Transcript the File - NAHU Education Foundation

Strategies for Getting Greater
Value in Healthcare
Source: National Association of Health Underwriters Education Foundation
State of U.S. Healthcare
Source: National Association of Health Underwriters Education Foundation
2
Healthcare Costs & the Economy
Projected 2024 U.S. healthcare spending = $5.46 trillion, 19.6% GDP
Source: National Association of Health Underwriters Education Foundation
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Up, Up and Away: U.S. Healthcare Spending Projections
Centers for Medicare and Medicaid Services
Source: National Association of Health Underwriters Education Foundation
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U.S. Healthcare System: High Costs, Mediocre Results
We spend far more on healthcare than other countries.
Source: National Association of Health Underwriters Education Foundation
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U.S. Healthcare System: High Costs, Mediocre Results
We don’t live as long as people in many other countries.
Source: National Association of Health Underwriters Education Foundation
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What Do We Get For All This Spending?
‣
U.S. ranks last in efficiency
‣
U.S. ranks low on safe and coordinated care and
patient access to primary care
‣
However, the U.S. ranks best on:
‣ Provision and receipt of preventive and patient-centered care.
‣ Rapid access to specialists.
Source: National Association of Health Underwriters Education Foundation
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Employers Foot the Bill
Employers paid 58% of employees’ healthcare costs in 2014.
‣
A typical family of four has $23,215 in medical costs each year
‣
Employer pays $13,520
‣
Employee pays $9,695
‣
($5,908 in payroll deductions and $3,787 in out-of-pocket costs.)
Source: National Association of Health Underwriters Education Foundation
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What Is Driving Healthcare Costs?
‣
There is no single driver responsible for the nation’s high and
rising healthcare costs.
‣
There is no single strategy to meet this challenge.
Source: National Association of Health Underwriters Education Foundation
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What Is Driving Healthcare Costs?
‣
Fee-for-service reimbursement
‣
Insurance benefit design
‣
Fragmentation in care delivery
‣
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Administrative burden
Cultural biases influencing care
utilization
‣
Healthcare market consolidation
‣
High unit prices of medical services
‣
The health care legal and regulatory
environment
‣
Structure and supply of the health
professional workforce
‣
Population aging, rising rates of chronic
disease and co-morbidities
‣
Advances in medical technology
‣
Lack of transparency about cost, quality
‣
Tax treatment of health insurance
Source: National Association of Health Underwriters Education Foundation
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Chronic Disease Drives Healthcare Spending
U.S. Healthcare Spending by Number of Chronic Conditions in 2010
Persons with no
chronic conditions
14.2%
Persons with more
than 5 chronic
conditions
35.0%
Persons with 1 chronic
condition
14.8%
Persons with 2 chronic
conditions
13.0%
Persons with 4 chronic
conditions
11.2%
Persons with 3 chronic
conditions
11.8%
Source: National Association of Health Underwriters Education Foundation
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Quality Varies Widely
There is a radical difference in
potentially avoidable hospitalization
rates across the country
Source: National Association of Health Underwriters Education Foundation
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Price Varies Widely
Source: National Association of Health Underwriters Education Foundation
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Price Varies Widely
Price for service in the U.S. can vary as much as
Source: National Association of Health Underwriters Education Foundation
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Price Varies Widely: Massachusetts Hospitals
Source: National Association of Health Underwriters Education Foundation
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Payment Reform
Source: National Association of Health Underwriters Education Foundation
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Fee for Service: Paying for Volume, Not Value
‣
Most healthcare services are paid for with a fee-for-service model.
‣
Pay regardless of quality, outcomes
‣
Pay for every test and procedure regardless of necessity
‣
Doesn’t pay for some important aspects of care – like coordination
Source: National Association of Health Underwriters Education Foundation
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The Objectives of Payment Reform
‣
To pay for the care we want, including better prevention, care coordination and
disease management
‣
To not pay for care we don’t want (wasteful/harmful care)
‣
To incentivize and reward providers for delivering high-quality, efficient care
‣
To remove financial barriers to improving the deliver of healthcare
Source: National Association of Health Underwriters Education Foundation
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The Elements of Value-based Payment Reforms
‣
Payment that reflects provider performance, especially the quality and safety
of care that providers deliver;
‣
Payment methods that are designed to spur efficiency and reduce
unnecessary spending;
‣
If a payment method only addresses efficiency, it is not considered valueoriented; it must include a quality component.
