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Why Employers Must Purchase Healthcare – And How they Can..

For many Colorado employers, employee health insurance is among the largest expense line items, often second only to salaries and benefits.  Many manufacturers may pay more for healthcare than for their raw materials.  Yet the healthcare market fails to deliver-to-deliver consistent value.  Here’ why: Quality Varies Widely.  Without question, you can get the best care in the world in the US.  But you don’t always.  Outcomes vary widely both across and within provider organizations depending on the specific service Waste is Pervasive – and Incented.   Virtually all studies on healthcare estimate waste at 35-50% or more.  An estimated 40% of procedures either don’t help or actually harm patients. Potentially avoidable complications can account for 50% or more of the costs of any given episode.  And worst of all, the way health plans have paid providers for decades has encouraged such waste. Increasingly expensive. With variability in quality and clinical waste, it’s no surprise that costs are climbing.  Employer premium increases run several times the CPI.  Employee premiums are up 24% and deductibles up 67% over 5 years while wage increases are up only 9%. Quality and Pricing is Opaque.  Finally, the lack of transparency in healthcare virtually assures that it cannot function like other markets.  Whether for planned or emergency procedures, prices typically aren’t published or even known by the providers themselves. These are not, however, symptoms of a "broken" system.  As Don Berwick reminded us, "Every system is perfectly designed for exactly the results it is getting."  In other words, inefficiency, ineffectiveness, and rapidly rising costs are all the inevitable outcomes of a dysfunctional healthcare market place.  These characteristics result from how care is being bought and sold in every market in every state. A quick review of the literature via google reminds us that effective, efficient markets have, among others, the following critical characteristics: Many buyers and sellers.(e.g., lots of competition) Ease of entry into and exit from the market (again, lots of competition) Complete price and quality transparency for consumers (e.g., the assumption of "perfect information) Comparability across products (e.g., common standards and measures so transparency is meaningful) Payment mechanisms that incentivize high quality (e.g., that put sellers at risk for poor quality or bad outcomes) As a recent Commonwealth Fund article, "Making Health Care Markets Work Better: The Role of Regulation," points out, not a single one of these conditions is met in today's healthcare market.  And while we agree that Federal and state regulators can have some effect to ensure that some of these conditions are at least partially met, we continue to believe that employers are the key to creating a functional healthcare market place.  While employers cannot do much about the consolidation in healthcare that leaves Colorado with only a small number of health plans and providers, employers - numbering literally in the thousands - can and must (if they want better value) act as purchasers to create a competitive marketplace.  As the Commonwealth Fund article puts it... "Historically, increased consolidation among providers has been associated with higher prices and lower quality. But the current emphasis on moving from paying for the volume of services to paying for the value they produce may change that dynamic." Exactly.  And employers hold the key for changing that dynamic,   They have the numbers.  They pay the bills - either directly or through their premiums.  By acting as purchasers, not simply payers, they can prod the market into improving value.  And they can do so by using the best-in-class tools offered by CBGH that address the two parts of the value equation - quality and cost.  These tools include: Bridges to Excellence- rewarding physicians who provide exception care for diabetes and cardiac patients. CareChex - assessing and rating hospital quality at the service line level. eValue8- providing a framework of standards to measure and compare health plan performance on critical functions. Leapfrog Group Satety Survey- grading hospitals on their safety. Most of these are tools actually designed by employers for employers.  All of them have been adopted by CBGH as providing employers with the best tool kit possible for demanding improvements in the efficiency, effectiveness, and affordability of care. If you want to know more about these tools and how they can fit into your efforts to rein in rising healthcare cost while improving the care your employees receive, give us a call.  Together we can change the marketplace. CBGH 2017


New Report Released From The Center For Improving Value in Health Care (CIVHC)

