8. Medical
Cost
Trends
–
Flat
at
6.5%
7
+
-‐
ULlizaLon
Technological
Medical
Supplies/
Equipment
Price
Transparency
Primary
Care
InnovaLon
• Aging
• Economic
Recovery
• Employment
• Advancements
• RoboLcs
• PET
• Increasing
High
Cost
Cases
• ConsolidaLon
• Physician
employment
• Purchaser
Pressure
• ComparaLve
Cost
InformaLon
• State-‐mandated
ReporLng
–
30
states
• Workplace
and
retail
clinics
• Telemedicine
• Mobile
Health
• PCMH
Pharma
“off
patent”
• Many
blockbusters
“off
patent”
driving
savings
Source:
Price
Waterhouse
Coopers
Medical
Cost
Trend:
Behind
the
Numbers
2014
9. Challenged
Public
Payers
8
Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2012, for community hospitals.
(1) Includes Medicare Disproportionate Share payments.
(2) Includes Medicaid Disproportionate Share payments.
70%
80%
90%
100%
110%
120%
130%
140%
150%
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
10. Rise
in
High
DeducLble
Plans
9
DeducLbles
over
$1,000
for
Single
Coverage
16%
21%*
35%*
40%
46%
50%
49%
58%*
6%
8%
9%
13%*
17%
22%*
26%
28%
10%
12%*
18%*
22%*
27%*
31%
34%
38%
0%
10%
20%
30%
40%
50%
60%
2006
2007
2008
2009
2010
2011
2012
2013
All
Small
Firms
(3-‐199
Workers)
All
Large
Firms
(200
or
More
Workers)
All
Firms
*
EsLmate
is
staLsLcally
different
from
esLmate
for
the
previous
year
shown
(p<.05).
NOTE:
These
esLmates
include
workers
enrolled
in
HDHP/SO
and
other
plan
types.
Average
general
annual
health
plan
deducLbles
for
PPOs,
POS
plans,
and
HDHP/SOs
are
for
in-‐network
services.
SOURCE:
Kaiser/HRET
Survey
of
Employer-‐Sponsored
Health
Benefits,
2006-‐2013.
15. One
of
many
implementaLon
issues?
• Employer
Mandate
• Treasury's
informaLon
technology
isn't
ready
to
process
and
cross-‐check
paperwork
across
the
5.7
million
businesses
in
America,
especially
the
pass-‐
through
S-‐corps
and
partnerships
that
file
under
the
individual
tax
code.
• Individual
Mandate
• During
the
delay
-‐
Insurers
will
not
have
to
report
the
names
and
social
security
numbers
of
people
they
cover
• Income
ExempLon
• Requires
informaLon
from
every
employer
of
every
family
member,
including
the
employee
share
of
the
premium
for
employer-‐sponsored
coverage,
whether
the
employee
worked
more
or
less
than
30
hours
per
week,
the
amount
paid
by
that
employer,
and
whether
the
coverage
is
for
the
employee
only,
or
the
employee
plus
his
or
her
family.
14
Source:
h[p://www.forbes.com/sites/theapothecary/2013/07/08/did-‐they-‐postpone-‐the-‐individual-‐mandate-‐also/
h[p://online.wsj.com/arLcle/SB10001424127887323899704578583493972896364.html#
19. Medicare
Advantage
-‐
InnovaLon
or
Albatross?
• 12.7
million
(25%
of
total
Medicare
book)
currently
parLcipaLng
• CMS
revised
the
methodology
for
paying
plans
and
reduced
the
benchmarks
-‐
2011
benchmarks
were
frozen
at
2010
levels.
• Beginning
in
2012,
reducLons
in
benchmarks
will
be
phased-‐in
over
3
to
6
years
• 40%
of
African-‐Americans
and
54%
of
LaLno
seniors
parLcipate
in
MA
–
mimics
Medigap
without
the
added
cost
18
23. Building
Blocks
of
Value
Based
Payments
22
Economic
Outlook
Reform
and
RegulaLon
Delivery
Redesign
Payment
Model
AnalyLcs
PopulaLon
Health
Consumer
Engagement
26. CumulaLve
Percent
Change
in
NaLonal
Health
Expenditures,
2010
to
2019
Given
ImplementaLon
of
Possible
Approaches
to
Health
Reform
25
27. • Authors
called
top-‐ranked
orthopedic
hospitals
in
the
US
and
2
largest
hospitals
in
each
state
• Fee
for
hospital
+
fee
for
surgeon
• Of
the
20
top-‐ranked
hospitals,
55%
could
not
provide
a
single
“bundled
price”
for
the
procedure
• 40%
could
not
provide
an
esLmate
• 90%
could
not
provide
a
single
“bundled
price”
• 37%
could
not
provide
an
esLmate
• VariaLon
was
shockingly
vast,
ranging
from
a
low
of
$11,100
to
a
high
of
$125,798.70
26
Source:
Journal
of
the
American
Medical
AssociaLon
Internal
Medicine
h[p://archinte.jamanetwork.com/data/Journals/INTEMED/0/jamainternmed.2013.465.pdf
29. Texas
IPA
• 150
physicians
–
mulL-‐specialty,
strong
primary
care
