BENDING THE MEDICAL TREND CURVE STRATEGIES TO INCREASE QUALITY 

AND 

REDUCE COSTS

Elyse Kaplan & Erin O’Connor

Who We Are

Adventist HealthCare (AHC) is a not-for-profit health system based in Rockville,MD with approximately 7,000 employees and a $24m health plan budget.

Cammack LaRhette Consulting (CLC) is an innovative employee benefits and health care consulting firm with over 65 health care clients as well as other NFP and Fortune 100 client organizations.

Our work together spans more than a decade and has capitalized on our organizations’ innovation and willingness to be leading edge.

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Learning Objectives

• Strategies for implementing cost savings initiatives without reducing plan coverage

• Case Study: Discover how Adventist HealthCare’s program was able to double employee/dependent engagement in preventative health management

• Find out how your company can consistently decrease spending year after year by integrating four key elements of management and strategy

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Managing toward the Ideal

Our shared journey enabled AHC to:

• Leverage unique advantage as both employer and provider

• Model services delivery to improve health and utilization efficiency

• Prepare infrastructure for looming industry shifts

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Four Fundamentals of Plan Management#1 Information

ManagementAggregate data from

disparate sources and organize it into useable

form

#4 Financial Management

Financial results are the outcome of the first

three steps and help measure success, areas

of concern, and risk

#2 Population ManagementIdentify health needs of the population using available data

#3 Individual ManagementTrained healthcare professionals working together to improve health by enhancing the quality and efficiency of healthcare services

Sequence is critical for success 5

Information Management Overview Diagram

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Population Overview Summary

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Individual Management: High-Risk Population

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Population Risk Stratification Factors: What Makes Someone “High Risk” ?

• Assess 17 separate “trigger factors”

• Triggers include‒ Utilization patterns‒ # of unique medical provider interactions‒ Diagnostic codes

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Chronically Ill

Healthy and Healthy with Habits/Conditions

Individual Management: Non-High Risk Population

Who We Are– Multi-unit health care delivery organization

• 3 Acute Care hospitals• Behavioral Health hospital• Rehabilitation hospital• Home Health organization

– In suburban area – Approximately 7,500 covered lives on the health plan

Where We Started– Recurring double digit cost increases– Unsustainable expense, threatening viability and competitiveness of benefit

offering

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Bending the Curve at Adventist Healthcare

What We Did

• Phase I: “Traditional” focus - 2003 through 2007‒ “Low hanging fruit” in plan design‒ Membership in group prescription buying plan‒ Co-pays and co-insurance designed to drive “domestic” utilization

• Phase II: Data driven decision making and shared governance – 2006 through 2010‒ Treated the plan (HealthNet) as if it was it’s own entity with a separate P/L

‒ Operated by a cross-functional team comprised of CHRO, CFO, Benefits Director, Community Wellness Director, Managed Care Director

‒ Monthly meetings to review plan performance including financial performance, utilization trends and other issues and to discuss potential plan changes.

‒ Contracted with third part medical management technology solution

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What We Did - continued

• Phase III: Movement toward proactive health management: 2007 through 2011‒ Third Party Health Management, using the data integration and medical management

technology to improve care management to provide the right care, not the least expensive care

‒ Driving participant engagement in wellness to improve early identification and mitigate risk‒ Smoking cessation programs as part of “Smoke-free campus” transition

‒ Bio-metric screening as part of annual benefits fair, achieving 35% penetration by offering $10 incentive

‒ 20% employee contribution discount for becoming/remaining tobacco-free in 2009

‒ 20% employee contribution discount for tobacco-free and HRA completion 2011

‒ 20% employee contribution discount for tobacco-free, HRA and bio-metric screening in 2012

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Employee Engagement – What We Learned

• It begins at the top; senior Management support and have a passion for developing Health and Wellness policies and initiatives

• Messaging works– Strong messaging has resulted in approximately 25% of AHC colleagues getting

biometric screenings at their benefits fairs this year

– Multiple channels: webinars, e-newsletters, flyers, etc.

• Wellness programs help‒ 50% off fitness, cooking and smoking cessation programs (including dependents for

the smoking program) ‒ Free nutritional counseling ‒ Free diabetes and pre-diabetes education programs (no limit on number times an

employee can participate)‒ Biggest Loser Programs have also been promoted in the past

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What We Achieved: Summary

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2010 2003-2010Feb - July Avg % Var

Hospital Based ExpenseInpatient Hospital $64.52 3.23%Facility $20.16 3.19%Emergency Room $11.71 6.43%Other Outpatient Services $7.04 15.13%Sub Total $103.43 5.42%

Other Medical ExpenseRx $39.57 4.48%Evaluation & Management $32.66 7.91%Procedures $26.63 4.11%Medicine $26.38 2.80%Outpatient Radiology $27.06 7.67%Outpatient Laboratory $14.86 8.67%Anesthesia $8.90 3.87%Outpatient Pathology $4.79 7.88%Medical management $0.56 0.00%Undefined Services $1.85 -5.42%Ambulance $0.68 10.59%Dental $0.02 0.00%Sub Total $183.96 4.38%

