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    As a former Dean and appointed Distinguished University Professor and Endowed Department Chair, Dr. David Edward Marcinko MBA was a NYSE broker and investment banker for a decade who was respected for his unique perspectives, balanced contrarian thinking and measured judgment to influence key decision makers in strategic education, health economics, finance, investing and public policy management.

    Dr. Marcinko is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; as well as Oglethorpe University and Emory University in Georgia, the Atlanta Hospital & Medical Center; Kellogg-Keller Graduate School of Business and Management in Chicago, and the Aachen City University Hospital, Koln-Germany. He became one of the most innovative global thought leaders in medical business entrepreneurship today by leveraging and adding value with strategies to grow revenues and EBITDA while reducing non-essential expenditures and improving dated operational in-efficiencies.

    Professor David Marcinko was a board certified surgical fellow, hospital medical staff President, public and population health advocate, and Chief Executive & Education Officer with more than 425 published papers; 5,150 op-ed pieces and over 135+ domestic / international presentations to his credit; including the top ten [10] biggest drug, DME and pharmaceutical companies and financial services firms in the nation. He is also a best-selling Amazon author with 30 published academic text books in four languages [National Institute of Health, Library of Congress and Library of Medicine].

    Dr. David E. Marcinko is past Editor-in-Chief of the prestigious “Journal of Health Care Finance”, and a former Certified Financial Planner® who was named “Health Economist of the Year” in 2010. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, economics trade journals and publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News] etc.

    Later, Dr. Marcinko was a vital recruited BOD member of several innovative companies like Physicians Nexus, First Global Financial Advisors and the Physician Services Group Inc; as well as mentor and coach for Deloitte-Touche and other start-up firms in Silicon Valley, CA.

    As a state licensed life, P&C and health insurance agent; and dual SEC registered investment advisor and representative, Marcinko was Founding Dean of the fiduciary and niche focused CERTIFIED MEDICAL PLANNER® chartered professional designation education program; as well as Chief Editor of the three print format HEALTH DICTIONARY SERIES® and online Wiki Project.

    Dr. David E. Marcinko’s professional memberships included: ASHE, AHIMA, ACHE, ACME, ACPE, MGMA, FMMA, FPA and HIMSS. He was a MSFT Beta tester, Google Scholar, “H” Index favorite and one of LinkedIn’s “Top Cited Voices”.

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Cost Increases by Plan Type

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An Integrated Approach to Healthcare Network Alignment and Scalable Innovation‏

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[Part 5 in a 6 part series]

By Sam Muppalla – Vice President, McKesson Health Solutions Network Performance Management

Previously, on this ME-P, I wrote about the barriers to alignment across product, network, care and reimbursement innovations. And, yes, I teased you with the three-word preview of what was to come this week: Integrated Building Blocks. The idea of building blocks lies at the heart of an approach to achieving alignment and scaling innovation, so let’s dive in.

Unlocking potential administrative, IT and medical savings — while also creating sustainable alignment of the innovation engines — requires various building blocks be in place as a sound foundation for network design and implementation. These building blocks deliver the required functionality in the most efficient manner. When these building blocks are utilized in an integrated fashion, the current barriers are removed and innovation alignment is achieved.

Four Essential Building Blocks

There are four essential network design automation building blocks that comprise the foundation for innovation: networks, contracting, reimbursement and engagement.

Each of these building blocks enables capabilities by delivering necessary functionality within and across the spectrum of network design. Reaching levels of maturity with this capability unlocks additional value and alignment.


The network building block enables health plans to differentiate and compete. The purpose is to differentiate their value for each customer segment by aligning the product and care model designs with the underlying network designs. It ensures network performance by facilitating the selection of appropriate providers into networks and the alignment of provider reimbursement with network design objectives. It enables networks to be mapped to member-facing and provider-facing products. The provider-facing products can be used for contracting and provider rate differentiation. The member-facing products can be aligned with benefits and serve as steerage targets for benefit designers.