The Center for Improving Value in Health Care (CIVHC) just released a new report based on the All Payer Claims Data Base (APCD) highlighting that payments for health care services vary widely across Colorado and emphasizing how "it is impossible to draw general conclusions about variation in prices based solely on geography or volume of services performed.  Two examples cited in the report include: While Coloradans living in the Northeast regionof the state paid over $15,000 more than the statewide median for dorsal/lumbar spinal surgery, and over $36,200 and $25,000 more than the statewide average for hip and knee replacement respectively, they were not the highest cost region for colonoscopies or head CTs. The Colorado Springs regionhad the lowest costs for colonoscopies and dorsal/lumber spine fusion, yet they were the highest cost region for abdominal echo exams, further demonstrating that relative prices are not determined solely based on geography. We encourage employers to read the report and to make use of the APCD website, CO Medical Price Compare, with perhaps three thoughts in mind... Of the various components that go into prices for both routine and complex procedures, by far the greatest source of variation are  facility fees - particularly those charged by hospitals.  (Physician charges actually demonstrate almost insignificant variation.) The kind of variation in facility fees that Bluebook, Castlight, and others have shown vary within markets as well as across An estimated 35-40% of health services - primarily routine procedures - are "stoppable." As time goes by, the APCD continues to increase its value to Colorado purchasers by bringing more and more insights.  We fully agree with the conclusion of the report... The move toward greater transparency in the health care industry will allow for further insights into the drivers behind costs. Insights such as these have the potential to inform new ways to improve care, lower costs, and create a healthier Colorado.


MAKING HEALTH INSURANCE AFFORDABLE

Many employers think that the only way to make healthcare more affordable is to cut quality.  At CBGH, we hold the opposite view. Decades of research demonstrates that the only way to reduce the growing burden of healthcare costs is to improve quality.  Now an excellent article from the Center for Healthcare Quality & Payment Reform on Insurance Affordability reinforces that counter-intuitive idea. “How to Make Health Insurance Affordable” outlines how the cost of healthcare can be reduced effectively while maintaining or actually improving quality care for patients.   And while it outlines several realities about the costs of health care, we picked the following six to elaborate on: The Cost of Health Care Can Be Significantly Reduced Without Rationing. Any value-improvement efforts must begin with and focus on quality.  A library of studies show that many “low value” services are grossly over-utilized, many “high-value”services are woefully underutilized, and others are plagued with errors.  Addressing these three issues improves care and reduces costs. Current Payment Systems Prevent Healthcare Providers From Delivering Lower Cost Care. Fee for service payments drive the waste for over-priced “low-value” services discussed above.  But we don’t incentivize high value services, or superior health outcomes and employers have not demanded alternatives.  For the most part, under current agreements, providers can actually lose money by improving quality. Alternative Payment Models (APMs) Are Needed to Solve These Problems. Most employers understand that what’s profitable gets done and what’s not doesn’t.  Healthcare economics isn’t rocket science.  If you overpay for some services you’re going to get overuse.  If you underpay other services – like primary care – and you get underuse.  Ignore quality and you simply get high volume instead of value. Accountable Care Organizations Don’t Solve the Problems with Current Payment Systems. This is almost a corollary to #3.  Employers should worry about payment models, not delivery models.  Fix the payment incentives and the providers will fix the delivery system.  They’re pretty smart folks. Physicians That Have Participated in Well-Designed APMs Have Shown They Can Significantly Reduce Costs.  Speaking of smart folks, we’re strong advocates of employers sitting down with their local physicians to discuss what it takes to change the trajectory of care.  In the end, physicians are the engineers of high quality care and will respond to employer needs. Private Health Plans Need to Move More Rapidly to Create True Alternative Payment Models. Today’s healthcare market – generally driven by commercial payers - simply does not reward affordability. If it did, you can bet that US insurers and providers could deliver it.  Since employers, not health plans, are the true “payers” for the majority of care, employers need to demand changes in how their plans pay providers. Few employers in Colorado contract directly with providers but, instead, rely on health plans – either as the insurer or as the administrator – as surrogate purchasers.  That model can work but only if they pay attention to these six realities.    


Which “Medical Center” improved from C to A on new report

Read the Yampa Valley Health latest report on Yampa Valley Medical Center! http://www.steamboattoday.com/news/2016/nov/06/health-briefs-yvmc-grade-improves-c-new-report/


“Fixing Health Care”

The big question is “How to Pay for Health Care”? The United States stands at a crossroads as it struggles with how to pay for health care. The fee-for-service system, the dominant payment model in the U.S. and many other countries, is now widely recognized as perhaps the single biggest obstacle to improving health care delivery. Read more.. BY MICHAEL E. PORTER AND ROBERT S. KAPLAN, Harvard Business Review, July–August 2016


