Perspectives Cracking the code with new approaches to care delivery and operations FALL 2013
FALL 2013 Perspectives In recent months, we have all been witness to the introduction of ACA and, along with it, a spectrum of competitive, socioeconomic, demographic and governmentmandated changes that impact growth, quality and performance strategies. It s clear that in our current environment, tackling the complexities of our health care system can feel daunting at times, which is why I find it intriguing and fitting that we ve entitled this edition of Perspectives, Cracking the code with new approaches to care delivery and operations. Through this continuum of change, each of us has before us an extraordinary opportunity to make decisions that positively affect the health of our communities and our organizations. At Optum, we recognize the challenges and new market realities that health plans face. We remain committed to understanding the implications of these changes, and bringing together the brightest minds in health care to discuss how we can meet these challenges head-on and turn strategies into concrete, tactical initiatives. Enjoy this issue of Perspectives and the insights provided. We hope it serves as a valuable resource to you and your colleagues. Best regards, Eric Murphy President, Payer Solutions, Optum 2
4 Health plans need to transform back office to achieve consumer engagement goals 9 Plans must provide population health incentives to promote provider risk sharing 3
4 Health plans need to transform back office to achieve consumer engagement goals
Expert presenters M any health plans recognize that their future growth will come from participating in health care exchanges and adopting new business models, but what they may not have considered is that streamlining their current back-office operations is essential to realizing that growth faster and in a manner that builds their relationships with consumers. As the health care market changes in a dynamic fashion, plans need to focus their attention on their back-office strategy, on levers that can be pulled by payers to optimize costs, and on metrics, such as auto-adjudication rates, in order to fund new initiatives and transformation, according to Jim Mapes, senior vice president, Optum, who spoke Oct. 29 in an Optum webinar, Transform the Back Office to Better Engage Consumers on the Front Line. Shifting resources from claims to communication Plans need to find a new paradigm so that the investments we make, which include the true time that we spend and the capital we have on an annualized basis, are focused on the consumer and on those growth drivers, Mapes said. Jim Mapes, Senior Vice President, Optum Clay Heinz, Vice President, Optum These market factors are pushing plans toward three key areas: 1) population and consumer management; 2) acceleration of automation; and 3) operations and administrative results. If plans do not move in these directions, Mapes asserted, they are unlikely to survive in future market models. Population and consumer management Payers need to focus on ensuring growth and financial success in a consumer-driven marketplace, according to Mapes. Consumer engagement is key to moving forward. When competing in an exchange, plans need to ensure that the consumer s first experience is a great experience, he said. Plans must focus on sales and retention solutions, innovatively retool benefits administration and product management as well as financial risk management, and communicate with consumers in a clear manner. Without a big-picture strategy for the business, he explained, plans are not going to be able to move forward during post-health care reform changes, which include accountable care organizations, value-based delivery and compensation models, consumer- and individual-based customized care, and state exchanges. Under this new paradigm, plans must reexamine the market dynamics that are at play: When competing in an exchange, plans need to ensure that the consumer s first experience is a great experience. Jim Mapes Senior Vice President, Optum Focus on clinical quality Medicaid privatization Market consolidation Consumer health revolution Operational efficiency Health benefit exchanges Aligning network and incentives Payer/provider convergence Acceleration of automation Delivering on goals takes a lot of hard work, but focusing on automation and data integration will allow plans to do real-time claims adjudication, provide benefit design flexibility and facilitate clinical quality/accountable care integration, Mapes stated. Plans need to be able to turn on a dime when regulatory changes are made, and automation and technology are the foundation for that ability. These are becoming the table stakes the pipes and wires for building a house. 5
Plans need to reduce their current operational and administrative costs to less than $10 per member, per month (PMPM), which can only be achieved through automation, because auto-adjudication is eight to 10 times less expensive than manual adjudication. Jim Mapes Senior Vice President, Optum Operations and administration results Plans also need a laser-like focus on cost and deployment strategies, with benefits delivered at a price that keeps them in business, Mapes said. Core administration and business services, payment integrity and claims accuracy, and ICD-10 support solutions can create cost reductions and drive efficiencies, he noted. In the past, prompt payment and delivering and responding accurately to claim inquiries were enough, but now the stakes are going up. Transparent models make timeliness and accuracy apparent to everyone and being able to deliver is critically important, he said, noting