Source: National Association of Health Underwriters Education Foundation
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Payment Framework
BASE PAYMENT MODELS
Fee For Service
Charges
Fee
Schedule
Bundled Payment
Per
Diem
DRG
Episode
Case Rate
Global Payment
Partial
Capitation
Full
Capitation
Increasing Accountability, Risk, Provider
Collaboration, Resistance, and Complexity
PERFORMANCE-BASED PAYMENT OR PAYMENT DESIGNED TO CUT WASTE
(financial upside & downside depends on quality, efficiency, cost, etc.)
Chart: Catalyst for Payment Reform
Source: National Association of Health Underwriters Education Foundation
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The Payment Reform Continuum
Type
Upside only for providers
Examples
Physicians
•Primary Care Medical Home/payment for care coordination
•Payment for shared decision making
•Payment for nontraditional visits (e.g. e-visits)
•Hospital-physician gainsharing
•Pay for Performance
•Shared savings
Hospitals
•Pay for Performance
•Shared savings
Downside only for providers
•Hospital penalties (e.g. readmissions, Hospital Acquired Conditions, never events, warranties, Length
of Stay)
Two-sided risk
(both upside and downside)
•Bundled payment
•Global payment/capitation
•Shared-risk in Accountable Care Organizations
Chart: Catalyst for Payment Reform
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Pay-for-Performance/Bonus Payments
‣
A pay-for-performance model provides performance incentives to
providers for increasing quality of care and/or reducing costs
‣
Incentives paid on top of fee-for-service payments
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Pay-for-Performance/Bonus Payments for Quality/Efficiency
Example:
‣ Bridges to Excellence (BTE) recognizes physician practices that meet
performance benchmarks
‣
Participating physicians earn both peer recognition and bonuses from
participating health plans.
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Payments Not Tied to Individual Services or Visits
‣
Providers get incentives not tied to fee-for-service payments, such as a
payment for care coordination given to patient-centered medical homes
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Payments Not Tied to Individual Services or Visits
Example:
‣
Payment and shared savings for care coordination and case management in a patientcentered medical home.
‣
CareFirst Blue Cross Blue Shield annual medical cost increase dropped to 2 percent
for 1 million members in its medical home program
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Bundled Payment
‣
A single payment to providers or healthcare facilities (or jointly to both)
for all services to treat a given condition or to provide a given treatment
‣
Also known as “episode-based payment”
‣
Providers assume financial risk for the cost of services for a particular
treatment or condition
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Bundled Payment
Example: Surgery Center of Oklahoma
‣ Flat-fee, all-inclusive pricing for dozens of procedures
‣ Quotes prices on its web site
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Shared Savings/Shared Risk Models
‣
‣
Shared savings
‣
Providers paid to provide care for a defined population
‣
Providers are incentivized to reduce unnecessary spending because
they share savings with payers
Shared risk
‣ Contracts go one step farther: Providers not only share savings, but
accept financial liability if they do not meet targets
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Shared Risk
Example:
‣
Blue Shield of California, Hill Physicians and
Dignity Health formed ACO to serve CalPERS
‣
ACO reduced Blue Shield premiums for CalPERS
beneficiaries by $59 million, or $480 per member per
year, over 3 years
Source: The Commonwealth Fund’s Case Studies of Accountable Care Systems
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Non-Payment Policies
‣
Providers do not get paid for performing services that are deemed
harmful or do not contribute positively to the care process
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
‣
Non-Payment Policies
Example:
‣ South Carolina Medicaid and Blue Cross Blue
Shield of South Carolina teamed up to stop
paying for early elective deliveries
‣
Policy realized substantial savings
Source: National Association of Health Underwriters Education Foundation
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Payment Reform Strategies
Full Capitation/Global Payment
‣
Health plan pays a fixed dollar payment to providers for the care that
members receive in a given time period, such as a month
‣
Payment adjusted for performance and severity of illness of the patient
population
Source: National Association of Health Underwriters Education Foundation
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Pairing Benefit Design & Payment Reform
Source: National Association of Health Underwriters Education Foundation
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Why Discuss Pairings of Benefit Designs and Payment Reform?
