Highmark, the Pennsylvania-
based integrated healthcare network, seeks to use ACOs and primary care medical homes to transform the way it does business.
One of the biggest Blue Cross Blue Shield carriers in the country says it is pushing the accountable care organization envelope.
Highmark Inc. has offered BCBS health plans for more than 75 years. A year ago, the Pittsburgh-based payer acquired the seven-hospital Allegheny Health Network, which helped make Highmark the third-largest integrated delivery network in the country.
Now the 5.2 million-member insurer with operations in Delaware, West Virginia, and Western Pennsylvania is banking on the ACO model to drive down costs in the seven-hospital network and spur development of a sprawling integrated healthcare delivery system.
In a phone interview last week, a pair of Highmark executives described the company's quest to transform the way the Blues does business. "We're trying to change our primary care model," said Mark Piasio MD, MBA, medical director at Highmark.
Deborah Donovan, director of provider performance and innovation at Highmark, said merging payer and provider offers valuable opportunities for the partners to leverage each other's skills and resources.
"Payers have incredibly rich data sets that we haven't shared with providers; we haven't really needed to because of the focus on care [to the exclusion of cost in the fee-for-service system]," she said. "The holy grail is when we can link the rich claims data with the clinical data the providers have."
Piasio, who practiced as a physician for 25 years, says he "never really understood the incredible complexity of what an insurer has to do. We still have a ways to go [toward] sharing data."
After finalizing the financial framework of its payer-provider partnership in the first months after the Allegheny acquisition, Highmark turned to "the loftier goals" of an ACO transformation, with primary care medical homes driving the process, Piasio said.
"It's interesting serving two masters, being both payer and provider," he said of the effort required to get the health plans and their providers working toward shared goals of lowering costs while raising efficiency and quality standards. "This is not a two-week project. This is a journey."
Bring in the Clinical Transformation Consultants Donovan says Highmark's medical homes follow established regional and national models that focus on clinical quality and cost of care. Two key elements of the company's ACO genesis are a staff of "clinical transformation consultants" who are helping physicians retool their practices and the establishment of gain-sharing programs with physicians.
"We are partnering with our providers and helping them transform… "[The clinical transformation consultants] work in the areas the practices need," Donovan said of the 30-member specialized consultant staff. "That's a major commitment on the part of the health plan."
Highmark is in negotiations with several physician practices to establish gain-sharing programs, she said, noting that "high volumes" of patients are required to optimize the benefits for both payer and provider.
"It's a good tool to use," Piasio said of gain-sharing programs. "We're exploring them everywhere they make sense."
He believes medical homes are particularly effective in helping patients manage chronic illness in a way that improves quality of life and contains costs. "They need a great deal of coordination to make sure one condition is not affecting another," Piasio said of chronic illness patients.
"How we deliver primary care and how specialists view the world will be totally different than we have today. Otherwise, we will be just kicking the can down the road."
In addition to the clinical transformation consultants, Highmark is providing financial support to help physicians invest in the changes needed adopt the medical home model and operate within the new integrated delivery system.
Highmark has provided funding for electronic health record upgrades and developed "detailed analytics" to share with physicians to help them understand more about the medical needs of their patient populations. "We're providing that on our dime. We are fully supporting them on all fronts," Piasio said.
Early Results
About 850,000 Highmark health plan members are receiving medical services through 3,500 physicians at primary care medical homes. "It's a significant footprint," he said, adding the early results are promising. The payer has documented an uptick in "gradable quality scores" among practices that were already participating in quality programs," Piasio said.
And Highmark's medical homes are starting to pay off on the cost side. "For the most part, relative to the market, they are outperforming those who are outside the system. Our costs are trending below the market," he said.
Donovan said the startup phase of Highmark's ACO drive will take several years. "We're looking at this being a three-to-five year assessment," she said. Piasio believes sustaining and growing ACOs and other value-based healthcare delivery systems will take much longer.
"This isn't easy. There are a great many complex parts that go into how Americans get and pay for healthcare. If it got changed in a generation, that would probably be good," he said. "It's a huge endeavor, but what we're seeing early on is there is uptake… At least the train has started moving."
A survey designed to measure the level of trust that hospital executives have in health insurance companies finds several factors that contribute to low scores, including the length of time it takes for claims to be paid, and the rates hospitals and physicians are paid.
It may come as a shock, but new research confirms it: Healthcare providers do not trust payers.
Payers scored poorly on all three of the new trust questions in the annual National Payor Survey conducted by ReviveHealth, a Nashville, TN-based strategic communications firm and Catalyst Healthcare Research. The results from the final question, which asked providers whether a particular payer "balances its interests with ours and doesn't routinely take advantage of us," were particularly dire.
"I was surprised that the numbers were as bleak as they were on [that] last question," said Brandon Edwards, CEO of Nashville-based ReviveHealth. "It's very hard to lawyer your way around that, or to contract your way around that."
On a 1–100 scale, payers posted an average score of 47 on balancing interests with providers. "All scores were lower in this measure, suggesting a disconnect between the interests of payors and providers," the survey states.
ReviveHealth's "Payor Trust Index" crafted the trust questions in conjunction with Catalyst Healthcare Research. Slightly more than 200 health system and hospital executives participated in the survey, with respondents representing about a quarter of the country's hospitals, Edwards said.
High and LowScorers
In addition to the question about balancing of interests, the survey asked whether a payer made "every effort to honor its commitments" and was "accurate and honest in representing itself and its intentions."
The survey found "the level of trust that hospital executives have in the health insurance companies they regularly deal with is abominably low."
A comparative bright spot, Bloomfield, CT-based Cigna, led the pack with a 63.1 composite trust score. The average score for all payers was 53.2, with Minneapolis-based UnitedHealth Group garnering a mark of only 40.7.
The low scores don't bode well. "Trust is a critical ingredient for the parties to work together," said Dan Prince, president of Catalyst Healthcare Research. "This means there's a long road ahead."
Cigna played up its relatively positive standing among its peers in a media statement, saying "While ReviveHealth's new Payor Trust Index paints a rather stark picture, we're pleased that Cigna is perceived as the most trusted health plan," said John Wray, senior vice president for delivery system innovation and collaboration.