that the results true, bottom-line unit costs and unit price results are what need attention. He further explained that the truth is in the numbers when it comes to claims adjudication. Plans need to reduce their current operational and administrative costs to less than $10 per member, per month (PMPM), which can only be achieved through automation, because auto-adjudication is eight to 10 times less expensive than manual adjudication. Failing to pursue automation in this area leaves a lot of costs on the table and leaves a lot of dollars on the table from a health care standpoint, Mapes emphasized. Figure 1 Transformation levers Process Automation Payment Accuracy Consumerism and Population Health He cited an American Medical Association statistic stating that if claims are paid accurately, an estimated $43 billion 1 in cost savings can be achieved by the industry, and noted that anti-fraud programs can save 1 percent of medical expense and increase profitability by roughly 16.7 percent. 2 He also remarked that payment integrity and payment accuracy can fund a lot of the initiatives that are needed for a consumer approach (see Figure 1). Part of cracking the code to achieving consumer engagement is understanding what the back office needs to look like, how to set the transformational drivers in motion such as payment accuracy and process automation and what the strategy will be for taking the cost and accuracy of delivering health plan benefits to a new level, according to Jim Mapes, senior vice president, Optum. Without the first two, you cannot tackle consumer engagement and population health, he said. 6
Figure 2 Proactive member onboarding and retention Your members want to know:: Onboarding concierge provides: How do I manage by plan? Proactive member services Designated navigator for your member Channels of communication members prefer Provider directory How do I manage by health? How do I manage my money? Completion of health risk assessment Appointment scheduling Follow-up after doctor visits Prescription monitoring Microsites specific to member care Assistance with bills and claims EFT payment option Ways to save solutions Case study: Regional health plan attacks first-year attrition Clay Heinz, vice president, Optum, shared a case study that focused on a regional health plan that offered individual products (both Medicare and underwritten) for consumers who are both over 65 and under 65. Before meeting with Optum, the client was not building loyalty within the first 90 days of members terms and had trouble retaining members past the first year. The plan utilized common tools in the marketplace, but interacted with all members in the same manner, using a generic welcome letter, the same messaging regardless of plan, region or needs, and with a reactive service model, Heinz said. If an individual had questions about the directory, online tools or a delinquent payment, the plan was in reactive mode and had no online tools for self-service. All of these factors are ingredients for a disaster for a health plan, and as a result, this plan had high member turnover. The plan needed to establish a meaningful relationship with consumers within the critical first 90 days of membership, and Optum developed an onboarding strategy for the plan including the creation of microsites designed to specifically for each consumer that bucketed the messaging for consumers into three main components, Heinz explained (see Figure 2). By helping members to manage 1) their plan, 2) their health and 3) their money, the regional plan s members were more satisfied, and the approach established by Optum allowed the plan to cut first-year attrition by 48 percent, according to Heinz. By combining initial outreach, follow-up contact, and appropriate and varied outreach tools, plans can leverage every possible communication channel to deliver the right message at the right time to the right person, he stated. 7
He added that satisfied customers are: 87 percent more likely to renew. 3 83 percent more likely to recommend. 4 43 percent more likely to purchase other products. 5 There has been a paradigm shift to really engage consumers, so plans need to change to become trusted advisors and co-navigators with the members, he said. Plans don t want to just be a card in the member s wallet anymore. Being able to deliver from a PMPM standpoint by initiating projects that create true cost take-out, such as automation, eliminating redundancy, working with vendors and looking at globalization, will be necessary as plans refocus their attention on getting new members and retaining them, Mapes concluded. These levers have to be pulled to be more forward-thinking and build relationships with consumers. The time to act is now. Plans don t want to just be a card in the member s wallet anymore. Clay Heinz Vice President, Client Practice, Optum Mapes also noted that the most important factors plans need to consider to enable migration to a new business model are leveraging data to focus on cost structure and back-office automation, looking at where the plan needs or wants to be in three to five years, and determining where to invest capital. How Optum can help Partner with Optum to transform your back office to ensure growth and financial success in a consumer-driven marketplace with a strategy focused on: Improved payment accuracy Accelerated administrative automation and real-time data Proactive member onboarding and retention Want to learn more? Visit optum.com or call 1-800-765-6807. 8 1. American Medical Association, 2013 National Health Insurer Report Card (NHIRC) 2. Optum estimates based on client experience 3. J.D. Power and Associates 2012 study 4. ibid. 5. ibid.
