring/orientation for quality assurance purposes. CHCs consider themselves the gatekeepers for safety and for safe practices. Regulatory oversight and licensure for MAs would not increase public safety. In fact, the current need to bring a physician into the NP-patient loop to delegate the duty to an MA or HA for a patient the physician has not seen is an extra step that raises the risk of error.
Lack of availability of nursing staff to do the work that MAs or HAs were previously doing means that NPs will have to perform these tasks more often themselves. This is already translating into more costly scheduling of providers. Sunshine Community Health Center has had to schedule two NPs for their clinic for a certain day instead of an NP and an MA. The regulation is causing the cost of care in Alaska to increase.
The APCA helped bring together a number of people to testify at the July Board of Nursing quarterly meeting to request that the regulation be changed. No action was taken by the Board and the item was tabled until their October 22-24 meeting in Fairbanks.
The Alaska Primary Care Association asks that the membership consider the impact of this regulation and join the effort to request that the regulation be changed to allow NPs the same rights and responsibilities as physician assistants and physicians in regard to delegating to HAs and MAs. Those able to attend the Board of Nursing meeting in October in Fairbanks or call in to provide testimony are asked to contact Shelley Hughes at Shelley@alaskapca.org or 907-841-1634.
The Alaska Primary Care Association will also be providing information to members and other advocates by email on how to contact the Board of Nursing to request the regulation change and to provide written testimony. To be added to the APCA advocacy distribution list, contact Regan@alaskapca.org. The relevant statute is listed below in context and highlighted [see number 13].
Authority: AS 08.68.100 AS 08.68.405 AS 08.68.410
12 AAC 44.970. NURSING DUTIES THAT MAY NOT BE DELEGATED.
Nursing duties that require the exercise of professional nursing knowledge or judgment or complex nursing skills may not be delegated. Nursing duties that may not be delegated include
(1) the comprehensive assessment of the patient by a registered nurse, and referral and follow-up;
(2) the focused assessment of the patient by a licensed practical nurse;
(3) formulation of the plan of nursing care and evaluation of the patient's response to the care provided;
(4) health education and health counseling of the patient and the patient's family or significant others in promoting the patient's health;
(5) receiving or transmitting verbal, telephone, or written orders from the patient's health care provider;
(6) the initiation, administration, and monitoring of intravenous therapy, including blood or blood products;
(7) providing and assessing sterile wound or decubitus ulcer care;
(8) managing and monitoring home dialysis therapy;
(9) oral tracheal suction;
(10) medication management for unstable medical conditions requiring ongoing assessment and adjustment of dosage or timing of administration;
(11) placement and administration of nasogastric tubes and fluids;
(12) initial assessment and management of newly-placed gastrostomy tubes and the patient's nutrition; and
(13) administration of injectable medications;
(14) administration of a non-herbal nutritional supplement.
[Source: APCA Legislative Update, July 30 2008]
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