Transcript Why Health Care Will Change: How purchasers will manage

Why Health Care Will Change:
How purchasers will manage health care
clinical/financial risk to disrupt
institutionalized excesses
Brian Klepper, PhD
Chief Executive Officer
National Business Coalition on Health
We Spend Double
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Coalition on Health
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How Much Health Care Cost Is Waste?
PwC 2008* – 54.5%
 In 2014 dollars, >$1.5 trillion annually
 9% of GDP
 US’ 2012 Budget Deficit
* The Price of Excess
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Institutionalized Mechanisms of Excess
Physicians and vendors
 AMA RVS Update Committee
Health plans
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Primary care payment that encourages specialty referral
Paying for services at multiples of market rates
Control and non-management of high cost acute and chronic patients
Open, performance-neutral networks
Health systems
 Overtreatment
 Excessive chargemaster unit pricing
EHR vendors
 Barriers to seamless exchange of health care information
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AMA Relative Value Scale Update Committee (RUC)
 31 physicians - 26 specialists & 5 PCPs
 CMS’ sole advisors on medical services valuation
 Secret proceedings, sham survey methods, composition
unrepresentative of physicians in market, financially
conflicted
 CMS has historically accepted 90% of recommendations
 Commercial health plans typically follow Medicare’s payment
lead
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Real World Impacts of RUC Influence
1. Over-values specialty services while under-valuing
primary care
2. Inhibits primary care’s moderating influence and
accountability function over specialty services
3. Creates systemic incentives to perform more services,
and more expensive services (specialists “practicing to
the codes”)
4. Payment disparities between PCPs and specialists;
crisis-level primary care shortage
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Increasing Primary Care Referrals To Specialists
 Typical 2012 established primary care office visit duration =
7.5-12 minutes, 30 years ago, it was 20-25
 PCPs paid by visit, so may refer time-consuming problems
 Most specialists profit from diagnostics, procedures
 Result: Huge increases in specialty visits, output diagnostics,
procedures
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The Challenge For All Health Care Purchasers
Identifying and buying health care value
 Driving appropriate care
 Disrupting inappropriate care
 Reasonable (market-based) unit pricing
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HOW BAD IS IT?
American Health Care Cost Is Absorbing Nearly ALL Economic Growth
In the decade preceding 2009,
79% of all household income
growth was siphoned off by
health care.
Source: Auerbach DI and Kellermann AL, “A Decade of Health Care Cost Growth Has Wiped Out
Real Income Gains for an Average U.S. Family,” Health Affairs, 30:9, 9/2011.
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Health Care’s Growing Burden on Federal Budget Crowds Out Other Needs
Source: White House Council of Economic Advisors
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US Health Care Unit Pricing Is Much Higher
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And Lucrative Pricing Drives Higher Utilization
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Global Competitiveness
US businesses operating in international
markets must overcome a 9+% health
care cost disadvantage just to be on a
level playing field with their competitors
in other developed nations (e.g.,
Australia, Korea, Germany)
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Structural Drivers of Excess Risk
 Fee for service reimbursement
 Lack of quality, safety & cost transparency
 Subjugation of primary care
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Sources of Excess Supply
 Overtreatment
 Egregious unit pricing
 Conventional steerage
 Lack of care coordination
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Incentives –
Why Direct (Market-Based) Contracting by Purchasers?
 Everyone in health care (except
primary care) is typically incentivized
to want health care to cost more
 Margins are a percentage of total
 Support for the status quo
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Market-Based Management of
Clinical & Financial Risk
Market-Based Reforms
Over the past 20 years, employers (and health plans) have,
without much impact:
 Significantly increased co-pays for “steerage”
 Introduced generic drugs and mail-order
 Introduced wellness, disease management, lifestyle coaching
programs
 Introduced incentives
 Renegotiated network discounts
 Given employees “more skin in the game”
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Market-Based Reforms
But we haven’t managed
the care process,
like businesses would.
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Management of Full Continuum Health Care Risk
Rx Dispensary
& Mgmt
Benefit Refinement
Stop-Loss Arrangements
+
Occupational
Health
Convenience/
Urgent Care
+
Carrots & Sticks
Chronic Disease
& Lifestyle Mgmt
+
Health IT
Utilization Review
+
Case Management
Telemedicine
Primary Care
Medical Home
Referral Mgmt
High Performing
Narrow Networks
Direct Contracting
Centers of
Excellence
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High Performance Vendors - Characteristics
 Often mission-driven
 Outside “conventional health care”
 High subject matter expertise in niche
 Receptive to alternative reimbursement
 Willing to go at financial risk for performance
 Evidence-based
 Data driven
 Drive appropriateness, disrupt inappropriateness
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Questions
1. Causality narrative: What do you do that is structurally
different and that allows you to get a better result in your
niche?