Last place-finisher UnitedHealth had this to say: "This small, narrow, non-scientific survey misses several critical components of the positive relationships that UnitedHealthcare has with most hospitals. It is not indicative of the strong connections we have cultivated with our network of more than 800,000 physicians and 6,000 hospitals. These collaborative relationships with providers are at the core of our work to improve quality for patients across the country."
Results Not Unexpected
Several factors contributed to healthcare payers' collectively poor performance, "including the length of time it takes to get paid, and the rates hospitals are paid for their services," the survey states.
"But new factors also play a role. Narrow networks, tiering, and changing the terms of provider contracts are among the unilateral changes that payors are making right now."
A pair of healthcare provider executives familiar with the survey said the findings are disappointing but far from unexpected.
"It doesn't surprise me," Debi Hueter, VP for managed care at Atlanta-based Piedmont Healthcare, said this week. "Everybody is talking about different funding methodologies… But we really haven't seen flexibility on the other side."
Hueter says payers are often unresponsive to providers' market-specific concerns during contract negotiations. "Those are your marching orders," she said of the conditions some payers set for their provider networks. "Obviously, that doesn't fit every market, every area… They're taking that box, putting it on the provider's desk, and you take it or leave it."
Some healthcare reform efforts have contributed to perpetuating a historically prickly relationship, she says. "Narrow networks have driven the payers and providers farther apart… We're both struggling with exchanges and narrow networks."
Clint Hailey, senior VP and chief managed care officer atDallas, TX-based Tenet Healthcare Corp., says providers and payers have been uneasy partners for decades. "It really has been that way forever," he said, adding that payers are in an unenviable position in US healthcare.
"They're in a tough spot. No matter how well they do, they start at a low point… Somebody's got to finance healthcare, and, for better or worse, health plans find themselves in that position a lot."
Hailey says the survey results are eye-popping given the pressing need for payers and providers to cooperate as they navigate the rapidly changing healthcare industry landscape. "It does scream for change," he said of the survey. "Something has to give. It doesn't mean they have to pay for more… What leads to relationships is mutual trust."
The Price of Mistrust
In strained individual human relationships, people either repair the damage or find new friends. Payers risk losing business partners and market share if they don't fix their broken images, Hueter said.
"They work for a for-profit Wall Street company. And you know there will always be an underlying we-have-to-keep-Wall-Street-happy mentality.
"We have to put the patient in the middle and decide what is best for the patient," she said. "It's got to be a long-term strategy, not a short-term strategy. That's just not in a payer's DNA…
"You will always have that yin and yang dynamic going on. We changed that by starting our own health plan, [with Wellstar Health System in 2012]" Hueter said. "We recognized change is coming down the pipeline. Every time we looked at our payer partners, they looked like deer in the headlights… We knew what we wanted to do. It's a physician-driven plan rather than a Wall Street-driven plan."
For the past decade, healthcare providers have been in the vanguard of efforts to combat the abuse and diversion of opioid pain medications such as Oxycontin. Now state and federal officials and health plans are joining the fray.
Oxycodone, 30 mg. Photo: CVS
For the rest of his time on Earth, one of my best friends will be walking the fine line between the life-preserving benefits of opioid pain medication and addiction.
I call my friend The Mayor of Martha's Vineyard. For The Mayor, powerful pain medications have been a blessing since 2002, when both of his lower legs were shattered in a horrific car crash on the island. The driver, one of his best friends, died in the driver seat beside him.
"My body will never be the same, and I need surgeries every two years just to be functional," The Mayor told me this week. He has been "tapered off" all opioid medication this year, but knows he will go back on oxycodone or Percocet following a hip replacement procedure in the fall, another consequence of the deadly wreck.
The Mayor is resigned to his need for opioid medication and the necessity to take steps to avoid addiction. A pain management doctor has been working alongside his primary care physician for the past three years, and monthly urinalysis testing is part of the pain doc's deal.
"That's probably the best thing as part of their treatment program," he said of the urinalysis tests, which not only keep patients honest but also provide pain doctors with solid data to help manage medication dosage. "And most people will do [the urinalysis voluntarily]. They are not addicts. They're law-abiding citizens."
Blue Cross Blue Shield of Massachusetts started ramping up efforts to help avert the misuse of painkillers about two and half years ago. "A small number of our members were responsible for a high number of our prescriptions," Tony Dodek MD, the Blue's associate chief medical officer and VP of medical quality and strategy, told me this week. "Those same numbers were driving up our costs."
The payer decided to help members find a balance between getting opioid pain medication when warranted, while avoiding the danger of addiction. A new painkiller prescription policy that applies to all members except cancer patients and the terminally ill has posted "remarkable results," he said.
Under that policy, health plan members trigger a painkiller safeguard program after they reach a 30-day treatment threshold. A threshold is described as any number of prescriptions in a coverage year that add up to 30 days of treatment with an opioid pain medication. Once a member reaches the 30-day threshold, the health plan requires pain management safeguards such as a treatment plan and limiting members to obtaining painkiller prescriptions from one physician.
Dodek says the new prescription policy has generated two positive results over its first 18 months:
Prescriptions of narcotic pain medications fell by 6.6 million pills
The company received only one member complaint.
"We had no disruption of pain medication for legitimate needs," he told me.
BCBS of Massachusetts' prescription policy also requires physicians to start pain medication prescriptions with short-acting formulations, which are generally less addictive than long-acting drugs. The policy shift, which applies to all members except cancer patients and the terminally ill, has resulted in a 50 percent reduction in prescriptions for long-acting painkillers, Dodek says.
And the health plan sends monthly letters to physicians about members who may be "pill shopping" for pain medication from several doctors simultaneously. "We see that in our claims pretty quickly," he told me, noting prescription claims are processed in real-time.
Another payer, Aetna, has launched "active surveillance" efforts on its members to help ensure that pain medications are not abused or diverted, Edmund Pezalla MD, MPH, the company's national medical director for pharmaceutical policy and strategy, told me this week. "We're looking for those [members] who have been getting a lot of narcotics at higher doses," he said. "We have a pharmacist who looks at this."
