In reducing costs – success, challenge and uncertainty

UNITED TOGETHER: UnitedHealthcare of New England President and CEO Stephen J. Farrell, center, says that his organization plans on adopting its own private exchange.


Page 16. Story 1
Photo Credit 1 = PBN PHOTO/MICHAEL SKORSKI
UNITED TOGETHER: UnitedHealthcare of New England President and CEO Stephen J. Farrell, center, says that his organization plans on adopting its own private exchange. Page 16. Story 1 Photo Credit 1 = PBN PHOTO/MICHAEL SKORSKI

Cost and access dominated the discussion in the second of two panels at the Feb. 27 Providence Business News Summit on Health Care Reform and the Insurance Exchange.
Populated by health insurance executives, health care providers and the executive director of the Rhode Island Business Group on Health, the panel examined how difficult it has been to tame the continuing rise in the cost of health care services, with much of the time in the 90-minute session spent discussing which levers were showing signs of slowing that growth.
One point of agreement among the panelists was that the reconfigured health insurance marketplace on its own was not going to exert strong downward pressure on costs. Tufts Health Plan’s President and Chief Operating Officer Tom Croswell leaned on his experience in Massachusetts, which undertook health care reform under then-Gov. Mitt Romney starting in 2006.
“Collectively, through all the changes that were put into place, the access problem was solved, but the cost problem was not,” Croswell said.
Care New England President and CEO Dennis D. Keefe underscored that perspective by saying that access by itself is not enough to overcome decades of perverse payment incentives, ones that rewarded what should have been punished and punished what should have been rewarded.
“I did spend six years in Massachusetts under RomneyCare,” he said. “The more we did as a hospital, the more surgeries we did, the more patients showed up at the emergency room. The American system created this situation that incented the wrong things. We have to change this fundamentally.”
Albert Charbonneau, the executive director of the Rhode Island Business Group on Health, pointed to accountable care organizations as a key to containing costs. His background includes more than 20 years as a CEO and chief operating officer of hospitals as well as another eight years as CEO of a community organization dedicated to reducing health care costs in the Rochester, N.Y., region.
“It’s absolutely crucial that we see ourselves going from health system to ACOs,” he said. “We really need to concentrate at the institutional level to use data to collaborate to change the course of health care.” In terms of ACOs, the first, and so far the only, in Rhode Island is Coastal Medical, which was named the state’s first accountable care organization in July 2012 in a contract that covered 10,000 Medicare patients.
Coastal’s President and CEO Dr. Alan Kurose announced during the panel that it had exceeded Center for Medicare and Medicaid Services projections in its first year of operation, reducing costs by 5.5 percent compared with what CMS had anticipated. The news drew loud applause from the audience.
Under the Affordable Care Act, the Medicare Shared Savings Program is designed to encourage better coordination of care for Medicare patients and lower costs without duplication of services or medical errors.
“We did more than bend the cost curve,” Kurose said. “We saved $4.6 million dollars in the care of these 10,000 people.” A big part of the savings came in diminished hospitalizations, which fell by 26 percent, Kurose said.
“We found that 44 percent of the people who used us would have gone to the ER if they hadn’t used us. … We’re excited about that,” he said.
Peter Andruszkiewicz, president and CEO of Blue Cross & Blue Shield of Rhode Island, which is the state’s largest health insurer as well as the dominant carrier on HealthSource RI, the state’s health-benefits exchange, supported Keefe and Kurose.
“We have a decades-long system of perverse incentives that has created the system that doesn’t work today, that’s broken. We need a new system that is patient-centered care, physician led, where we can create affordable care,” he said.
Croswell added that while the state of Massachusetts as a whole had yet to get its arms around the cost problem, Tufts itself had had some successes with its own employees.
“Tufts Health Plan adopted a tiered benefit program for its own employees, where the out-of-pocket costs vary depending on which group of providers you see,” he said. “We have seen very positive impacts both from a cost standpoint and in changes in behavior on the part of our employees. It requires a ton of education.” As heartening as the news from Kurose and Croswell was, however, the progress they talked about was far from being the final word.
Specifically, even as Kurose elaborated on Coastal’s success, driven by the introduction of the “Coastal 365” plan, which allows members urgent care visits with their primary-care practice 365 days a year, the story was not without complexity and even a tinge of shadow.
“I’m certainly happy about some of the progress we’ve made,” he said. “But that was accomplished with a ton of work and some greater expenses. We were able to cover those costs, but we did need the federal government to reward us. I’m not sure that we can continue, because this was not profitable. I would prompt the thought that the patient-centered medical home is not enough. It is not a sustainable way to create the improved services and cost savings that are required. This game has to be structured so that people can win sometimes.”
While the Affordable Care Act has created space for new approaches to health care delivery, the most obvious changes to the market have involved health insurance, and the expectation that the creation of transparent purchasing marketplaces would have an impact on the cost of insurance.
Andruszkiewicz had plenty to say on the topic. When asked by panel moderator, PBN Editor Mark S. Murphy, if he was satisfied so far by the exchange, his reply: “Absolutely not.
“The reason is we don’t have close to the intent of the ACA and the intent of most thoughtful people on this topic, and that is to have everyone insured,” he said. “What we want to see is everyone in the state of Rhode Island have incredible coverage. No. 1 is getting everyone insured, and No. 2 is making it affordable.”
Blue Cross has been partnering with a number of providers to incentivize innovative methods of delivering care – and in fact was credited by Kurose as part of Coastal’s efforts to create new approaches to patient care. Andruszkiewicz has made clear for quite some time that Blue Cross was not content just to tinker around the edges of the cost issue. “Every single person in this room, the reason they’re here is that [the cost of care] is not affordable,” he said.
He added that despite the issue of cost being so powerful a driver for health care reform, so far 58 percent of people coming to HealthSource RI to buy insurance had purchased “silver” plans, a lower-cost approach to health insurance, but not the least expensive option (so-called “bronze” plans). That result, he said, was about what the insurer had expected.
Croswell dropped an unexpected bit of news into the discussion, saying that Massachusetts’ current problems with its exchange have created such a backlog at Tufts that he does not expect the insurer to be able to join HealthSource RI in 2015 as had been planned.
A third topic emerged during the panel, so-called “private exchanges,” the online portals that carriers have been launching around the country, including in Rhode Island, that some perceive as significant competitors to the state and federally run exchanges.
Stephen Farrell, CEO of UnitedHealthcare of New England, who was the first to announce such intentions in the Ocean State in December, addressed the topic more expansively at the summit.
“We support … HealthSource RI,” he said. “I think it’s exactly what we expected so far, it’s a work in progress. We will be introducing our own private exchange, and it will have a different value proposition.”
Full employee choice, of the kind offered through the Small Business Health Options Program exchange, which currently offers 16 options from three insurers, Blue Cross, UnitedHealthcare and Neighborhood Health Plan of Rhode Island, has its appeals, Farrell said, but all of those choices can be overwhelming.
“I hear the need for decision support, to help [employees] make an intelligent choice,” he said. •

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