These constructs, in conjunction with each other, enable productization of care model and payment innovation. For example, a health plan could define a “Medical Home Network” that consists of medical homes and supporting providers in a given geography. It could then enable PCMH-specific reimbursement (e.g., PMPM capitation + Fee For Services (FFS) for preventive services + P4P for EBM) by defining a provider-facing product and associating specific reimbursement policies with that provider product. Additionally, it could also define a member-facing product (e.g., PPO Value) which combines the medical home network with the general market PPO network. This in turn will allow the health plan to define a benefit extension which gives a 10 percent premium reduction to members who use Medical Home Network providers for their primary care. In short, a health plan is now able to monetize its care innovation (PCMH), align benefit design to network design for steerage, and align its provider payment with member incentives (around preventive services), while incenting higher quality care (P4P).

The network building block also achieves administrative cost leadership through comprehensive provider data governance and automation of core provider processes.


The contracting building block is designed to enable health plans to reduce contract administrative costs while increasing provider payment accuracy. It optimizes the management of the provider contracting lifecycle through the automation of contract authoring, offering negotiating and acceptance while ensuring the standardization of terms and policies. This building block achieves reduced medical expenditure driven by contract standards adherence, reduced claims mis-payments, and increased speed to market for new payment innovations. It also can support rules-based enforcement of network level reimbursement guidelines to ensure consistent network performance.


The reimbursement building block enables health plans to maximize the effectiveness of their medical expenditures by paying for value versus volume and by incenting team-based performance. It is the single source of truth for all forms of reimbursement including traditional claims pricing, episodes of care, shared savings, capitation and P4P. This building block enables the mixing and matching of reimbursement methodologies to incent optimal provider performance. It supports a modeling engine to analyze the financial impact of reimbursement and contract changes. It incorporates network-aware provider/contract selection for claims pricing intake. This is a rules driven, high performance service that leverages provider relationship information to select the right provider, the right governing contract and the right reimbursement model for each incoming claim. Additionally, it includes provider transparency services that enable health plan provider portals to support online pricing lookups and reimbursement status/detail inquiries for providers. These services can be extended to support provider performance scorecards and benchmarks.


The engagement building block is designed to increase collaboration and participation. It enables meaningful engagement among health plans, providers and members in order to improve health outcomes and reduce costs. This building block achieves reduced administrative and service costs, increased member participation and adherence, increased provider satisfaction and adoption of care/payment initiatives, and the enablement of collaborative/integrated care delivery models such as PCMH and ACO.

Utilizing flexible, automated and integrated building block capabilities is the key to sustainable success that not only unlocks the promise of affordable care to customer segments but also delivers on reduced administrative, medical and IT costs. Incorporating information technologies that can facilitate, if not altogether replace, the manual interactions will be an important part of every organization’s evolution.


Next week, in our final part 6 of this series, we’ll wrap up this discussion with a look at some of the potential savings health plans could achieve through alignment and an integrated approach to network design. The potential savings are not slight, so stay tuned. As always, if you just don’t want to wait for next week, visit our website and download the entire Unlocking Affordable Care by Aligning Products white paper; it’s available now.


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Understanding MCO-Medical Practice Contract Standards

The Conversion to Negotiated Managed Healthcare is Significant

Dr. David Edward Marcinko, MBA CMP™

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The conversion to managed healthcare and capitation financing is a significant marketing force and not merely a temporary business trend. More than 60% of all physicians in the country are now employees of a MCO. Those that embrace these forces will thrive, while those opposed will not.

Developing an Attractive Practice

After you have evaluated the HMOs in your geographic area, you must then make your practice more attractive to them, since there are far too many physicians in most regions today. The following issues are considered by most MCO financial managers and business experts, as they decide whether or not to include you in their network:

General Standards

  • Is there a local or community need for your practice, with a sound patient base that is not too small or large? Remember, practices that already have a significant number of patients have some form of leverage since MCOs know that patients do not like switching their primary care doctors or pediatricians, and women do not want to be forced to change their OB/GYN specialist. If the group leaves the plan, members may complain to their employers and give a negative impression of the plan.
  • A positive return on investment (ROI) from your economically sound practice is important to MCOs because they wish to continue their relationship with you. Often, this means it is difficult for younger practitioners to enter a plan, since plan actuaries realize that there is a high attrition rate among new practitioners. They also realize that more established practices have high overhead costs and may tend to enter into less lucrative contract offerings just to pay the bills.
  • A merger or acquisition is a strategy for the MCO internal business plan that affords a seamless union should a practice decide to sell out or consolidate at a later date. Therefore, a strategy should include things such as: strong managerial and cost accounting principles, a group identity rather than individual mindset, profitability, transferable systems and processes, a corporate form of business, and a vertically integrated organization if the practice is a multi-specialty group.
  • Human resources, capital, and IT service should complement the existing management information system (MIS) framework. This is often difficult for the solo or small group practice and may indicate the need to consolidate with similar groups to achieve needed economies of scale and capital, especially in areas of high MCO penetration.
  • Consolidated financial statements should conform to Generally Accepted Accounting Principles (GAAP), Internal Revenue Code (IRC), Office of the Inspector General (OIG), and other appraisal standards.
  • Strong and respected MD leadership in the medical and business community is an asset. MCOs prefer to deal with physician executives with advanced degrees. You may not need a MBA or CPA, but you should be familiar with basic business, managerial, and financial principles. This includes a conceptual understanding of horizontal and vertical integration, cost principles, cost volume analysis, financial ratio analysis, and cost behavior.
  • The doctors on staff should be willing to treat all conditions and types of patients. The adage “more risk equates to more reward” is still applicable and most groups should take all the full risk contracting they can handle, providing they are not pooled contracts.
  • Are you a team player or solo act? The former personality type might do better in a group or MCO-driven practice, while a fee-for-service market is still possible and may be better suited to the latter personality type.
  • Each member of a physician group, or a solo doctor, should have a valid license, DEA narcotics license, continuing medical education, adequate malpractice insurance, board qualification or certification, hospital privileges, agree with the managed care philosophy, and have partners in a group practice that meet all the same participation criteria. Be available for periodic MCO review by a company representative.

Specific Medical Office Standards

MCOs may require that the following standards are maintained in the medical office setting:

  • It is clean and presentable with a professional appearance.
  • It is readily accessible and has a barrier-free design (see OSHA requirements).
  • There is appropriate medical emergency and resuscitation equipment.
  • The waiting room can accommodate 5 – 7 patients with private changing areas.
  • There is an adequate capacity (e.g., 5,000 – 10,000 member minimum), business plan, and office assistants for the plan.
  • There is an office hour minimum (e.g., 20 hours/week).
  • 24/7 on-call coverage is available, with electronic tracking and eMRs.
  • There are MCO-approved sub-contractors.


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Why Health Savings Accounts are No Longer a Banking Industry Pariah

The High Deductible Insurance Competition Heats Up

By Dr. David Edward Marcinko; MBA


As ME-P readers are aware, I’ve had a High Deductible Healthcare Plan [HDHP] coupled with a Health Savings Account [HSA] for my family, and consulting firm, for more than a decade. We’ve been very pleased with it thus far. No significant health problems along the way; just a few scares that proved costly, but benign, because of physician over-protection, over-reaction, or liability phobia; i.e., its better to be safe, than sorry!.

Still, having some economic skin in the insurance game because of the high-deductible feature, makes one an informed consumer. It also provides a sense of empowerment which, while ultimately illusionary for mortals, does offer a bit of self-control. After all, while we can’t mitigate against drunk-drivers and catastrophic diseases, we can live a healthy lifestyle and pay out of pocket for true health “maintenance” … much as we self-pay to maintain our cars and homes, etc. We can do our best … and hope for the rest.

Of course, the savings portion [HSA] has always been a secondary after-thought relative to the actual re-insurance coverage terms, exclusions and conditions. I personally remain focused on the indemnity or PPO type with full coverage, no co-payments and few restrictions. After all, if I use up my high-deductible for an adverse health incident, I figure I have far more problems to worry about than economic. My health, well-being and probably life are significantly in peril.