Pezalla says Aetna, which has 22.7 million medical insurance policy members and more than 600,000 physicians in the company's healthcare networks, reaches out to patients when painkiller abuse or diversion is suspected. "We offer patients counseling. We try to get to the patients, and assume they are people who need help." He notes that the health plan covers substance abuse treatment programs and can restrict a member's access to painkillers. "We can limit them to a single pharmacy or a single doctor."
While acknowledging that any snooping in members' claims data raises privacy concerns, Pezalla says health plans bear a responsibility for patient safety in the area of prescription medication.
"Safeguarding the privacy of our membership is very important to us," he told me. "But under HIPPA and other laws and rules, we can track anything that is part of the payment system or normal care."
Pezalla says Aetna is generally supportive of public policy efforts to address the abuse and diversion of painkillers, including state-based registries that track prescriptions of narcotic medications. "If a state puts a registry together, we will help them. We are here to help where we can," he told me. "The improper use of medication just makes it harder for the patients who need it."
Governors Take a Stand
In January, Vermont Gov. Peter Shumlin (D) devoted his entire state of the state address to the Green State's drug addiction crisis. In March, Massachusetts Gov. Deval Patrick declared an opioid abuse public health emergency in the Bay State.
"We have an epidemic of opiate abuse in Massachusetts, so we will treat it like the public health crisis it is," Patrick said in a prepared statement. His office announced a range of measures designed to combat the problem, including mandatory physician and pharmacist use of the state's narcotics prescription registry.
Background facts provided in the statement paint a dire picture of opioid abuse: "The use of oxycodone and other narcotic painkillers, often as a route to heroin addiction, has been on the rise for the last few years in Massachusetts. At least 140 people have died from suspected heroin overdoses in communities across the Commonwealth in the last several months, levels previously unseen. From 2000 to 2012, the number of unintentional opiate overdoses increased by 90 percent."
In April Patrick went so far as to order a ban on a new painkiller, Zohydro, until officials can "safeguard against the potential for diversion, overdose and misuse." Zohydro is a long-acting form of hydrocodone. (Vicodin is a short-acting form of the drug.) Federal and state officials, including Sens. Mitch McConnell (R-KY), Lamar Alexander (R-TN) and Tom Coburn (R-OK) and 29 attorneys general, are urging the FDA to reconsider its approval of Zohydro. The drug's maker says it is working to develop an abuse-resistant formulation of the drug.
Meanwhile, the Mayor of Martha's Vineyard hopes his governor can walk the fine line between cracking down on the minority of patients who abuse or divert painkillers, and the majority of patients who need pain medication to cope with arduous suffering.
"The percentage of people who take these drugs and abuse them is miniscule compared to people getting good treatment," The Mayor told me, adding a backlash against painkiller prescriptions is already having a chilling effect in the medical community. "They're just afraid for their jobs."
The impact of proposed changes to Medicare's Inpatient Prospective Payment System in 2015 will vary from hospital to hospital, but federal officials predict providers will take a $241 million payment hit next year.
Medicare and Medicaid have been under the budget knife for years. The proposed 2015 IPPS rules from the federal Centers for Medicare & Medicaid Services released last week have hospital officials asking a pressing payment question: How low can you go?
"It's really starting to chip away at hospitals," says Joanna Hiatt Kim, vice president of payment policy at the American Hospital Association. "We really can't pin it on CMS because they are implementing cuts in a statutory manner."
The IPPS applies to nearly 4,000 acute care and long-term care hospitals across the country. In the proposed rules for 2015, CMS presents two classes of factors that will affect Medicare payments next year: set factors that will impact all hospitals covered in the proposed rules, and variable factors that will differ from hospital to hospital.
The set factors in CMS' proposed 2015 IPPS rules establish a baseline 1.3 percent increase in Medicare payments. The elements of that baseline figure are as follows:
2.7 percent hike, "market basket" update
0.4 percent reduction, productivity adjustment
0.2 percent reduction, Patient Protection and Affordable Care Act
0.8 percent reduction, documentation and coding
Federal officials expect the net IPPS payment figure to be in the red because of several variable factors—mostly negative adjustments and penalties under Medicare payment programs. Those payment adjustments and penalties include ongoing cuts to the Disproportionate Share Hospital program that reimburses hospitals for uncompensated care as well as penalties for high rates of readmissions and hospital-acquired conditions.
The proposed IPPS reduction in HACs, which federal officials estimate at 0.3 percent, could be the most prominent pain point for hospitals, according to Kim and several other observers. She says large hospitals and teaching hospitals appear to be hardest hit. "If it's because they treat sicker patients, we don't think that's fair."
Peter Angood MD, CEO of the American College of Physician Executives, says reducing hospital acquired conditions is going to be a challenge for everybody.
"The complexities of reducing those HACs are tough," he said, noting reductions in readmission rates are easier to attain through relatively modest changes in programs and procedures. "It gets to the core of trying to improve the healthcare delivery system… Reduction in HACs is a longer term project. We've been on this journey for about a decade."
While Angood praised CMS for driving the effort to promote value in US healthcare, he said hospitals and other key stakeholders face short- and medium-term risk from the "dichotomous" payment system they face in the transition period. "CMS is using its platform effectively to shift us from volume to value… It's complicated for health systems to navigate both sides of that."
Two-Midnight Rule
The proposed IPPS rules are more about staying the course than breaking new ground, several observers say.
"It's 1,700 pages of a pretty boring rule," Eric Hammelman, VP of data analytics at DC-based Avalere Health, said Friday.
Anyone expecting CMS to chart a new course on its so-called "two-midnight rule" for hospital admissions is surely disappointed. Under the rule CMS set last summer, patients who stay at a hospital for a period of time spanning less than two midnights are generally considered appropriate for payment at outpatient rates under Medicare Part B. Inpatient hospital stays are reimbursed at the higher Medicare Part A rate.
Hospital Execs Hope for Two-Midnight Rule Repeal
In its proposal, CMS invites providers to offer exceptions to the two-midnight rule via email for inclusion on a list of procedures that are automatically designated for inpatient payment. But there is no new guidance on the rule.
"They didn't change any of the regulations," Paul Clark, a supervisor at Wolters Kluwer's Health Reform KnowlEDGE Center, said Thursday. "They just repeated guidance that RACs are at bay until March 2015."
Medicare recovery audit contractors are the biggest two-midnight rule losers for now, he says. "[Contractors] are not going to be making as much money. They are not happy."
