Post on 21-Dec-2015
Why Health Care Will Change:
How purchasers will manage health care clinical/financial risk to disrupt institutionalized excesses
Brian Klepper, PhD Chief Executive Officer
National Business Coalition on Health
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We Spend Double
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How Much Health Care Cost Is Waste?
PwC 2008* – 54.5%
In 2014 dollars, >$1.5 trillion annually
9% of GDP
US’ 2012 Budget Deficit
* The Price of Excess
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Physicians and vendors AMA RVS Update Committee
Health plans Primary care payment that encourages specialty referral Paying for services at multiples of market rates Control and non-management of high cost acute and chronic patients Open, performance-neutral networks
Health systems Overtreatment Excessive chargemaster unit pricing
EHR vendors Barriers to seamless exchange of health care information
Institutionalized Mechanisms of Excess
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AMA Relative Value Scale Update Committee (RUC)
31 physicians - 26 specialists & 5 PCPs
CMS’ sole advisors on medical services valuation
Secret proceedings, sham survey methods, composition unrepresentative of physicians in market, financially conflicted
CMS has historically accepted 90% of recommendations
Commercial health plans typically follow Medicare’s payment lead
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Real World Impacts of RUC Influence
1. Over-values specialty services while under-valuing primary care
2. Inhibits primary care’s moderating influence and accountability function over specialty services
3. Creates systemic incentives to perform more services, and more expensive services (specialists “practicing to the codes”)
4. Payment disparities between PCPs and specialists; crisis-level primary care shortage
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Increasing Primary Care Referrals To Specialists
Typical 2012 established primary care office visit duration = 7.5-12 minutes, 30 years ago, it was 20-25
PCPs paid by visit, so may refer time-consuming problems
Most specialists profit from diagnostics, procedures
Result: Huge increases in specialty visits, output diagnostics, procedures
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The Challenge For All Health Care Purchasers
Identifying and buying health care value
Driving appropriate care Disrupting inappropriate care Reasonable (market-based) unit pricing
HOW BAD IS IT?
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American Health Care Cost Is Absorbing Nearly ALL Economic Growth
In the decade preceding 2009, 79% of all household income growth was siphoned off by health care.
Source: Auerbach DI and Kellermann AL, “A Decade of Health Care Cost Growth Has Wiped Out Real Income Gains for an Average U.S. Family,” Health Affairs, 30:9, 9/2011.
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Health Care’s Growing Burden on Federal Budget Crowds Out Other Needs
Source: White House Council of Economic Advisors
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US Health Care Unit Pricing Is Much Higher
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And Lucrative Pricing Drives Higher Utilization
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Global Competitiveness
US businesses operating in international markets must overcome a 9+% health care cost disadvantage just to be on a level playing field with their competitors in other developed nations (e.g., Australia, Korea, Germany)
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Structural Drivers of Excess Risk
Fee for service reimbursement
Lack of quality, safety & cost transparency
Subjugation of primary care
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Sources of Excess Supply
Overtreatment
Egregious unit pricing
Conventional steerage
Lack of care coordination
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Incentives – Why Direct (Market-Based) Contracting by Purchasers?
Everyone in health care (except primary care) is typically incentivized to want health care to cost more
Margins are a percentage of total
Support for the status quo
Market-Based Management of Clinical & Financial Risk
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Market-Based Reforms
Over the past 20 years, employers (and health plans) have, without much impact:
Significantly increased co-pays for “steerage” Introduced generic drugs and mail-order Introduced wellness, disease management, lifestyle coaching
programs Introduced incentives Renegotiated network discounts Given employees “more skin in the game”
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Market-Based Reforms
But we haven’t managed the care process,
like businesses would.
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Management of Full Continuum Health Care Risk
OccupationalHealth
Convenience/Urgent Care
Primary Care Medical Home
+
+
Rx Dispensary& Mgmt
Chronic Disease& Lifestyle Mgmt
Referral Mgmt
+ +
Benefit Refinement
Utilization Review
Case Management
Carrots & Sticks
Stop-Loss Arrangements
TelemedicineHealth IT
Direct Contracting
High PerformingNarrow Networks
Centers ofExcellence
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High Performance Vendors - Characteristics
Often mission-driven Outside “conventional health care” High subject matter expertise in niche Receptive to alternative reimbursement Willing to go at financial risk for performance Evidence-based Data driven Drive appropriateness, disrupt inappropriateness
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Questions
1. Causality narrative: What do you do that is structurally different and that allows you to get a better result in your niche?
