Solutions for Effective Health and Benefit Plans Healthcare Cost Transparency Tools March 2015
Today s Presenters Kristine Klepper Senior Vice President/Practice Leader Conner Strong & Buckelew Dan McCormick Senior Vice President Healthcare Bluebook 2
Past, Present and Future Annual cost to provide coverage for a family Average employer share of premium Health spending as % of GDP 1992 2015 The Future $4,000 $23,000 At current trend rates, annual costs will double in 10 years 76% 78% - 80% Remain steady? 11% 17% 20% by 2017 Number of Americans with a chronic condition 118 million in 1992 141 million in 2011 164 million in 2025 3
Cost for Family of Four Annual Medical Cost for Family of Four $25,000 $20,000 $18,074 $19,393 $20,728 $22,030 $23,215 $15,000 $10,000 $5,000 $0 2010 2011 2012 2013 2014 Source: 2015 Milliman Medical Cost Index 4
Major Challenges Going Forward Fragmented delivery system, outdated provider reimbursement model Outdated information systems New technology & the increase of testing and new procedures Poor-quality care, medical errors, fraud, misuse and underuse Chronic diseases such as heart disease, cancer, diabetes and hypertension, mostly driven by harmful individual behavior Prescription drug costs The ACA is about covering people, not addressing the rising cost of health care or the quality gap. Taxes, Record Keeping and Reporting and Cadillac Tax implications 5
Health Care Spending Waste Identified waste $1.2 trillion Behavioral $303 billion to $493 billion Obesity/overweight $200 billion Clinical $312 billion Defensive medicine $210 billion Operational $126 billion to $315 billion Claims processing $21 billion to $210 billion Smoking $567 million to $191 billion Preventable hospital readmissions $25 billion Ineffective use of IT $81 billion to $88 billion Non-adherence $100 billion Alcohol abuse $2 billion Poorly managed diabetes $22 billion Medical errors $17 billion Unnecessary ER visits $14 billion Staffing turnover $21 billion Paper prescriptions $4 billion Treatment variations $10 billion Hospital acquired infections $3 billion Over-prescribed antibiotics $1 billion Source: PWC s Health Research Institute. The Price of Excess: Identifying waste in healthcare spending 6
Why Healthcare Cost Transparency? In healthcare, there is no correlation between cost and quality. Prices for medical services can vary greatly - even for the same procedure, in the same area, within the same network. Quality and outcomes can vary with no relationship to price. The only way to know whether you're getting good care at a reasonable price is to see the data. Cost transparency tools provide employees with the information they need about cost and quality to choose the best care at the best price. 7
Who Benefits from Cost Transparency? Employers - Healthcare transparency can help improve the health care that your employees receive, while helping to control skyrocketing medical costs. It also leads to more engaged, activated employees. Employees - With more large employers now offering high-deductible health plans, consumers are faced with increasingly large out-of-pocket expenses. Access to price and quality information helps employees save money. It also empowers them to get the best care. Providers - Greater transparency means that high-quality health care providers will receive the recognition they deserve. 8
Changes as a Result of the ACA Employer Actions to Minimize the Impact of the Excise Tax Add or expand tools to encourage plan participants to be better consumers Implement or expand account-based CDHPs Add or expand incentives/disincentives to 3 engage employees in wellness programs Increase employee cost sharing Reduce spousal subsidy or implement spousal surcharge Eliminate high cost plans Add or expand high performance networks, ACOs, PCMHs or similar delivery models Move to a defined contribution model Other 10% 1% 42% 37% 30% 27% 57% 53% 73% Source: 2014 National Business Group on Health Plan Design Survey 9