Avalere's Hammelman says CMS appears determined to move forward with enforcement of the rule, which has drawn howls of protest from healthcare providers and their allies in Congress. "In their minds, this is a policy [CMS officials] have implemented." While recognizing there are exceptions to any rules, CMS has directed contractors to start looking at Medicare billing with the two -midnight rule in mind, he says.
The proposed IPPS payment statutory reductions such as those mandated under the PPACA and programs that will hit individual hospitals differently such as HAC penalties have been expected.
"It's all stuff that [CMS officials have] telegraphed," Hammelman said. And several quality programs such as HAC have the potential to take bigger and bigger bites out of bottom lines over time. "It will become a growing issue as we see hospitals face penalties in the six, seven, [or] eight percent range."
'Really Hurting'
The proposed 2015 IPPS rules cover several other topics for healthcare providers and other Medicare stakeholders to consider during the 60-day comment period that began April 30.
Wolters Kluwer's Clark says CMS appears to be trying to rein in appeals of decisions made at the Provider Reimbursement Review Board. "About a third of the newly proposed regulations apply to the PRRB," he said. "They're trying to eliminate certain appeals that providers can do. … In recent years, the PRRB has been trying to reduce the number of appeals they have to deal with."
Ongoing cuts to DSH payments will hurt hospitals in states where Medicaid expansion under the PPACA has been blocked, Clark said.
"One of the big issues in this one is going to be DSH reimbursement," he said of the proposed 2015 IPPS rules. "The assumption was the need for DSH payments was going to go down. CMS doesn't seem to be taking into account that the level of uncompensated care is not going down the way regulators, lawmakers and others had expected… For 2015, they're not making dramatic changes. It seems like they're going ahead with the existing formula."
The federal officials who drafted the PPACA expected states to expand Medicaid to more adults under a deal that has Washington paying 100 percent of the bill for the first three years. Federal support of Medicaid expansion is set to taper down to 90 percent in 2020.
"States that didn't expand Medicaid and already had a relatively sick population are really hurting," Clark said of states such as Georgia and Missouri, where hospitals are set to endure another round of double-digit cuts to DSH payments in 2015. "Struggling, marginal hospitals… the DSH payments may have been making them solvent. Those marginal ones are going to be in a bind."
Health plan enrollment nationwide beat HHS's expectations, but fell short on attaining two key goals of federal officials: enrolling Latinos and adults between 18 to 34 years of age. The differences from state-to-state were, in some cases, pronounced.
The early results are in. While federal officials appear to have beat expectations for 2014 HIX enrollment nationwide, the performance of the new public exchanges varies state-to-state.
In a 45-page report released Thursday, the U.S. Department of Health and Human Services provided detailed demographic data on the people who signed up for individual health insurance policies on the new public exchanges between October 1, 2013 and March 31, 2014.
Some key findings:
More than 8 million people signed up for health insurance policies through the Patient Protection and Affordable Care Act exchanges during the enrollment period
About 28 percent of 2014 exchange enrollees (2.2 million people) are between 18 and 34 years old
Nearly half of the people who signed up for exchange policies —3.8 million—signed up during "the March surge" at the end of the HIX open enrollment period
About half of those who enrolled during the surge at the finish were in the 18 –34 age group, a coveted cohort for payers
The report reveals wide variances among states, but indicates that enrollment nationwide exceeded HHS's expectations. Last June, HHS Secretary Kathleen Sebelius and the federal Office of Management and Budget set the national enrollment target for the exchanges at 7 million beneficiaries.
Latino, Youth Enrollment Disappoint
The national enrollment data shows the exchanges fell short on two key goals of federal officials, the enrollment of Latinos and of adults 18 to 34 years old.
According to 2012 US Census Bureau statistics, Americans of Hispanic origin constitute the largest share of the country's uninsured population. At 15.5 million lives, nearly 1-in-3 uninsured Americans are Latino, the Census found.
The HHS report lists ethnicity statistics from the nearly three dozen exchanges that are administered by federal officials directly or in conjunction with the states. Of the 3.7 million beneficiaries who reported their ethnicity, only 403,632 were of Hispanic origin, slightly over 10 percent.
Richard Olague, a spokesman at the federal Centers for Medicare & Medicaid Services, said in an email Friday that exchange officials across the country face a challenge reaching Latinos.
"We always anticipated reaching the Latino community would require a unique approach that included more than having a Spanish website and offering bilingual support at the call center," he said. "Because of this, we took steps to utilize what we know are trusted messengers in the Latino community, including Spanish language media and community partners to provide as much in-person assistance to help educate and enroll the Latino community.
"Our goal remains to continue to educate… all Americans about the benefits and protections now available to them because of the Affordable Care Act," he said.
Young Invincibles
While it could have been much worse without "the March surge," the enrollment of people 18 to 34 years old still fell short of federal officials' hopes.
About 28 percent of exchange beneficiaries are in this age group, which represents about 40 percent of the population of Americans eligible to obtain insurance on the exchanges, says Elizabeth Carpenter, director in the healthcare reform practice at DC-based Avalere Health."
Speaking by phone Friday, she said, "we're certainly in the realm where the enrollee demographics will affect rates next year." The 2015 rates are highly likely to vary by health plan, she said, depending "on what their strategy was going in and what their strategy is going forward."
'State-by-state Question'
As exchange stakeholders pore over the 2014 beneficiary pool data in the coming weeks, they will be closely examining the state numbers. "This is not a national question," Carpenter said of analyzing beneficiary pools in the exchanges. "It is really a state-by-state, region-by-region question."
Multiple factors must be weighed when evaluating the beneficiary pools and associated risks for payers, she says, including the size of the state and the proportion of the state's population that was previously uninsured.
A handful of outlier states lie on both sides of the performance spectrum. The data released last week shows the District of Columbia and Hawaii "lagging behind" in overall enrollment, Carpenter said. Despite the Oregon exchange's decision last week to scrap its troubled state-administered website and to adopt the federal government's HIX website, HealthCare.gov, the West Coast beneficiary pools stand out positively, she noted. "California has exceeded expectations," and the Washington exchange also performed well.
"While Hawaii has had a hard time with its exchange, Oregon managed to come close to its enrollment target," Carpenter said. "There was a lot more that went into enrollment than just the performance of the exchange website."