Totals ($0.26 var) $287.39 4.94%

What We Achieved

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Trending PMPM Statistics

2009 2010 March 2011

Members 7802 7825 7067

Medical PMPM $249.12 $258.74 $246.35

Rx PMPM $46.78 $42.57 $55.50

Total $295.90 $301.31 $301.85

Variation 1.8% -15.2%

A/G 1.13 1.13 1.13

CMI 1.14 1.22

What We Achieved

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Category of Care PMPM

2009 2010 March 2011

Hospital Related $110.36 $112.96 $121.95

Professional $132.30 $139.55 $117.36

Rx $46.78 $42.57 $55.50

Other $6.46 $6.23 $7.04

Total $295.90 $301.31 $301.85

Measurement Detail

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Claimants over $10,000

2009 2010 March 2011

Number of people 446 453 36

% of membership 5.72% 5.79% 0.51%

% of total paid 57.68% 60.06% 36.59%

Largest claimant $1,000,000 $633,755 $186,903

Avg cost per claimant $29,870 $31,940 $21,681

Measurement Detail

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Medical Management Performance

2009 2010 March 2011

PMPM expense $5 $4 $7

$$ expense $437,811 $378,638 $52,070

Recorded savings $2,140,961 $2,022,454 $187,824

ROI 4.89 5.34 3.61

Total Episodes 2717 2860 469

Unique participants 1279 1251 303

Measurement Detail

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Population Risk Stratification (4th or current Qtr)

2009 2010

High 422 6% 354 4%

Moderate 847 11% 813 10%

Low 1,875 24% 2,027 26%

No known risk 4,472 59% 4,747 60%

Total 7,616 100% 7,941 100%

The Next Level

• By 2008, AHC increases were consistently 5% below national averages• In 2009, the self-insured plan hit a “speed bump” – a 12% jump in

expenditures!• Analysis showed that over 80% of expenditures were in less than 5% of

covered lives• Led to recognition that Primary Care Physicians needed to be brought

into the process• Developed “Patient Centered Medical Home” pilot program

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PCMH Pilot• HealthNet Steering Committee established four objectives:

‒ Help the high risk members improve their health

‒ Increase efficiency of healthcare delivery for these members

‒ Support PCP practices treating these members

‒ Moderate health plan cost escalation

• Focus: “poly users” – members who saw at least 15 different providers and had at least 9 prescribing physicians in the prior year

• Goal: Ensure these members, significant users of health services, receive the coordination necessary for their complex healthcare needs.

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PCMH Pilot• Step One

‒ Identify high risk members to enroll in the pilot and the PCPs who would manage their care• Risk stratification• Poly user identification• PCP alignment

• Step Two‒ Establish outcomes measures

• Step Three‒ Physician support

• Information access• Personal Health Nurse support and care coordination

• Step Four– Payment alignment

• Step Five‒ Measure results‒ Lessons learned 23

Results• Pilot participants

‒ 46 “poly” members and 8 PCPs to manage their care needs

• PCP access to physician portal

‒ Performance summary for the identified group and

‒ Ability to drill into patient specific Clinical Claims Chart and Patient Synopsis Report

with drill down capabilities to identify specific gaps in EBM or other compliance issues

• Assigned PHN to manage care coordination and integration of other

professional health needs (e.g., Dietician, Pharmacist)

• PCPs paid for time with the patient and PHN care coordinator

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Results - Healthier Members• High risk members seen by PCPs decreased by more than 48%

• Members moved into the moderate and low risk categories

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Results - Efficient UtilizationCATEGORY OF CARE PER‐MEMBER‐PER‐MONTH (PMPM) COST 

FOR 46 PILOT MEMBERS

Category of Care 2009 2010 Variance

Inpatient hospital $393.26  $268.44  ‐124.82

Prescription drugs $261.20  $246.52  ‐14.68

Medicine $363.10  $196.84  ‐166.26

Procedures $144.84  $124.27  ‐20.57

Facility $216.22  $118.88  ‐97.34

Evaluation & management $171.79  $89.94  ‐81.86

Outpatient radiology $194.32  $73.27  ‐121.05

Outpatient laboratory $72.78  $52.78  ‐20.00

Anesthesia $43.84  $42.22  ‐1.62

Emergency department $29.40  $27.54  ‐1.86

Outpatient pathology $50.70  $23.52  ‐27.17

Other outpatient services $5.42  $17.50  12.08

Medical management $19.67  $5.51  ‐14.16

Undefined services $13.86  $1.77  ‐12.09

Ambulance $0.67  $1.22 

Totals $1,981.07  $1,290.22  ‐690.86

• Spending in most of the categories of care declined for the pilot participants, while the utilization cost for all other HealthNet members rose slightly

• Pilot participants per member per month (PMPM) expense, including Rx, dropped 35%

‒ from $1,981 in 2009 to $1,290 in 2010

‒ PMPM for non-participants increased 0.9% from $296 (2009) to $299 (2010)

• Return On Investment (ROI)

‒ Total pilot costs $31,204 vs. directly recorded savings of $87,365 = ROI of 2.79

‒ Annual PMPM cost reduction of $381,630, which represents ROI of 12

‒ Excluding Rx, total claim dollars of high risk participants dropped from $949,890 in 2009 to $576,130 in 2010; PMPM declined 39% for an ROI of 4.3 27

Results – Cost Savings

Application & Next Steps• AHC/HealthNet sees broader application to the population

‒ EMR adoption‒ Pay-for-performance models for PCPs‒ Increasing PHN services‒ Increasing PCP use of tools and reports‒ Member accessibility to health information and resources‒ HRA links

• How does this apply to corporate employers?‒ Health care is delivered locally‒ Partnering with local providers‒ Carving out services in your employee benefit plan‒ Driving outcomes‒ Value based insurance design

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