Plans must provide population health incentives to promote provider risk sharing 9
Expert presenters Scott Howell, MD, Senior National Medical Director, Optum DDuring the past several years, the delivery of health care has changed dramatically. These changes, which stem from government-mandated health insurance as well as competitive, socioeconomic and demographic forces, have a direct impact on health plans growth strategies, care management approaches, and cost and quality initiatives. Among these initiatives is risk sharing, which calls for all health care stakeholders to take on more risk in order to improve health outcomes. To encourage physicians and hospitals to participate in integrated risk-sharing models that advance population health management, health plans will need to develop incentives that are both significant enough to ensure stakeholder buy-in and simple enough that they can be implemented in a reasonable and timely manner, according to Dr. Scott Howell, senior national medical director, Optum. There are hundreds of ways to design population health management programs, but if risk-adjustment model incentives are minor and bonuses get paid out 18 months later, providers will not be interested, Howell said, adding that regardless of how plans design their programs, they have to first acknowledge that the status quo in health care is long gone. Over the past three years, we have seen one of the most transformational periods in medicine. Right now, plans are under exceptional pressures, which include changes in Medicare riskadjustment models, sequestration and performance standards, he said, so models have to be extremely fine-tuned to meet cost, quality and performance goals while firing on all cylinders. Howell noted that various factors from geography to health information technology (HIT) adoption rates contribute to success or failure in meeting important performance measures. According to an analysis of key community benchmarks from Optum, 1 health care today is both local and uneven, said Howell. Geographic differences evident for three key measures To demonstrate the inconsistencies in care, cost and population health, Howell turned to Optum data, which tracks certain health care indicators as a way to identify key enablers of better performance. To understand certain quality benchmarks, the data set includes avoidable hospitalizations, hospital readmissions and medication adherence rates. From a quality-of-care perspective, looking at large data sets is crucial for understanding geographic trends, comments Howell. There are hundreds of ways to design population health management programs, but if risk-adjustment model incentives are minor and bonuses get paid out 18 months later, providers will not be interested. Optum data shows the following: Scott Howell, MD Senior National Medical Director, Optum Avoidable hospitalizations: Commercial data reveals that avoidable hospitalization rates are lowest in the West, the Midwest and the Northeast, while the highest rates can be found in the South and certain rural and urban regions. These higher rates are associated with chronic illness, low economic resources and poor patient health behaviors. Hospital readmissions: For 30-day hospital readmissions in the commercial population, the highest and lowest rates are less centralized. Among the Medicare population, 18 percent of patients are readmitted within 30 days, while just 8 percent of commercial plan patients are readmitted within 30 days (see Figure 1). The highest rates for readmission for Medicare patients are concentrated in the Appalachian and Ohio Valley regions, as well as in the states of Mississippi and Louisiana. 10
When you look at the Medicare map, the data are striking, because they indicate that there are 2,100 hospitals that essentially forfeited about $280 million in reimbursement for 30-day readmissions last year, Howell said. Medication adherence: Medication adherence is characterized by the World Health Organization as a leading cause of preventable morbidity, mortality and high health care costs, and is a key patient-centered care measure that varies widely across communities. For example, communities in the South and mountain regions have lower rates of medication adherence relative to the rest of the nation. Communities with high rates of medication adherence often have fewer avoidable hospitalizations. Factors that drive performance Beyond the general observations about the quality and cost of care, Howell explored other dynamics that may be driving the performance of health plans in certain geographic areas. Factors that drive health system performance fall into two categories, he observed: 1) community social and economic capital defined as wealth, employment, education, literacy, charitable and volunteer activity; and 2) community incentives and alignment defined as valuebased payment and accountable collaborative care. There is no single factor that will change performance, but there is a whole host of factors that drive aspects of differentiation. Scott Howell, MD Senior National Medical Director, Optum There is no single factor that will change performance, but there is a whole host of factors that drive aspects of differentiation, according to Howell. However, incentive alignment, social capital, economic resources, technology and health behaviors all contribute to good outcomes. Some early findings from our data show that adoption of HIT, value-based incentives and provider alignment as opposed to not having those contribute to higher performance levels, especially for quality. Figure 1 Lowest rate, readmissions Quality of care: 30-day readmissions in the commercial population 2 Highest rate, readmissions Insufficient data 11