Controlling Medical Plan Costs Employer Tools and Programs Nurse coaching for care/condition management Disease management Prior authorization for selected services Nurse coaching for lifestyle management Price transparancy tools Self-service decision support tools Data warehouse 85% 84% 80% 73% 71% 71% 66% Employee advocacy tools/services for claims assistance 52% Source: 2014 National Business Group on Health Plan Design Survey 10
Healthcare Bluebook Conner Strong & Buckelew - Philadelphia
3x to 10x Variance in price and quality Plan members are in the dark 12
Healthcare Bluebook s Vision Transform inefficient, broad-panel provider networks into virtual networks of high-value providers 13
Transparency Leader Launched in 2007 profitable since 2011 180+ direct clients 5,000+ clients via partners 14
Cost Transparency
Healthcare Price Variance Report Philadelphia Market 16
The Price Problem Colonoscopy (no biopsy) Price Variability Unique Cases $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 17
Start by Understanding Your Excess Cost 18
It s Not the Physician Cost. 19
It s the Facility. 20
ShopSmart Services Category Total Procedures Total Spend Opportunities to Save Potential Savings Savings Percent GeneralDiagnostics 4,624 $7,896,920 2,459 $2,735,785 35% IP /OP Surgery & Procedures 736 $3,740,544 402 $1,140,354 30% W om en's H ealth 6,800 $5,008,379 3,704 $1,078,265 22% Bone & Joint 696 $7,769,613 436 $2,173,131 28% CT Im aging 3,263 $3,183,473 1,911 $1,733,976 54% M RI Im aging 3,193 $4,004,932 2,005 $1,990,632 50% U ltrasound 6,701 $1,774,499 3,082 $703,976 40% Xray Im aging 18,396 $1,798,777 9,396 $945,085 53% Labs (Top 30) 104,914 $3,331,610 64,695 $1,863,897 56% Total 149,323 $38,508,746 88,090 $14,365,101 37% 25% of total medical spend 37% of the spend on ShopSmart services could be saved using high-value, in-network providers 22
ShopSmart Services 23
ShopSmart Services 24
Quality Transparency
NATIONAL QUALITY RANK The Quality Problem Joint Replacement Philadelphia 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 56 Hospitals in the Greater Philadelphia Area 26
Hospital Quality Data Clinical Category: Joint Replacement Philadelphia, PA City Rank Hospital City Rating Score National Rank 1 Christiana Care Health Services, Inc. Newark ++ 98.7 44 2 Thomas Jefferson University Hospital Philadelphia ++ 98.5 50 3 Doylestown Hospital Doylestown ++ 95.0 167 4 Shore Medical Center Somers Point ++ 94.5 184 5 6 Atlanticare Regional Medical Center- City Division Pennsylvania Hospital of the University of Pennsylvania Atlantic City ++ 90.9 293 Philadelphia + 89.5 366 7 St. Mary Medical Center Langhorne + 88.4 406 National Percentile Rankings ++ 90 th percentile 26 th 74 th percentile - 11 th 25 th percentile + 75 th 89 th percentile -- No data/not eligible -- 10 th percentile 27
Hospital Quality Data Clinical Category: Joint Replacement Philadelphia, PA City Rank Hospital City Rating Score National Rank 50 Mercy Fitzgerald Hospital Darby - 13.2 3,036 51 Crozer Chester Medical Center Upland -- 10.7 3,122 52 Memorial Hospital of Salem County Salem -- 7.8 3,225 53 Chestnut Hill Hospital Philadelphia -- 7.4 3,239 54 Cape Regional Medical Center, Inc. Cape May Court House -- 6.1 3,284 55 Cooper University Hospital Camden -- 5.3 3,313 56 Roxborough Memorial Hospital Philadelphia -- 0.8 3,470 National Percentile Rankings ++ 90 th percentile 26 th 74 th percentile - 11 th 25 th percentile + 75 th 89 th percentile -- No data/not eligible -- 10 th percentile 28
Inpatient Quality Scorecard Objective Data Multi- Dimensional Scoring By Clinical Category All Hospitals Relative Ranking Risk-adjusted Volume-adjusted Data is objectively collected and audited Mortality Condition- Mortality Overall specific Complications Core Processes Patient-Safety Events Patient Satisfaction Included quality scores by clinical category Includes virtually all acute, non-fed hospital in US Ranks hospitals relative to each other Adjusts quality scores to account for differences in demographics, co-morbidity and complexity Weights hospital scores according to procedure volume 29