2. Longitudinal data demonstrating better health outcomes
and/or lower cost
3. Client testimonials affirming performance + attesting to
execution
4. Willingness to go at financial risk for performance
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High Value Risk Solutions
Three Examples:
Integrated Mechanical Care (IMC)
Employers Choice Rx (ECRx)
Colo-Guard
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1. Integrated Mechanical Care, Tallahassee, FL
 Musculoskeletal management (17%-30% total spend)
 Built on mechanical diagnosis and therapy (MDT)
 Significantly enhanced industrial platform for scale
• Advanced clinical guidelines
• Rigorous training to performance standard
• Quality management
• Clinical decision support
• Integration with clinical documentation platforms
 Can intervene in approximately 80% of cases
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1. Integrated Mechanical Care, Tallahassee, FL
 Case rates of $175 for triage, $775 for management
 Significantly better functional health outcomes
 Half the recovery times
 50%-60% the cost for net savings of 10+% off total health care
spend
 Significant drop in volume/intensity of recidivism events
 Major Clients > 3 Years – Capitol Heath Plan, General
Dynamics, Michelin North America
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2. Employers’ Choice Rx – Ft. Smith, AK
 Coalition-mounted PBM in collaboration with PBM consultant
(Rx Results, Little Rock)
 Four major design elements
1. Rewrote contractual language
2. Collaborated with UArk Pharm School on true evidencebased formulary; drug mfg-sponsored studies given lower
weight; focus on independent studies; better drug mix at
lower cost; disrupted mfg-controlled formularies
3. Contract with major PBM for admin/ancillary programs to
get scale
4. Narrow pharmacy network – Ousted CVS & Walgreens in
exchange for $5/script reduction
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2. Employers Choice Rx
 Results show consistent 35%-40% savings over
conventional PBMs, with strong testimonials
 PBM is 10%-12% of total spend for 3.5%-4.0%
potential savings
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3. Exact Sciences Colo-Guard
 Home molecular diagnostic test
 As sensitive as colonoscopy w/lower false
positive rates
 Approved by FDA and CMS. FDA panel approval
10-0
 Retail: $550 vs colonoscopy about $2,000
 Marketed through primary care
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Direct Contracting Opportunities
 Cardio-metabolic management
 Musculoskeletal management
 Oncology management
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Pharmacy benefit management
Infusion
Dialysis
Ambulatory surgery
High performance networks
Centers of excellence
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Policy-Based Approaches That Could Lower Risk
 Risk-based reimbursement –provides a discipline that
encourages careful management of care and cost
 Transparency efforts – market context and decision
support on cost/safety/quality
 Infrastructure – EHRs that seamlessly exchange
patient information. (e.g., Direct Trust); can’t manage
risk without everyone working from the same data
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Approach – Purchaser Strategies/Tactics For Leverage
Gain business/union leaders’ buy-in and $$ support
 Convey gravity of health cost problem for their organizations and the US
Through coalitions, deliver measurable savings/value
 Ancillary risk management carve outs: advanced imaging,
musculoskeletal mgmt., oncology mgmt., ambulatory surgery, etc.
Leverage collective strength to drive value
 In markets, make visible purchasing decisions that favor excellent
performance
 In policy, become a counterweight to the health industry’s influence
 Promote approaches (e.g., risk-based reimbursement) that favor
accountable care
© National Business
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Brian R. Klepper, PhD
is a health care analyst and commentator. He is CEO of the National Business Coalition on
Health, a national collaborative driving improved health care value, representing 52 regional
business health coalitions, 4,500 businesses, unions and local governments, and about 35
million people. He is also a Principal in WeCare TLC, LLC, a worksite primary care clinic and
medical management firm based Orlando.
An active author and speaker, Dr. Klepper has provided health care commentary to CBS Evening
News, the Wall Street Journal, The New York Times, and the Washington Post. He has published
articles in Kaiser Health News, Healthleaders, The New England Journal of Medicine, Modern
Healthcare, Business Insurance and newspapers nationally.
Brian is a columnist on Business of Medicine and Primary Care for Medscape, the most-read
medical site. He is a regular contributor to The Health Care Blog, The Doctor Weighs In, The
Health Affairs Blog, Kevin MD, Health Care Policy and Marketplace Review and other expert
health care blogs.
Brian served on the American Academy of Family Physicians’ Primary Care Services Valuation
Task Force, and is a reviewer for Health Affairs and The Journal of Ambulatory Care
Management. He is an Advisor to the Lundberg Institute and the Patient-Centered Primary Care
Collaborative, which advocates for medical homes.
In his spare time, he is an offshore sailor.
904.343.2921, [email protected]
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Coalition on Health
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