Transcript Document

Provider Consolidation: Better Care or Higher
Costs
Suzanne Delbanco, PhD
Executive Director
Massachusetts Association of Health Plans, December 5, 2014
About CPR and Why We Care About
Transparency and Market Power
Shared Agenda
Payments designed to cut waste or
reflect performance
Leverage purchasers and create
alignment
• Health plan sourcing,
contracting, management and
user groups
• Alignment with public sector
Implement Innovations
• Price transparency
• Reference and value pricing
• Maternity payment reform
• Pilots on high-impact areas
• Enhance provider competition
www.catalyzepaymentreform.org
December 5, 2014
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2014 National Scorecard Results
Variation in Quality & Safety
Variation in Price
+
Bad Deal
Step One: Insist on Transparency
Step Two: Reform benefit design
Step Three: Reform payment
Step Four: Address environmental
factors impeding value
What will get us better and more
affordable care?
www.catalyzepaymentreform.org
December 5, 2014
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What Keeps Employers Up at Night
(courtesy of Bob Galvin)
• Reducing overuse and improving population health requires coordination of care
• Policy and payment changes to facilitate coordination of care accelerate horizontal and
vertical consolidation among providers
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Providers argue that they need to consolidate for (i) coordination (ii) scale and (iii) to
combat insurer consolidation
•
Market imperfections – weak buyers, lack of transparency and price
insensitivity – and anti-trust struggles in the sector lead to over-consolidation
•
Payers ‘partner’ with large providers in one-sided risk arrangements
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Provider market power leads to big price increases for employers and crowds out
disruptive innovations and new entrants
• Because providers are big employers and economic drivers in their communities,
efforts to right-size and promote competition lack political support
www.catalyzepaymentreform.org
December 5, 2014
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CPR: Bringing Visibility to Provider
Market Power
Regulatory
Approaches
Market-Based
Approaches
www.catalyzepaymentreform.org
Coordinated
Public-Private
Approaches
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Possible Market-Based Approaches
1. Price and Quality Transparency
• Fundamental lack of helpful information on provider prices,
quality and overall value of care can allow providers with
market power to charge higher than competitive prices
2014 CPR-HCI3 Report Card on
State Price Transparency Laws
• CPR has pushed for more effective price and quality
transparency from health plans, providers, vendors and states
F
2. Consumer Engagement with Benefit Design
• e.g. reference and value pricing implemented by CalPERS for
hips and knee replacements, a top ten procedure with drastic
price variation. CalPERS set a reference price of $30,000;
reduced average cost of procedure from $32,000 to $23,000.
3. Tiered, Narrow or High-Performance Networks
• e.g. Group Insurance Commission, Commonwealth of
Massachusetts limited network program
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December 5, 2014
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Possible Market-Based Approaches
(cont’d)
4. Centers of Excellence and Direct
Contracting
• e.g. Wal-Mart Stores, Inc. direct contracting and travel
benefit for Centers of Excellence
5. Oversight of Accountable Care
Organizations
• e.g. Savings not shared with providers unless they first
meet quality standards
6. Alternative Sources of Care
• e.g. New entrant in market that provides less expensive
care and helps to control utilization such as telehealth,
retail clinics, onsite or near-site clinics
Photos from Grand Rapids PCMH and Kaiser Health News
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Consumers are More Willing to Make
Tradeoffs
Consumers are also willing to make trade-offs, such as travelling
for care, or “tolerating” narrower networks if it reduces their cost
sharing.
•
Consumers are
increasingly ready to
trade choice for a lower
premium
•
…And are more often
seeking and using lower
cost settings, such as
retail clinics
Source: Harris Interactive Consumer Survey 2012
www.catalyzepaymentreform.org
December 5, 2014
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Possible Legislative or Regulatory
Approaches
CPR conducted a standardized search on laws and regulations in each
state related to:
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Antitrust
Encouraging transparency on quality and price
Competitive behavior in health plan contracting
Implementing the monitoring or regulating of prices
The development of ACOs
Expanding the authority of Departments of Insurance
Facilitating or reducing barriers for new entrants to the market
www.catalyzepaymentreform.org
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Findings: State Efforts Beyond
Legislation
• The most common strategy employed by states  antitrust jurisdiction.
• Active states have resources devoted to maintaining and/or creating a
competitive healthcare market; access to resources is critical.
• Attempting to regulate competition by allowing mergers to occur through
conditional settlements that monitor prices and negotiations during a
provisional period.
• Expanding state’s purview to collect, monitor, and analyze provider pricing
data…limited evidence that these actions address the consequences of
provider market power.
www.catalyzepaymentreform.org
December 5, 2014
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Looking Ahead: Potential State
Approaches
Antitrust
Monitoring
Healthcare Prices
ACOs and Safe
Harbors
Department of Insurance
Conduct Remedies
www.catalyzepaymentreform.org
• Recent and current cases
• Resource heavy, forcing states to be selective on
which cases to pursue
• Increasing awareness of price and quality
information
• Uncertainty how consolidation among health care
providers for the formation of ACOs impacts
competition among providers and whether the
state has the resources and expertise to regulate
and monitor ACOs
• Rate review and regulation of health insurance
payments to providers as a means to
counterbalance growing provider market power
• Gaining popularity, but long-term impact unknown
• Most remedies require resource intensive
monitoring
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Contact Information and Questions
FOR MORE INFORMATION VISIT:
www.catalyzepaymentreform.org
CONTACT:
Suzanne Delbanco
[email protected]
www.catalyzepaymentreform.org
December 5, 2014
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