Cover Orgeon's site performance was so bad that the FBI and the GAO have launched inquiries into what went wrong.
In Colorado, officials at the state-administered exchange are hopeful about their beneficiary pool. "There are many good signs," Linda Kanamine, director of communications at Connect for Health Colorado, said Thursday. "We are pleased to see an even distribution of enrollments statewide and that our young adult enrollments are increasing. Our focus continues to be on reaching more Coloradans and increasing access, affordability and choice."
Kanamine highlighted these data points:
Enrollments by each county very closely mirror each county's percentage of total state population.
60% of those who signed up applied for and got tax credits – averaging $277 per month statewide.
"26% of our customers were between 18 and 34. Factoring in Medicaid expansion, almost 44% of those new enrollees are also in the 18–34 range.
A Payer's Perspective
Indianapolis-based Wellpoint Inc. is upbeat about its new exchange customers.
"We continue to process applications and payments from our new members, as this first open enrollment period under the Affordable Care Act has drawn to a close," Wellpoint spokesman Jerry Slowey said in an email Friday.
"Our new enrollees appear to generally match the federal government's projections for the industry… At WellPoint/Brand, we are proud to have been essential players from the start, encouraging enrollment across our fourteen states. As we move forward, we can all take pride that for the first time, millions of uninsured Americans have access to comprehensive health insurance."
As model payment for healthcare services moves from fee-for-service to a system based on value, the health insurer Cigna is putting an emphasis on colon cancer prevention measures.
"A pound of prevention is worth an ounce of cure." – Benjamin Franklin
One of the worst perversions of fee-for-service medical care is the under valuing of prevention.
In the real world of human suffering, prevention is the ultimate value proposition. Preventing illness not only improves quality of life but also cuts treatment costs.
This concept is clearly on display at Bloomfield, CT-based Cigna, which began ramping up its efforts to increase colorectal cancer screening rates among its members in 2005. "At the time, our screening rates were comparable to what the national rates were, so there was room for improvement," Kathryn Pierce, director of clinical initiatives at Cigna, told me. "Colon cancer can be prevented or easily treated if detected early."
According to the American Cancer Society, colorectal cancer is the third leading cause of cancer-related deaths in the United States, and the disease is expected to kill 50,310 Americans this year.
Cigna's Colorectal Cancer Screening Program is making a difference. Last year, the company documented a 23.7 percent year-over-year increase in screening rates. Any boost in screening rates has the potential to save lives. And Cigna is cutting costs by paying for home test kits that indicate whether members should undergo more expensive testing such as a colonoscopy, which has an average cost of $1,185 in the United States.
This year, Cigna plans to reach two million people who are due for screening through a combination of targeted online messages and direct mail. More than 20 percent of health plan members who received an outreach message from Cigna in 2013 obtained a colorectal screening within six months of the intervention, according to the company.
Outreach is at the heart of the Cigna program. Anyone turning 50 or who becomes a Cigna health plan member past age 50 receives an educational brochure outlining all screening methods, which include a simple and sanitary home collection kit. "There are pros and cons to each of them," Pierce said of the screening methods. "For those who have used the kit in the past and have a preference for it, we send one directly. We take one step out."
The home collection kits are distributed by Madison, NJ-based Quest Diagnostics and are "very easy to use," Pierce told me. The collection is conducted after a bowel movement, requiring "a gentle brushing of the stool in water for about 5 seconds," according to information provided by Enterix, the company that makes the kit." The brush is able to pick up any blood in the water "that may be the result of bleeding the person may not be aware of," said Pierce.
The patient sends the collection kit to a Quest lab for testing and Quest notifies the patients about the results. A positive result prompts a recommendation to undergo further screening through their physician such as a colonoscopy.
Pierce said the vast majority of Cigna health plans cover colorectal screening "at 100 percent."
Healthcare providers are key partners in Cigna's Colorectal Cancer Screening Program, Pierce told me, noting the company's survey data has found that a doctor's recommendation is the No. 1 reason people get screened. "We have partnered with physicians with great success," she said.
Pierce told me Cigna's screening program is saving the company money, but she said the value of the effort goes far beyond the bottom line. "There definitely is a financial return," she told me. "But the thing you can't quantify is the lives saved. [The screening program] promotes a culture of health. It will encourage them to get their screenings for other cancers and cardiovascular disease."
Prevention potentially saves lives, cuts costs and "moves the needle" on overall health. That sounds pretty valuable to me.
A report setting principles and recommendations for achieving greater price transparency in US healthcare suggests the task will require cooperation between healthcare providers, payers, and employers.
"Patients are being asked to take on an increasingly significant share of the payment for healthcare services. They are looking for higher value providers: those that offer quality services at a fair price," Richard Gundling, VP of healthcare financial practices at HFMA, said in an email exchange. "It is impossible for them to make decisions about the value of a provider without having price as a component."
Why Is Healthcare Price Transparency So Hard?
The authors of the report wanted any form of price transparency to be easy to use and easy to communicate to stakeholders. They set the following goals as the foundation for price transparency reforms:
Should empower patients and other care purchasers to make meaningful price comparisons prior to receiving care.
Should be paired with other information that defines the value of services for the care purchaser.
Should ultimately provide patients with the information they need to understand the total price of their care and what is included in that price.
Will require the commitment and active participation of all stakeholders.
"Transparency won't be successful without clarity of information, or without easy accessibility. The basic point is to make it easy for patients and other care purchasers to make decisions about which provider offers them their desired level of value," Gundling said.
"The report offers several examples of how information can be made easily accessible: Providers might post procedure prices on a public website, or provide information on how to make phone or email inquiries to pricing specialists. Many payers, as well as third party vendors, are already offering transparency tools for their members that enable them to make price and value comparisons among multiple providers."
Achieving the price transparency goals will require cooperation between healthcare providers and payers, Gundling said. "Transparency will work best when there is collaborative agreement between providers and payers on the right 'metrics' for transparency, offering different or potentially conflicting information will ultimately create confusion for care purchasers."
"And both payers and providers need to be responsive to feedback from patients/health plan members on what information they find useful when choosing a provider. The HFMA report includes a recommendation to establish "different price transparency frameworks for different care purchaser groups," he said.