Evaluated by Clinical Category Overall Hospital Care Overall Medical Care Overall Surgical Care Cancer Care Cardiac Care Cardiac Surgery (Major) Carotid Artery Surgery Coronary Bypass Surgery Gall Bladder Removal Gastrointestinal Care GI Hemorrhage General Surgery Heart Attack Treatment Heart Failure Treatment Hip Fracture Repair Interventional Coronary Care Joint Replacement Major Bowel Procedures Neurological Care Neuro-Surgery (Major) Organ Transplants Orthopedic Care Orthopedic Surgery (Major) Pneumonia Care Pulmonary Care Spinal Fusion Spinal Surgery Stroke Care Transplant of Bone Marrow Transplant of Heart Transplant of Kidney Transplant of Liver Transplant of Lung Trauma Care Vascular Surgery Women's Health 30
Demo-Member Experience
Demo-Member Experience 32
Demo-Member Experience 33
Demo-Member Experience 34
Demo-Member Experience 35
Demo-Member Experience 36
Savings & Reporting & Engagement
Engagement Levers Awareness Communications Scavenger Hunts Opportunities to Save Statements Benefit Fairs Behavior Modification Communications Rewards PreCare Outreach Reference Based Pricing Full Integration with Other Vendors 38
Table Tents 39
Scavenger Hunt Mailer 40
Postcard 1.65x Increase 41
Developing a Cost Transparency Strategy Site of care is a significant driver of cost for health care services. Employers have the opportunity to realize significant savings by steering employees to high-value settings with little or no reduction in quality or outcomes. Given the high-cost variation between sites of care, employers can make a meaningful impact by shifting just a small number of targeted patients to lower-cost facilities. Successful site-of-care strategies must combine data analysis, financial incentives for patients, transparency tools or member advocacy programs, and ongoing communications to ensure that patients have the information they need prior to selecting a site of service. Employers will save money, and so will their employees. Such efforts to drive down costs will also keep the pressure on everyone to reduce costs and compete on value.. 42
Developing a Cost Transparency Strategy Review baseline health care spend and trends for services that have high-cost variation across different sites of care; and identify the specific sites where these services--including hightech imaging and the administration of specialty medications and outpatient procedures--are being offered by different levels of professionals at differing costs. Leverage plan design to financially incentivize employees to seek care in high-value settings. Prior authorization should be required for nonemergency services in high-cost sites of care that have lower-cost alternatives. Offer transparency tools and health plan/vendor programs that empower employees to make informed decisions regarding site of care. Develop a premier network of high-value facilities/providers for specific services with high-cost variation. These include specialty pharmacies, on-site clinics and telehealth providers, as appropriate. After careful review of your data, consider carving out appropriate prescriptions like selfinjectables from the medical benefit and moving them to the pharmacy benefit Use multi-channel communication strategies to educate employees and dependents about the importance and benefits of seeking care at high-value settings. Work with vendors to identify and engage providers that most often refer patients to highcost sites of care. This strategy will become more important as the market moves to integrated delivery systems like accountable care organization with structured referral channels and risksharing contracts that reward providers for reducing costs. 43
Other Resources from Conner Strong & Buckelew Periodic Webinars Web-based presentations on health care legislation, regulations and innovative ideas Email Alerts and Updates High level, quickly produced articles about emerging issues intended to alert clients to legislative and regulatory developments Perspectives Thought pieces intended to identify trends/ issues, helping clients anticipate challenges Our presentations and publications are for educational purposes only and are not intended, and should not be relied upon, as accounting, tax or legal advice; any advice is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code (IRC) or applicable state or local tax law provisions. www.connerstrong.com 44
Thank You for Your Participation 45