‣
Benefit design and payment reform are equally important
‣
Benefit design is taking on broader meaning
‣
Some promising payment reforms are slow to be adopted – benefit design could make a
difference
‣
If doctors and patients work together, in the same direction, outcomes and the value are
more likely to improve
Source: National Association of Health Underwriters Education Foundation
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Benefit Designs in Play Today
‣
Benefit design features fall into the following five domains:
1.
Cost sharing
‣
2.
3.
4.
Co-insurance, co-pays, deductibles
Financial incentives around lifestyle choices
and use of services
‣
Consumer-directed healthcare
‣
Value-based insurance design
5.
Policies
‣
Prior authorization
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Required referrals to specialists
Transparency
‣
Price and quality
Financial incentives around choice of
provider
‣
Reference pricing
‣
Centers of excellence
‣
Narrow networks
Source: National Association of Health Underwriters Education Foundation
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What is Reference Pricing?
Reference Pricing establishes a standard price for a drug, procedure, service or bundle
of services, and generally requires that health plan members pay any allowed charges
beyond this amount.
Consumers seeking
care from providers
above the reference
price may be subject to
additional out-ofpocket financial liability
$20K
Price Variation
Identical Service
‣
$15K
$10K
REFERENCE PRICE
Consumers seeking
care from providers at
or below the reference
price are typically
responsible for normal
or no cost-sharing
$5K
$0
Frequency and Cost of Services Performed
Catalyst for Payment Reform
Source: National Association of Health Underwriters Education Foundation
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Effective Pairing: Reference Pricing & Bundled Payment
‣
CalPERs sets a reference price of $30,000 for
hip/knee replacement surgery.
‣
Members who seek care at a higher price
provider pay the difference above the reference
price.
‣
‣
In the first nine months:
‣
Number of enrollees who chose a designated highvalue hospital increased from 50% to 64%
‣
Average price fell from $42,000 to $27,000
40 hospitals cut prices
Source: National Association of Health Underwriters Education Foundation
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What is a Narrow Network?
‣
Plans with narrow networks of providers limit the doctors and hospitals their enrollees
can use.
‣
Go to doctor A or hospital A, and the plan will pay all or most of the bill
‣
Go to doctor B or hospital B, and the enrollee may have to pay all or most of the bill herself
A
B
Source: National Association of Health Underwriters Education Foundation
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Effective Pairing: Narrow Network & Shared Savings (and Risk)
‣
Intel has a direct contract with Presbyterian Health
System (PHS)
‣
Employees who select the PHS option must use a
narrow network of PHS providers
‣
Intel pays PHS directly to manage quality and cost
‣
PHS shares in both savings and risk
Source: National Association of Health Underwriters Education Foundation
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What is Case Management for High-Cost Employees?
‣
Specially trained, multidisciplinary teams coordinate closely with primary care teams to
meet the needs of patients with multiple chronic conditions or advanced illness.
Source: National Association of Health Underwriters Education Foundation
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Effective Pairing: Case Management & Shared Risk
‣
Blue Cross Blue Shield of North Carolina created program to identify patients who
frequently use emergency rooms
‣
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Identifying and educating identify high ER users eliminated 1,300 inappropriate ER visits in a year
Case management pairs well with shared risk.
‣ Incents providers to work in cross-disciplinary teams to ensure the needs of complex
patients are being met outside the hospital.
Source: National Association of Health Underwriters Education Foundation
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Price Transparency
Source: National Association of Health Underwriters Education Foundation
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Price and Quality Transparency
‣
Transparency is important to:
‣
Create educated healthcare consumers
‣
Create accountability for price and quality variation among providers
‣
Enable purchasers to judge value
Source: National Association of Health Underwriters Education Foundation
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Defining Price Transparency
The National Association of Health Underwriters defines price transparency as
“empowering the healthcare consumer with the cost and quality information necessary to
make an educated and informed choice on a particular service, treatment, procedure or
appliance before they make a buying decision.”
Source: National Association of Health Underwriters Education Foundation
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Employers’ Need for Price Transparency
‣
Employers are asking employees to get engaged, educated
and empowered
‣
Empowered employees can help drive better quality and
efficiency
‣
Unwarranted price variation needs to be exposed to help
identify high-value providers.