For insured patients, the report recommends payers serve as the main source of price information. Providers are best suited to provide price information to uninsured and out-of-network patients, the report contends. And fully insured employers should use and expand transparency tools that help workers identify higher-value providers, according to the report.
"Patients are assuming greater financial responsibility for their healthcare needs and in turn need information that will allow them to make informed healthcare decisions," the report states. "Price is not the only information needed to make these decisions, but it is an essential component."
'Unleash the Market'
One of the most powerful results of greater price transparency will be transforming many fields of medicine into market-driven service delivery models, according to the HFMA report.
"Certain areas of health care are becoming, or already are, more like a retail marketplace, including the market for elective procedures such as Lasik eye surgery or cosmetic surgery," the report states.
"Recent trends in consumer-driven and value-based insurance design are moving 'commodity services' such as lab work, imaging, and screening tests, as well as some procedures, more toward a retail model. And new payment models are potentially reshaping how care will be delivered and priced."
David Friend, who earned a graduate degree in finance from the University of Pennsylvania's Wharton School, a medical degree from the University of Connecticut and now works at accounting powerhouse BDO, has been advocating for market-based reforms in medicine for nearly four decades. In a phone interview he said price transparency and market-based reforms go hand-in-hand. "They're going to have to unleash the market."
"If you let the market work, it will be just like restaurants," he said of achieving price transparency in healthcare. "You should know what you're getting and how much it's going to cost."
Friend believes the market forces that have already been unleashed are bearing down on the "vested interests" that oppose greater transparency in US healthcare.
"This is coming because the consumers are getting smarter and are starting to demand it," he said, noting individuals have an incentive to become savvier shoppers as they face wider healthcare coverage options that include a range of cost sharing burdens such as deductibles and co-pays.
"It's now finally going to happen," he said. "The entire health system has to change: 25 percent of the economy. With 25 percent of the economy up for grabs, you're going to have tremendous winners and unbelievable losers."
'Center Stage Without a Script'
The need for greater transparency is widely viewed as pressing. "We're giving consumers keys to a new car, but you wouldn't give anyone a new car without driver's education," Robin Gelburd, president of New York, NY-based FAIR Health Inc., said in a phone interview.
FAIR Health is a not-for-profit corporation established in 2009 as part of a settlement agreement between the state of New York and insurers over out-of-network reimbursement practices. According to the organization's website, the organization was formed to manage, improve, and expand the claims database that supported claims adjudication and to enhance its transparency, objectivity, reliability and accessibility."
FAIR Health maintains an independent database of healthcare claims information on 140 million "covered lives," Gelburd said.
"In the past, the consumer was like the chorus line in a Broadway show," she said. "Now they have been thrust to the center of the stage with the spotlight on them. They can't be center stage without a script."
Payment reform is the glue holding Arkansas' ambitious healthcare reform efforts together, according to top leaders in the state. Some legislative hurdles remain.
Gov. Mike Beebe
This is the third and final part of series on healthcare payment reform in Arkansas.
An ambitious plan to build the country's first public-private, universal payer, value-based healthcare delivery system is playing out in Arkansas and the preliminary results look promising.
"One of the reasons we have been successful with the legislature is we tackled cost containment first before we expanded insurance," Arkansas Surgeon General Joseph Thompson MD said in a phone interview earlier this month. "We didn't have any votes to spare."
Arkansas' payment reform push started several years before the cliff-hanger votes over the past year that expanded Medicaid to more adults through the state's new public exchange.
"Delivery system costs were going to force the state to do something dramatic [with Medicaid]," the surgeon general said, adding that the existing fee-for-service program faced insolvency unless there were deep cuts to provider payments or patient benefits. "Our private sector carriers were having the same issue."
Payment Reform Naysayers 'Better Wake Up'
Gov. Mike Beebe's administration began designing the Arkansas Payment Improvement Initiative in 2011 and started launching reforms in 2012. The essential elements of the initiative are two-fold:
A gainsharing/cost-penalty payment system for physicians with as many as 150 "episodes" of care for conditions ranging from upper respiratory infections to clogged coronary arteries
Patient-centered medical homes that bear financial responsibility for the healthcare needs of a population
Arkansas has 15 episodes either established or launching this summer.
By setting standards for care alongside the cost thresholds, Arkansas' payment system is intended to make value a driving force in the state's delivery of healthcare services. Physicians who provide services above the cost threshold have to pay money back. "It's not just about lowering cost," Thompson said. "The idea is to improve quality first, then achieve efficiency to lower cost."
Joseph Thompson, MD
Arkansas Surgeon General
PCMHs help physicians coordinate care, marshal resources, and provide the best value to their patients, said Steve Spaulding, VP of enterprise networks at Arkansas Blue Cross Blue Shield, the state's largest private healthcare insurer. "When they refer to somebody, they can be sure they're referring to the best value in the system," he said of the doctors who lead medical homes.
PCMH: Shouldn't Patients Have Their Say?
Not surprisingly in the home of college football's Razorbacks, Thompson calls medical home leaders "quarterbacks."
"We're wrapping a team around a lead physician," the pediatrician said, adding that a doctor working in a medical home practice could have as many as 5,000 patients. "The team helps carry the load. It helps their efficiency. It helps their effectiveness."
Medical homes will be crucial in helping physicians treat thousands of previously uninsured Arkansas residents, said David Wroten, Executive VP of the Arkansas Medical Society.
"The Payment Improvement Initiative, particularly the primary care medical homes, is hopefully how we will be able to handle this increased access to medical care," he said of the half million previously uninsured Arkansas residents who now have the option to obtain healthcare coverage through Medicaid or the state's new public exchange, Arkansas Health Connector.
"The system you have out there right now, you add 250,000 people to it and you're going to have a bottleneck. That's why the state is pushing so hard to get those medical homes up and running."
Early Results Promising
"We're starting to see improvement in quality and efficiency of services that is generating savings," Thompson said. "We have some clinics that are knocking the ball out of the park."
The Arkansas Center for Health Improvement, which Thompson leads as director, recently began analyzing payment data from the first episodes of care launched in October 2012, he said. Data for upper respiratory episodes from October 2012 to September 2013 shows more physicians had to pay back than gained a share of cost savings, the surgeon general said.