focus
• Two
community-‐hospital
town
• Launching
NewCo
IPA/MSO
for
purposes
of
entering
into
capitated
arrangement
with
Medicare
Advantage
plan
• Narrow
network
will
aggregate
~10,000
MA
members,
migraLng
to
at-‐risk
payment
arrangement
• Building
capacity
to
aggressively
add
primary
care
• Build
single
tax-‐ID
primary
care
group
to
capture
new
PCPs
to
market
• “Secure”
payment
guarantees
from
local
hospitals
• Building
markeLng
capability
to
convert
indemnity
Medicare
members
already
in
panels
–
incorporaLng
co-‐op
$
from
payer
• Build/Buy
decision
about
HP
administraLve
services
–
HP
partner
offers
capLve
TPA
enLty
as
an
opLon
• Core
needs
–
claims,
enrollment
management,
financial
reporLng,
case
management,
referral
management
28
30. SoCal
Medical
Group
• Inland,
Los
Angeles-‐based
300-‐physician
mulL-‐specialty
medical
group
–
building
wrap-‐around
IPA
• Sister
MSO
serving
~1,000
physicians
and
hospitals
• Major
Academic
Medical
InsLtuLon
parLal
owner
of
MSO
–
shiwing
University
employees
into
narrow
networks
• Knox-‐Keene
licensed
Plan
for
commercial
acLvity
and
to
be
listed
on
HIX
–
23
KK
are
provider
enLLes
• In
acLve
MSSP
ACO
discussions
with
mulLple
payers
• 17
locaLons
• Covers
more
than
100,000
HMO
members
• Claims
administraLon
handled
today
by
health
plans
–
“shadow”
capitaLon/
global
budget
• Delayed
reporLng
from
plans
for
even
basic
claims
data,
feeling
vulnerable
to
risk
straLficaLon,
not
comfortable
that
health
plans
“se[le-‐up”
appropriately
• Knox-‐Keene
allows
them
lots
of
flexibility
–
but
feeling
they
need
HP
administraLon
capabiliLes
capLve
to
control
their
desLny
29
31. Tail
Wagging
the
Dog
ACO
• Advanced
physician-‐led
delivery
organizaLon
• 200+
MDs,
single
tax
ID
mulL-‐specialty
group
• “Wrap-‐around”
IPA
• Joint
venture
MSO
with
Community
Hospital
• CBO
selling
revenue
cycle
services
• GPO
aggregaLng
buyer
power
• IT
services
organizaLon
offering
provider
and
payer
systems
• Health
plan
infrastructure
to
pay
claims,
manage
enrollment,
track
financial
performance,
manage
“high-‐flyers,”
etc.
• Ownership
in
MA
plan
• CerLfied
Medicaid
ACO
in
its
state
–
a
gate
to
risk
transference
30
32. Covington
Health
• 280
employed
physicians
in
3
states
• 6
hospitals,
~1,000
affiliated
physicians,
PHO,
IPA,
full-‐service
conLnuum
modaliLes
• Very
high
customer
saLsfacLon
in
market,
growing
affluent
market
• Tremendous
pressures
on
census
perceived
over
the
next
3-‐5
years
• Significant
growth
in
Medicare
and
adjacent
to
urban
market
with
Medicaid
growth
–
FFS
“doesn’t
cut
it”
for
them
because
payments
are
too
low
–
the
model
they
desire
it
to
manage
uLlizaLon
to
appropriate
levels
to
allow
for
adequate
payments
• Payer
community
desires
risk
transference
• OrganizaLon
is
preparing
readiness
assessment
for
financial
risk-‐
assumpLon
–
biggest
gap
are
core
capabiliLes
31
33. Recap
• ACA
is
the
law;
ACOs
are
for
real
• Purchasers
are
moLvated
and
acLvated
to
seek
lower
prices
• The
New
Normal
Medicare
means
taking
~25%+
out
of
costs
–
toughest
on
AMCs
• Hospitals
and
high-‐cost
procedure-‐oriented
specialLes
(CV,
neuro,
ortho)
are
especially
suscepLble
to
demand
destrucLon
• Back
to
the
Future
–
focus
on
Primary
Care
• Many
interim
steps
in
migraLon
to
capitaLon
–
P4P,
penalLes,
bundled
payments,
ACO
shared
savings
–
BUT…
capitaLon
is
coming
back
in
force
• Benefits
cost
increases
–
some
quite
dramaLc
–
will
drive
“narrow
network”
growth
and
increased
focus
on
price
transparency
• Massive
consolidaLon
(integraLon???)
is
underway
• David
vs.
Goliath
set-‐up
32
34. Some
Takeaways
• You
could
be
the
“tail
that
wags
the
dog”!
• In
old-‐economy
health
care
there
was
no
premium
paid
for
choreography
and
“systems
thinking”-‐
that’s
changing
• Don’t
deploy
technology
for
technology-‐sake
–
invest
in
things
that
drive
value
–
populaLon/enterprise
care
management
will
pay
dividends
• Really
understand
the
economics
of
the
disease
burden
of
your
populaLon
• Think
like
a
health
plan