...In individual communities and regions that are not high performers and that do not have some of the high-performance drivers in place, providers may not be quite ready to take on more responsibility for the care of populations. Scott Howell, MD Senior National Medical Director, Optum Looking at how a very large data set maps out, you can see where health plan performance is, what types of interventions are sophisticated and where there are good outcomes, he says, and it all points to a high level of HIT adoption and value-based incentives. However, in individual communities and regions that are not high performers and that do not have some of the high-performance drivers in place, providers may not be quite ready to take on more responsibility for the care of populations. In a Harris Interactive multi-stakeholder survey commissioned by Optum in late 2013, 1,602 physicians and 400 hospitals were asked questions to determine their readiness to take on more accountability for managing patient care and dollars, improve population health management and manage population health initiatives. Although some physicians (34 percent) and hospitals (43 percent) said they were adequately prepared to take greater responsibility for managing patient care, only 16 percent of physicians and 30 percent of hospitals were similarly prepared to take greater financial risk for that care, Howell explained. Further, the survey shows that when you add consumers into the equation (3,400 consumers were surveyed), their perception of health care delivery in their communities does not always match up with the doctors and facilities providing that care. For example, Howell pointed out that although 38 percent of consumers stated that health care is coordinated in their communities, only 22 percent of physicians and 29 percent of hospitals thought that was true. And when asked whether they thought patients received needed preventive care, 51 percent of physicians thought they did, while only 35 percent of consumers thought so. Integrated risk adjustment drivers must be in place To drive population health management, which Howell defines as improving member care and quality of life in an integrated manner using a framework that leverages best practice analytic capabilities to provide a holistic view of your population and provide the right intervention at the right time to drive member and provider behavior, providers need to implement such population health initiatives as clinical integration, high-risk patient management and readmission reduction programs. Surprisingly, the survey results show that only one-third of providers have implemented population health initiatives or have them underway (see Figure 2). Hospitals are further along in meeting those goals. This delta in implementation rates is likely due to hospitals having greater incentives in place to do so and in providers wait-and-see approach to developing value-based payment capabilities, said Howell. The factors behind this provider reluctance to adopt value-based opportunities stem from concerns over complexity, administrative costs and increased risk without adequate reward, according to Howell. The marginal aspect of this situation is determining how much of a reward you need to provide to move forward on the risk front, he said. You can t add risk without enough reward to keep the lights on. Also, providers want to keep things simple so they can understand the targets; plans need to design value-based programs with this information in mind. Although some physicians (34 percent) and hospitals (43 percent) said they were adequately prepared to take greater responsibility for managing patient care, only 16 percent of physicians and 30 percent of hospitals were similarly prepared to take greater financial risk for that care. Scott Howell, MD Senior National Medical Director, Optum 12