Gainsharing for treatment of upper respiratory infections during that period was about $60,000 and cost-penalties were about $92,000. "We've had remarkably little provider pushback to date," he said.
Thompson says the new payment system features rational incentives and simplicity for physicians because Medicaid and commercial payers are playing by the same rules. "What we're not doing is putting a new management system on top of a provider's delivery system. We are highlighting for the provider the inefficiencies in the system."
Andy Allison, Arkansas' Medicaid director, says the new payment system is already bearing fruit. "What we've achieved in the last two or three years is, in my view, without precedent. We've heard multiple stories of providers who didn't believe the numbers… Once you start paying that way and showing providers what actually is going on, the providers are very willing to make a change. History tells us payment drives change."
Allison says the Payment Improvement Initiative is pushing for system-wide change and driving to include all healthcare payers operating in the state. "Experiments don't work because they're experiments. Providers don't change their business model on a whim."
Physicians, who have been among the most skeptical Arkansas healthcare reform stakeholders, are cautiously optimistic about the Payment Improvement Initiative. "They're busy, they're seeing 40 or 50 patients a day, and they're just seeing how this works," Wroten said. "We need to look beyond the data at this point and find out what really is going on."
Like Thompson, he has not heard complaints from doctors. "We did not get any calls from physicians who were in a position to pay money back to the state," Wroten said.
Robert "Bo" Ryall, president of the Arkansas Hospital Association, believes the new payment system is on the right track. "The pace of it has been good," he said in a phone interview. "Medicaid spending is down to flat. So we know this is working to some degree."
'A Huge Impact'
In Arkansas, there is widespread agreement that building a public-private, universal payer, value-based healthcare delivery system would have a host of benefits for many states.
"It's a huge impact," Ryall said. "You're talking about having a healthy workforce. It's also important for the health of hospitals… Having a more insured population helps the health of hospitals."
The healthcare reforms Arkansas has embraced are relieving financial pressure on providers, many of whom previously faced budget-busting uncompensated care as well as shrinking Medicaid and Medicare reimbursement rates, Gov. Beebe said in a phone interview. "You can't stay in business if you're giving away 25 percent of your services for free," he said.
Spaulding said Medicaid expansion through the Arkansas Health Connection's "private option" has had a palpable effect on many people who have never had health insurance before. "Regardless of how you feel about it politically, it was expanded and there are thousands of people who are benefiting from it," he said, adding several of the newly insured have suffered with untreated chronic diseases for years. "The fact is, what has been done in Arkansas, it's created an opportunity for the overall health of the state of Arkansas to improve."
Medicaid expansion will be a financial bargain for the state even after the federal government tapers its support for the expansion program from 100 percent to 90 percent after 2020, Wroten said. "The economic benefit we will get from insuring all those people will more than offset the cost. In order to have a medical practice, you have to have enough patients with insurance or who can otherwise pay for care."
Arkansas officials face several remaining barriers in their quest to transform the state's healthcare system, including annual legislative votes on Medicaid expansion that require 75 percent majorities and convincing Medicare to join the state's new payment system.
"We need Medicare to join completely," Thompson said. "We're losing some of the fidelity of the signal to our providers."
The surgeon general said the top two candidates seeking to succeed Beebe, who is ineligible to run for re-election due to term limits, have "both signaled willingness to continue" the Payment Improvement Initiative, but he noted healthcare "is usually not the first choice" for any new governor.
"We're not at the home stretch yet," he said. "It still could go wrong."
A Pittsburgh-based Blue Cross Blue Shield carrier views private health insurance exchanges as a golden opportunity in the group market.
Highmark Inc. is banking on customer-driven private health insurance exchanges as a key growth area for group coverage over the next four to five years.
"We're looking aggressively to move groups to private exchanges," Bill Brown, manager of digital distribution at the Pennsylvania-based insurer, said in a phone interview on Wednesday. "We flipped from a defensive to an aggressive strategy. We've done a lot of demos for national accounts."
Highmark, the fourth-largest Blue Cross and Blue Shield-affiliate in the country, provides health insurance policies to more than 5 million people in Delaware, Pennsylvania, and West Virginia. It launched private exchanges for group coverage in January 2011, with "full scale" operations in place by January 2012. Analysts predict that percentage of consumers using HIX will grow from 1 to 3 percent now to as high as 40 percent in 2018.
"We are so early in the evolution of these exchanges, [that] to have growth that quickly shows how powerful this technology is," Brown says.
"More Depth with the Group'
Highmark is working to establish defined-contribution private exchanges that are consumer-driven and offers "many types of products." Beyond medical coverage Highmark's private exchanges offer dental, vision, and other types of consumer policies.
Brown says private exchanges appeal to small- and medium-sized businesses that have relatively high revenue and well-compensated employees. "The private exchange gets more depth with the group… low-revenue companies may not have the funding to do defined contribution."
Low-revenue companies and small business employees who have never had health insurance are often better served pursuing coverage options on the new public exchanges, Brown said.
Under the federal Patient Protection and Affordable Care Act, individuals and businesses may purchase health insurance policies on public exchanges in all 50 states. With the open enrollment period for 2014 now closed, federal officials say more than 8 million people have signed up. The Small Business Health Options Program public exchanges for group coverage are launching at a slower pace, with growth expected to accelerate in 2015.
"We do have a few groups that have already purchased through the SHOP," Brown says of Highmark's participation in the public exchange for group coverage. "There are different groups that will have more opportunities in the SHOP than a private exchange."
The ability to offer a large suite of insurance products is a major selling point for defined contribution plans on private exchanges. "We're getting a group or member to select from the umbrella of Highmark products," Brown says. "There's a benefit to Highmark to put all its products up and sell them as one. … It's a great opportunity for Highmark to grow our subsidiary business."
Private exchanges offer several advantages to employers and employees, Brown contends. On the employer side, he cites a 450-employee business that reaped huge administrative cost-saving gains from purchasing health coverage on one of Highmark's private exchanges. "They did all their enrollment on paper. They moved to our platform to move themselves to an online platform. It's saving them hours and hours of work every month."
For employees at small businesses, workers can choose a product tailored to their needs, Brown says. "For the most part, in the 100-and-under sized company, they had never had the opportunity to buy products that are what their families need," he said. "With private exchanges, you have employees picking policies that are right for their families and the stage of their lives."