Healthcare Costs Resume Their Upward Climb

Although it was nice while it lasted, a multi-year slowdown in the growth of healthcare costs came to an end in 2015 with overall costs increasing 5.8% and spending by private insurers increasing 7.2 %.  A December 2nd report by U.S.News, in addition to citing the above, points out that these are the largest increases in the last 8 years and probably signal that the downturn in healthcare costs was temporary.   Employers should probably not be surprised.  Despite its promising name, the "Affordable Care Act," while decidedly effective at increasing coverage and, in fact, making coverage more affordable for a segment of the population, did little to address the underlying drivers - on both the demand and supply side of the ledger - of healthcare inflation.  And although incentives for primary care physicians to improve outcomes and reduce costs under provisions of the "MACRA" legislation to go into effect in January hold promise, employers are not likely to see the benefits of those changes anytime soon.   Three Things Employers Must Do   While we think there are specific steps employers should be taking to both control costs and improve outcomes, looking to the Federal government would not be among them.  Specifically, employers can and should be acting to achieve three goals: Measure and manage the risks and costs of chronic disease. This is the single most important thing employers can do.  Chronic diseases drive up to 70% of your costs and actually generate another $0.51 in expense for every dollar you spend on healthcare due to lost productivity and replacement costs.  Unfortunately, for virtually every CBGH employer member we've studied, the incidence of employees with a chronic condition has increased over the past several years. Promote consumerism for routine procedures.  The cost of routine screening tests and routine procedures varies in the Denver market from 250% to 1,100% depending upon the service.  Provide your employees with the tools and incentives to shop for common medical procedures.  And, just as importantly, teach them the "Five Questions to Ask Your Doctor."  (Download the free poster and use it widely.) Make sure employees use high quality hospital services.  Note that we do not say "use high quality hospitals."  Hospital quality can best be judged on a service by service basis.  While a hospital may very well score, for instance, in the top 10% of all hospitals nationally when performing joint replacements, that same hospital may score in the bottom 10% when it comes to cardiac or cancer care.  Overall, in healthcare, high quality usually ends up costing less, not more. For more information on how to achieve these goals at your organization, give us a call.  We'd be happy to talk about how to help you tailor these three strategies.     http://www.usnews.com/news/business/articles/2016-12-02/us-health-care-tab-hits-32t-fastest-growth-in-8-years 


Employer-based health costs slow in 2016 ?

“Modern Healthcare” Article on October 26, 2016, talks about how total health-benefit cost growth for employer-based insurance has slowed to a near-record low? And did you know the slower cost growth in employer coverage comes at the cost of shifting more workers to high deductible plans that are attached to a health savings account or a health reimbursement arrangement? You should read more.. http://www.modernhealthcare.com/article/20161026/NEWS/161029928?utm_source=natlnewsletter&utm_medium=email&utm_content=national&utm_campaign=Denver_20161027_10


Employers Embracing Value-Based Care! Read More..

According to a recent article in Modern Healthcare, more and more employers are beginning to understand and support the notion of "value-based" health care by pursuing one or more of three key strategies: Value-based reimbursements.  Rather than relying on traditional fee-for-service payments, more employers want to use new payment models such as bundled payments. Centers of excellence.  WillisTowers Watson reports that 45% of employers are promoting health care providers that have high quality ratings. Differential benefit design.  According to the article, today only about 11% of employers use insurance design to steer employees to the highest quality providers but that nearly 50% expect to do so by 2018.At CBGH, we think these three strategies all go together synergistically.  By negotiating bundled payments with the highest quality providers and then using value-based insurance design to provide incentives to use those facilities, employers can implement meaningful value-based purchasing strategies that will address some of the key drivers of health care costs. Purchasers wishing to discuss how they can buy more health and not more health care can call either Donna Marshall or Bob Smith at 303.922-0939.


Rising Drug Prices-An Article By The Wall Street Journal!

                                                            Why Are Drug Prices Rising? Read this article by the Joseph Walker of the "The Wall Street Journal" on why are drug prices are rising and who's pointing fingers at whom? http://www.wsj.com/articles/drugmakers-point-finger-at-middlemen-for-rising-drug-prices-1475443336?tesla=y


CBGH is Celebrating 20 Years!

CBGH: 2016 is rolling to a close! Please join us on October 13th, 2016 at the Kaiser Permanente Offices located in Lone Tree . Along with Budget and Strategies for 2016 & 2017 , this Members only meeting will update the Board on CBGH activities in preparation for the Annual Meeting and 20th Anniversary Celebration, December 1st, 2016 at the Lone Tree Arts Center. Please contact liz.olson@cbghealth.org for the meeting Agenda.


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