Source: National Association of Health Underwriters Education Foundation
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States Are Not Filling the Void…
2015 Report Card on State Price Transparency Laws
1-A 2-Bs 2-Cs 45-Fs
Source: National Association of Health Underwriters Education Foundation
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Private Price Tools on the Rise
‣
The private sector is stepping up
with information about price and in
some cases quality.
‣
Health plans
‣
Independent vendors: Castlight
Health, Change Healthcare, Fair
Health, Guroo, Healthcare
Bluebook, Zest Health
Source: National Association of Health Underwriters Education Foundation
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The Data Sharing “Spat”
Many health plans restrict data use by self-funded purchasers
‣
Some plans do not allow purchasers to give price data to other third party vendors
‣
‣
They argue that price information is proprietary and confidential
Plans making significant investments in more sophisticated and proprietary
transparency tools worry that providing data to other vendors supports competing
products
Source: National Association of Health Underwriters Education Foundation
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Employers Using Price, Quality Information for Reference Pricing
Consumers seeking
care from providers
above the reference
price may be subject to
additional out-ofpocket financial liability
Price Variation
Identical Service
$20K
$15K
$10K
$5K
REFERENCE PRICE
Consumers seeking
care from providers at
or below the reference
price are typically
responsible for normal
or no cost-sharing
$0
Frequency and Cost of Services Performed
Catalyst for Payment Reform
Source: National Association of Health Underwriters Education Foundation
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What Employers Can Do About It
Tips to Encourage Employee Use of Plan Cost Tools
‣
Incentivize employees
‣
Engage influencers and stakeholders
‣
Email campaign
‣
Use testimonials
‣
Follow up promotion strategy
‣
‣
Highlight health plan tools in existing
benefits communications
Engage spouses and dependents
‣
Incorporate tools in new hire onboarding
Source: National Association of Health Underwriters Education Foundation
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Value-based Insurance Design
Source: National Association of Health Underwriters Education Foundation
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A New Approach to Benefits: Recognize Clinical Nuance
University of Michigan Center for Value-Based Insurance Design
Source: National Association of Health Underwriters Education Foundation
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Value-based Insurance Design
‣
Sets consumer cost-sharing
level on clinical
‣
‣
Reduce or eliminate financial
barriers to high-value clinical
services and providers
Successfully implemented
by hundreds of public
and private payers
University of Michigan Center for Value-Based Insurance Design
Source: National Association of Health Underwriters Education Foundation
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Example: Waiving Co-Pays for Medications after a Heart Attack
‣
Study assessed impact of free
access to preventive medications for
Aetna members who had a heart
attack
‣
Random trial reported in New
England Journal of Medicine
‣
“Enhanced prescription coverage
improved medication adherence and
rates of (heart attacks) and
decreased patient spending without
increasing overall health costs.”
Source: National Association of Health Underwriters Education Foundation
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Implementing V-BID: Connecticut State Employees Health Plan
‣
‣
Participating employees receive a reprieve from
higher premiums if they commit to:
‣
Yearly physicals, age-appropriate screenings/preventive care,
two free dental cleanings
‣
Employees with certain chronic conditions must participate in
disease management programs (which include free office visits
and lower drug co-pays)
Early results:
‣
99% of employees enrolled
‣
Decrease in ER and specialty care
‣
Increase in primary care visits
‣
Increase in chronic disease medication adherence
‣
Medical spending trend declined
Source: National Association of Health Underwriters Education Foundation
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Steering Employees to Centers of Excellence
‣
Lowe's eliminates co-pays and pays
travel costs if employees use the
Cleveland Clinic for elective heart
procedures
‣
Cleveland Clinic’s negotiated bundled
price beats price of local hospitals
Source: National Association of Health Underwriters Education Foundation
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HSA-qualified HDHPs: Making Them Work for the Chronically Ill
‣
More than 25% of employers now offer High
Deductible Health Plans, many with qualified
Health Savings Accounts
‣
The clinical downside: Higher out-of-pocket
costs may discourage employees from
getting evidence-based medical services
‣
The upshot: There is a movement to
changes the rules to encourage enrollees
with chronic diseases to get the care they
need to manage their conditions
Graphic: Western Health Advantage
Source: National Association of Health Underwriters Education Foundation
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