Nevertheless, as a health economist, I have always appreciated the above market rates given to my cash HSA account; 5% to 4.0% historically; and now 2.5% even after the domestic implosion thru 2010. Compared to the paltry 0.19% in my FDIC protected Wachovia money market deposit account, or the 0.5% in my non-FDIC protected money market mutual fund [brokerage] account; this is a great deal. And, it is tax exempt.

Oh the Irony! 

So, it comes as some surprise that after more than a decade, and the recent health insurance reform political debacle, that there is a surge of interest in the HSA companion. This time however, interest comes not from the insured’s – but the insurers. And, not from the health insurance industry, but rather from the affiliated [and desperate] banking industry.

How so – and why?

Well, it now seems some insurance companies actually desire the business of folks like me who are willing to bear a higher deductible in return for lower premiums, or who are willing to research CPT® code prices and question the efficacy of the procedures they negotiate with physicians in a collaborative fashion; or who are willing to watch their weights and abstain from over-indulgences for their own good. How novel; and again, why?

It’s the HSA pot-o-gold; Duh!

The Proof

Below, is a copy of an email I personally received from eHealthInsurance soliciting my separate health savings account [HSA] business; not my health insurance coverage business:

Dear David,

Did you know that your health insurance plan can be complemented by a Health Savings Account (HSA)? If you haven’t opened an HSA yet, it’s not too late! An HSA allows you to:

  • Use funds to pay for copays, deductibles, prescription drugs, dental services, vision care and more
  • Save money by deducting 100% of your HSA contributions from your taxable income
  • Earn tax-free interest on the funds that accrue in your account over time
  • Grow your account from year to year – the money you contribute won’t expire; you can even use an HSA as a secondary retirement savings account

There are no penalties or taxes when you use your HSA funds to pay for qualified medical expenses. Take advantage of your health plan’s benefits and open an HSA today! eHealthInsurance has partnered with nationally recognized, highly-rated HSA banks to offer you industry leading choices:

  • The Bancorp Bank
  • HSA Bank
  • JPMorgan Chase Bank
  • OptumHealth Bank
  • Sovereign Bank
  • Wells Fargo Bank

We’re with you every step of the way

Our representatives are also available for online chat 24 hours day.

Gary Matalucci
Vice President of Customer Care

The Question Is?

Such the deal; NOT!

So, any thinking HDHP participant [like me] must logically ask why such “nationally recognized, highly-rated HSA banks” would offer above market rates during these times of essentially zero interest rate levels.  Why the interest at all? Are they trying to loose money; or are they just befriending me?

As tennis player John McEnroe might say: are you serious!


Yes John, the high rates are a serious loss-leader for more expensive products.

These banks want to make money; not from the non-existent interest rate spread on your HSA cash, but by enticing us to place this growing cash horde into their “investment vehicles.”  In the recent past, some of us mortgaged our homes chasing the stock market or were goaded into flipping houses. And now, these same bankers are encouraging us to mortgage our health insurance on whatever high-priced, low-quality, fee-ridden, load bearing, snarky “investment vehicles” they can pawn off on us.

Of course, the health insurance companies get a fat sales commission or percentage cut, as well. A win-win situation for all but us – the insured.

Think AARP.

My Personal Advice

Do not do it. Do not take the bait.

The HSA portion of your HDHP is for paying premiums and future medical care in the event of a health catastrophe. It is for savings, not for investing in a risk-bearing vehicle. Far too many of us realized too late that a home is a place to live – not an investment. Likewise, a health savings account is for your health, and health insurance – not risky investing.

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Well, that’s my opinion as a retired surgeon, former insurance agent and financial advisor.


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Janis Oshensky Lobbies Congress – Not Dentists

Show Me the Math

By Darrell K. Pruitt; DDSpruitt 

I have noted here far too many times how it disappoints me that Delta Dental Plans Association vice president Janis Oshensky repeatedly chooses to turn to politicians rather than discuss Delta Dental’s arguably egregious and harmful policies with me, a dentist. I intend to put a stop to such disrespect one PR expert at a time if necessary.