2. Longitudinal data demonstrating better health outcomes and/or lower cost
3. Client testimonials affirming performance + attesting to execution
4. Willingness to go at financial risk for performance
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High Value Risk Solutions
Three Examples:
Integrated Mechanical Care (IMC)
Employers Choice Rx (ECRx)
Colo-Guard
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1. Integrated Mechanical Care, Tallahassee, FL
Musculoskeletal management (17%-30% total spend)
Built on mechanical diagnosis and therapy (MDT)
Significantly enhanced industrial platform for scale• Advanced clinical guidelines• Rigorous training to performance standard• Quality management• Clinical decision support• Integration with clinical documentation platforms
Can intervene in approximately 80% of cases
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1. Integrated Mechanical Care, Tallahassee, FL
Case rates of $175 for triage, $775 for management
Significantly better functional health outcomes
Half the recovery times
50%-60% the cost for net savings of 10+% off total health care spend
Significant drop in volume/intensity of recidivism events
Major Clients > 3 Years – Capitol Heath Plan, General Dynamics, Michelin North America
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2. Employers’ Choice Rx – Ft. Smith, AK
Coalition-mounted PBM in collaboration with PBM consultant (Rx Results, Little Rock)
Four major design elements1. Rewrote contractual language2. Collaborated with UArk Pharm School on true evidence-
based formulary; drug mfg-sponsored studies given lower weight; focus on independent studies; better drug mix at lower cost; disrupted mfg-controlled formularies
3. Contract with major PBM for admin/ancillary programs to get scale
4. Narrow pharmacy network – Ousted CVS & Walgreens in exchange for $5/script reduction
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2. Employers Choice Rx
Results show consistent 35%-40% savings over conventional PBMs, with strong testimonials
PBM is 10%-12% of total spend for 3.5%-4.0% potential savings
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3. Exact Sciences Colo-Guard
Home molecular diagnostic testAs sensitive as colonoscopy w/lower false
positive ratesApproved by FDA and CMS. FDA panel approval
10-0Retail: $550 vs colonoscopy about $2,000Marketed through primary care
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Direct Contracting Opportunities
Cardio-metabolic management Musculoskeletal management Oncology management Pharmacy benefit management Infusion Dialysis Ambulatory surgery High performance networks Centers of excellence
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Policy-Based Approaches That Could Lower Risk
Risk-based reimbursement –provides a discipline that encourages careful management of care and cost
Transparency efforts – market context and decision support on cost/safety/quality
Infrastructure – EHRs that seamlessly exchange patient information. (e.g., Direct Trust); can’t manage risk without everyone working from the same data
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Approach – Purchaser Strategies/Tactics For Leverage
Gain business/union leaders’ buy-in and $$ support Convey gravity of health cost problem for their organizations and the US
Through coalitions, deliver measurable savings/value Ancillary risk management carve outs: advanced imaging,
musculoskeletal mgmt., oncology mgmt., ambulatory surgery, etc.
Leverage collective strength to drive value In markets, make visible purchasing decisions that favor excellent
performance In policy, become a counterweight to the health industry’s influence Promote approaches (e.g., risk-based reimbursement) that favor
accountable care
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Brian R. Klepper, PhDis a health care analyst and commentator. He is CEO of the National Business Coalition on Health, a national collaborative driving improved health care value, representing 52 regional business health coalitions, 4,500 businesses, unions and local governments, and about 35 million people. He is also a Principal in WeCare TLC, LLC, a worksite primary care clinic and medical management firm based Orlando.
An active author and speaker, Dr. Klepper has provided health care commentary to CBS Evening News, the Wall Street Journal, The New York Times, and the Washington Post. He has published articles in Kaiser Health News, Healthleaders, The New England Journal of Medicine, Modern Healthcare, Business Insurance and newspapers nationally.
Brian is a columnist on Business of Medicine and Primary Care for Medscape, the most-read medical site. He is a regular contributor to The Health Care Blog, The Doctor Weighs In, The Health Affairs Blog, Kevin MD, Health Care Policy and Marketplace Review and other expert health care blogs.
Brian served on the American Academy of Family Physicians’ Primary Care Services Valuation Task Force, and is a reviewer for Health Affairs and The Journal of Ambulatory Care Management. He is an Advisor to the Lundberg Institute and the Patient-Centered Primary Care Collaborative, which advocates for medical homes.
In his spare time, he is an offshore sailor.
904.343.2921, bklepper@nbch.org