Keys to Success
For insurers seeking to launch private exchanges for group coverage, Brown says the keys to success include careful market assessments and picking the best IT partner possible. "We wanted to make sure we hit the right markets at the right time."
Highmark looked for markets where the company could offer employers opportunities to manage costs, Brown said, "giving the small-group employer another option to dropping their employees on the public exchange market."
Medium- to large-sized employers present opportunities for both Highmark and its group coverage clients, who can realize significant human resources cost savings. With the private exchange handling administrative functions that were often previously sited in multiple locations, "you're really consolidating a lot," Brown says. "They love the administration aspect of it."
Highmark executives also chose carefully when they picked Seattle, WA-based Array Health as the company's IT partner for private exchanges.
"We were looking for someone who had the same vision as Highmark," Brown says. "They are really customer-focused. After the sale, we have very deep touch-points with our consumers… They wanted to make sure everything after enrollment was nailed down. That's why we chose them."
Array Health CEO Jonathan Rickert said Tuesday that he co-founded the company in 2006, when "Romneycare," the Massachusetts healthcare reform law enacted in 2006 by then-Governor Mitt Romney, sparked the imagination of healthcare executives across the country. "The original vision of the business was to offer employees an array of choices," Rickert says. "We wanted to ultimately personalize and humanize the experience of purchasing insurance."
Rickert says Array Health began licensing the company's private exchange IT platform in 2011. "The ACA happened, and we started getting approached by large carriers." Array Health views a private exchange's online presence like an iceberg. "The marketplace is like the tip of the iceberg, then there's the 90 percent under water," Rickert says.
The "90 percent under water" includes billing, customer service, data integration, and "a beautiful front-end shopping experience. You've got to pick the right partner and you have to set it up correctly."
"We loved their back-end technology," Brown says of Highmark's choice to partner with Array Health. "On the front end, we wanted something that was really simple… We do have a call center that supports the website. But we don't get a lot of use of our call center."
As the clock winds down on the Obama administration's final term, CMS Principal Deputy Administrator Jonathan Blum joins what is becoming a steady stream of top federal officials leaving for new career opportunities.
Jonathan Blum
Principal Deputy Administrator of CMS
In its third high-level departure this spring, HHS has announced the resignation of Jonathan Blum, principal deputy administrator at the Centers for Medicare & Medicaid Services.
Blum, a former Office of Management and Budget program analyst, was the White House's first political appointee at CMS, serving as director of the Center for Medicare from 2009 to 2013. As principal deputy administrator over the past year, he concentrated on payment reform and cost reduction efforts across the agency.
In a memo to CMS employees Tuesday morning, CMS Administrator Marilyn Tavenner said Blum "has decided to leave CMS to pursue new opportunities." His last day on the job will be May 16.
Blum's departure follows the April 11 resignation of HHS Secretary Kathleen Sebelius, the administration official most closely associated with reforms under the Patient Protection and Affordable Care Act. Gary Cohen, director of the Center for Consumer Information and Insurance Oversight at CMS, announced his resignation last month. Cohen had led the troubled launch of the new public health insurance exchanges.
A Champion of ACOs
Blum has led several Medicare reform initiatives linked to the PPACA, including development of accountable care organization rules, quality framework implementation for Medicare Advantage plans, and helping to craft value-based payment strategies.
"Under Jon's leadership, the Medicare program has served as one of our primary drivers to shift our health care system to reward quality, care improvement, and value," Tavenner wrote. "Medicare per-capita cost growth has remained at the lowest sustained period under Jon's tenure, while quality of care has increased and new benefits have been added to the program."
CMS came under fire this spring over proposed cuts to Medicare Advantage plans that the agency pegged at 1.9 percent but insurers forecast at 5.9 percent. Republicans in Congress accused CMS of pilfering Medicare to pay for Obamacare.
In a conference call with reporters on April 7, Blum defended the final CMS calculation of anticipated 2015 MA payment rates, which the agency has set at a 0.4 percent gain. "CMS has a very good track record," he said. "We've been pretty spot-on over the past four years on predicting the markets."
Exodus in Motion
In email exchanges Wednesday, a pair of analysts noted that the departures at HHS present both opportunities and risks.
Nicholas Manetto, director at DC-based FaegreBD Consulting and a former congressional press secretary, said the exits of Blum, Cohen, and Sebelius present more risk than potential for gain.
"Like in most situations, too much change at once can be destabilizing and presents a certain amount of risk, particularly given the complexity of ACA implementation and related issues," he said.
"While there can also be some opportunity in new blood, new approaches and new thinking, I think the risks could be significant, particularly given the number of challenges that still very much exist and lay ahead with the ACA."
Kevin Coleman, head of research and data at Sunnyvale, CA-based HealthPocket Inc., said the timing of the HHS departures could be good for the Obama administration's political standing and efforts to drive healthcare reform.
"By waiting to depart after the administration's [public exchange] enrollment goals have been met and exceeded, Sebelius and Blum have prevented their departures from being cast as key leadership abandoning a very troubled inaugural enrollment period," Coleman said.
Opportunity
The departures present the White House with several opportunities, Coleman added. "These recent HHS departures represent an opportunity for the administration to increase implementation process transparency for the public as well as improve its management of supporting technology and service vendors," he said.
"The new secretary of HHS can review those vendor management practices that culminated in the federal exchange roll-out problems and monitor the management of the new exchange vendor to confirm mistakes are not repeated as various aspects of the exchange software system are modified. With respect to transparency improvements, HHS can provide ongoing updates regarding the testing status of exchange functionality, load performance, and data security prior to the commencement of the next Open Enrollment Period."
Manetto cautioned that observers should not read too much into the HHS turnover.
"Transitions of this kind at this point in time in any administration are certainly not uncommon," he said. "Blum and Sebelius in particular were in their very demanding positions for quite lengthy periods of time, so it is not surprising to me that they are looking to transition, and I would think we will only see more changes of this kind as the administration moves into its final two years."
Other high-ranking administration officials who have resigned this year include Customs and Border Protection Commissioner David Aguilar, Small Business Administration chief Karen Mills, and White House Counsel Kathryn Ruemmler.