Long ago I warned Oshensky that if she didn’t talk to me, she should probably just shut up in order to preserve what’s left of her Internet reputation. Since by posting her Letter to the Editor on POLITICO.com today, she obviously ignored my advice, this highly critical comment will reliably join three others of mine on her first page soon enough. Her employer is sacrificing her like a pawn.

The following comment is the one I posted on POLITICO.com in response to Oshensky’s letter. It might just help the vice president to finally come to a decision on this issue one way or the other. Either way, marketplace conversation like this cannot help but lead to safer air for the community … My pleasure.


Dear POLITICO.com Editor:

This comment and subsequent invitation to Janis Oshensky is in response to the Delta Dental Plans Association vice president’s July 14, 2009 letter to you. Her letter is the most recent message she successfully sent Congress using a political news Website. Even though Ms. Oshensky holds the position of VP of dental relations as well as public policy, she has avoided answering this dentist’s questions about Delta Dental’s policies for months. If Ms. Oshensky is willing to do so, I would love for her to join me in discussion of Delta Dental’s taxation subsidy right here on POLITICO.com so that our lawmakers can witness a more balanced view of the issues.

Hello – It’s Me

Hello. My name is D. Kellus; Pruitt DDS, and I’m a practicing dentist in Fort Worth, Texas. It is my professional opinion that my patients are harmed by the policies of managed care dental plans like that sold by DDPA because there is no accountability to their clients or dentists. There is barely any accountability to those who select and pay for Delta’s products – dental patients’ naive bosses.

Like virtually every US citizen, your readers probably couldn’t care less about the dental industry. It is precisely because dentistry has been uninteresting for decades that make the microcosm of health care incredibly interesting to me. Let me uncover for your appreciation the event horizon in dental history. You could learn about more than just dentistry.

If left to natural forces of human nature, what happens to value when there is no accountability? For example, what do the 1975 East German Trabant and the 1979 Ford Pinto have in common? By popular vote, those products not only represent the two worst automobiles ever made, but the state shielded both manufacturers from accountability to consumers. Poor quality happens.

Oshensky argues against the taxation of managed care dental benefits like those sold to employers by Delta Dental. Let me offer that if Delta’s product were taxed like income, its value would quickly dive below the market threshold that attracts purchasers’ consideration.

Allow Me to Show-You the Math

Recently, Delta Dental of Michigan lost the accounts of thousands of GM retirees when their group dental benefits were cut in bankruptcy negotiations with UAW. Suddenly, Delta found itself forced to market their product to individuals who for once have the choice to keep their money. Faced with true competition for healthcare dollars, Delta leaders desperately cobbled together individual policies for the retirees who want to continue with their coverage. Even though Delta did everything possible to lower the cost of their coverage, the cheapest of the plans they offered still runs about $30 per person per month, and covers only 50% of everything, including preventive. So for premiums of $360 per year plus half the preferred providers’ 20% to 30% discounted fees, is this a bargain for Michigan retirees?

Free Markets 

In my free-market, fee-for-service practice, if a patient comes in for two cleanings and routine x-rays during a year, 100% of my bill is $208. This is the market price in my neighborhood that is continually challenged by lively competition with other dentists for new patients who may not even have dental benefits. Those customers pay in full at the time of visit, just like most people whose bosses purchased Delta Dental Plans.

Value Comparisons

So let’s compare value of Delta Dental’s product with cash. If I were a Delta Dental preferred provider, my fee of $208, less Delta’s 25% discount would be $156. Never mind that my wife has problems with my 70% cut in pay, let’s move on. 

The patient’s half of the $156 I earned is $78. $360 + $78 = $438. So for one uneventful year of discounted dental services with a dentist chosen from a list of names, a patient can expect to spend more than twice as much than if they paid the free-market price at the point of service.


Not only is that hardly a bargain, but it is my opinion that managed care dentistry is dentistry by the lowest bidder with no quality control. That should be enough meat to get this conversation rolling. Now it’s your turn Ms. Oshensky. I think you have to admit that you’ve got holes to mend in the dental relations part of your job.


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