Figure 2 Population health management: Are providers ready to manage population health initiatives? 3 80 Physicians Hospitals 73% 70 60 50 57% 50% 40 30 31% 28% 33% 20 10 0 Clinical Integration Initiatives High-Risk Patient Management Programs Readmissions Reduction Programs A member-centric, collaborative approach is ideal, he noted. Plans need to surround the member in an interactive and integrative manner, he said, adding that Optum collaborates with a health plan s quality and clinical teams and works with its disease management and other program staff to drive programs toward a prospective service model. Prospective services include: Analytics and reporting (population segmentation, risk and quality segmentation, Stars measures implementation) Surprisingly, the survey results show that only one-third of providers have implemented population health initiatives or have them underway. Scott Howell, MD Senior National Medical Director, Optum Care gap analysis (HEDIS/Stars, HQPAF, chronic condition management, in-home assessments) Provider and member engagement (market consultation, provider training and education, member outreach) Looking at the current state of the nation, it is important to integrate population health, cost measures and quality initiatives to drive change moving forward, Howell says. As seen in these data, we are not there yet, but we need to start heading in that direction to move the needle on risk management, he advises. It is going to be important to ramp up from where we are today, so that five years from now, the whole industry will be willing to take more risks based on outcomes and performance. 13
How Optum can help Optum helps health plans improve care by the accuracy, thoroughness and timeliness of their reporting through outsourced services that include a clinical orientation. Our solution set helps you: Implement an integrated risk and quality program. Review and collect information through retrospective data capture. Submit and manage data transactions. Manage risk adjustment analytics and reporting. Prospectively engage with providers and members. Want to learn more? Visit optum.com or call 1-800-765-6807. 1 The Optum Labs Community Measures Project provides new data and analyses on the performance of the health care system in 306 communities across the United States; its results underscore that health care today is both local and uneven. The Optum Labs Community Measures Project evaluates the local cost of care for commercially-insured and Medicare populations, utilization of health care services (including analyses that pinpoint potentially avoidable care and excessive use), and quality of care. It uses a portfolio of measures that are well validated and capture a range of outcomes across points of care and health care conditions. Performance measures include readmission rates, physician compliance with chronic care guidelines and patient medication adherence. Population health is captured in measures of life expectancy and prevalence of disease. 2 Commercial claims as analyzed by Optum 3 Multi-stakeholder Study, October 2013 conducted for The Optum Institute by Harris Interactive 14
Perspectives Expert presenters Fall 2013 Biographies Clay Heinz, Vice President, Client Practice, Optum Heinz is responsible for developing new business concepts at Optum. As vice president of Client Practice, he lends his expertise and innovation to payers, providers, employers and government entities in the health care marketplace. His mission is to empower consumers to make better health care decisions. Prior to joining Optum, Heinz worked for Extend Health, where he developed work force readiness, ranging from the development of training to licensing and appointments. He also managed relationships with several health plan payer partners, ensuring compliance, policy reconciliation and systems integration. Scott Howell, MD, Senior National Medical Director, Optum Howell is responsible for risk adjustment, quality performance and predictive modeling. Prior to Optum, he was the regional chief medical officer (RCMO) for the Northeast Region of AmeriChoice, Inc., focusing on the Medicaid and Dual SNPs populations. He also served as the medical director for managed care at the AIDS Healthcare Foundation along with having responsibility for international consulting in Russia, Ukraine, Guatemala, Honduras and Haiti. Jim Mapes, Senior Vice President, Optum Mapes is focused on delivering technology and services-based solutions to hospitals, payers, physicians, life sciences companies and other key players in health care. He is responsible for all facets of the business including global strategy, finance, executive leadership, operations and business development. He has more than 25 years of experience in developing client relationships and deploying a unique combination of business, clinical and technology solutions for the health care industry. Mapes has worked in various Fortune 50 firms as a technology executive and business leader. 15
Perspectives Cracking the code with new approaches to care delivery and operations Visit optum.com or call 1-800-765-6807. fall 2013 optum.com 13625 Technology Drive, Eden Prairie, MN 55344 Optum TM and its respective marks are trademarks of Optum, Inc. All other brand or product names are trademarks or registered marks of their respective owner. Because we are continuously improving our products and services, Optum reserves the right to change specifications without prior notice. Optum is an equal opportunity employer. OPTPRJ2881_Print 12/13 2013 Optum, Inc. All rights reserved.