Employer Payment Reform Workshop IJanuary 11, 2013

Supported by Robert Wood Johnson Foundation’s Aligning Forces for Quality

The Call to Action; If Not Now, When?

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The Call to Action; If Not Now, When?

Payment Reform project goals Employers’ landscape today Why employers should care

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Project Goals

Change payment to reward value instead of volume Assess employers’ current level of understanding Engage employers in changing payment models in

Minnesota & nationally including TCOC, HCH, others

Identify and answer your questions of health plans & providers

Identify your goals for payment reform Communicate to market with Consensus Statement

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Employers’ Landscape Today Most attention focused on numerous, short-term demands

Managing trend Complying with multiple new regulations Understanding impact of insurance exchanges Promoting wellness programs Staying in the game – in or out decision, when

Some attention on high level concepts Quality improvement Care delivery change

Less attention on details of care transformation and payment reform Complex Hidden and negotiated by suppliers Varies by provider and market

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Heard on the Street

“Payment for quality and shared savings is not enough to invest in new care models” – primary care clinic

“I’m going to do as many surgeries as possible and hope to retire before this affects me” - orthopedic surgeon

“The amount of revenue at risk today, low single digits, is not enough to really change behavior; we still win by providing more services” – large care system CEO

“Public and private purchasers are the only stakeholder that cares if costs go from $38 billion to $40 billion; everyone else grows” - local policy wonk

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Employers’ Call to Action is Needed Now

Dartmouth Atlas: utilization varies by provider supply 30-50% of spending is waste NY Times 1/6/2013 – “Health Insurers Raise Some Rates by

Double Digits” 20-26% increases by Anthem, Aetna, BS CA Easier to pass costs along than figure out, and implement,

changes in payment Collective employer effort can influence health plans to

address payment reform Potential cost shifting from public to private purchasers with

Federal and state reform

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Today’s Meeting Goals

You know enough to know what you don’t know

Your key questions are raised You begin to define the employers’ role You believe employers can have an impact You are energized to take action

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Understanding the Road to Payment Reform in Health Care

Michael Bailit

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What Employers are Saying so far…Six employer interviews National & local, large & small, public & private Varying levels of general understanding

– Payers have mentioned changes in contracts, “on board” – Don’t know results of payment reform so far – Unsure of details, e.g., year end settlements, provider cash flow, pace of change

• MN moving faster than rest of the country• Concerns about provider consolidation

Two employers have – Included questions about payment reform in RFPs– Had conversations with health plans and providers together

• Learned about progress to date• Expressed desire to accelerate reform• Provided input on contracts that changed terms

All agreed collective action is more powerful than individual

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Employer Survey Preliminary Findings

Average on a scale of 1 (low) to 6 (high) How well informed? (3) How important to:

– Know your health plan’s negotiated pmpm targets? (4.6) – Compare providers’ pmpm payment targets? (4.8)– Compare performance against targets? (5.1)– Set pmpm targets to decrease rate of increase or reduce costs over time (33%)– Include downside risk in provider contracts (5.3)

Roles: – Meet with key care systems and health plans (73%)– Have input on amount of revenue at risk for quality (73%)– Provide input on targets and trend (64%)– Input on amount at risk for savings (64%)

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What Others Say Employers Can Do United Health Care, December 2012 – Farewell to Fee for Service?

– Be catalysts for testing new payment models – Explore value-based benefit designs– Deploy employee incentives for wise choices about health and health care

Institute of Medicine (IOM) September 2012 Report – Best Care at Lower Costs; promote transparency in quality, value, and outcomes to aid consumers in care decisions

Elliott Fisher MD, MPH, Dartmouth – Slowing the Growth of Health Care Spending: If Not Us, Then Who?

– Slow medical arms race– Accelerate payment reform transition– Move market share to higher value providers

Other possible roles– Measure and reward health plan performance for

• Reducing waste• Changing payment models to reward value, faster

– Require health plans to reform payment – Contract directly with providers

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Discussion Questions Do you want to know:

Cost and quality targets of different care systems? How providers perform compared to targets?

What are plans doing to address market share leverage of provider consolidation? Wiling to offer narrower networks based on quality and cost targets? Willing to challenge health plans to meet your company’s trend goals without

more cost shifting to consumers? Will payment reform really change how care is delivered and can providers

perform to manage disease as a team? How could employers accelerate the right kind of payment reform? Would you be willing to set goals for pace of payment reform? How to balance high deductible health plans and ACO/TCOC strategy? Do you feel like you can influence the supply side?

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