The Evolution of Plan-Provider Relations

Bill Barcellona

SVP for Government Affairs, APG

Joe Gifford, MD

SVP of Population Health, Lumeris

John Pickett

Regional VP, Anthem

September 19, 2018 Burbank, California

Early Forms of Collaboration…

The New Order…

Presented byJohn PickettRegional Vice PresidentProvider Solutions

The Latest on Plan & Provider ActivitiesSeptember 19, 2018

CONTAINS ONLY PUBLICLY AVAILABLE INFORMATION

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OverviewMarket Snapshot

• Focus on HMO in California

Current State• Provider Reactions

Current State• Plan Reactions

Future State

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HMO in California

CONTAINS ONLY PUBLICLY AVAILABLE INFORMATION

California HMO – “America’s most evolved delivery system…”

✓ 215 PMGs within 108 contracted Provider Organizations

✓ Those PMGs are the backbone of the care delivery system in California

California HMO – Despite the rumors, it is “alive and kicking”

✓ 10.2 million Commercial HMO members, including Kaiser

✓ 3.4 million Commercial HMO members, 16 non-Kaiser health plans

✓ HMO is a fully-insured Commercial product

California HMO – Outperforms PPO on cost and quality measures*

✓ HMO clinical quality composite score is 0.26 (PPO is -0.72)

✓ HMO is 8% less expensive than PPO on a risk-adjusted basis

✓ No change if the Kaiser data is removed* IHA Cost Atlas 2 findings, published January 2018

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HMO Membership Trends

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CA Commercial HMO Membership

Health Plan2011

Membership2017

Membership2017

Market ShareComments

Blue Shield 801,403 837,220 25% Five percent (5%) decrease, excluding HIX

Anthem 1,031,686 769,563 23% Decrease driven by Small Group

HealthNet 682,126 586,048 18% Forty percent (40%) decrease, excluding HIX

Aetna 341,374 333,692 10% Expect further declines in Small Group

Local Plans 134,116 325,112 10% Sharp, Sutter & WHA; growth in Small Group

United 529,102 138,839 4% De-emphasizing HMO; focusing on POS

CIGNA 66,187 50,756 2% Limted HMO presence in California

Total Non-Kaiser 3,669,581 3,332,684 33% Thirty percent (30%) decrease, excluding HIX

Kaiser 5,311,911 6,809,990 67% Twenty percent (20%) increase, excluding HIX

Total Combined 8,981,492 10,142,674 100%

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HMO Impact on PPO

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Anthem has a big stake in California Commercial HMO

✓ 743K members with ≈ $3.2 billion annual revenue

✓ $1.7 billion in annual capitation payments where forty-six percent (46%) of Commercial HMO membership is in a high value network

HMO competitiveness has a direct impact on PPO sales

✓ Seventy-five percent (75%) of large group members are affiliated with cases that offer HMO/PPO dual option

✓ Anthem has ≈ fifty percent (50%) CA Commercial PPO market share (4.6 million members); in contrast

✓ Anthem has ≈ seven percent (7%) CA Commercial HMO market share (22% of non-Kaiser Commercial HMO market share)

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General Provider Reaction

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Specific Provider Reactions

Consolidations: Providence St. Joseph Health forms a 50-hospital and 829 physician clinic health system across seven (7) states in July 2016

✓ Operating revenue of $23 billion in FY2017, up 5 percent from FY 2016

✓ Operating income of $3 million in FY2017, improving a $255 million operating loss in FY 2016

Flirtations: Providence St. Joseph entertained and ended merger discussions with Ascension between the end of 2017 and the beginning of 2018

Hospital – Medical Group Alignments: Community Hospital of Monterey Peninsula (CHOMP) aligned with Montage Medical Group to bring HMO to Monterey County in 2018

Clinically Integrated Networks: Various models in various stages of development with a goal of stabilizing stand-alone IPAs or acting as a referral conduit for large academic institutions

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General Plan Reactions

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Specific Plan Reactions

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Blue Shield Trio

✓ The Trio ACO HMO Network is a narrow network designed to offer the same benefits as Blue Shield’s regular HMO plans at a lower cost

✓ The Trio ACO HMO Network is in twenty-four (24) California counties

Anthem Vivity

✓ First in the nation partnership established in 2014 with seven (7) competing hospital systems that share data + financial risk and gain

✓ The Vivity product is offered in LA and Orange counties

CANOPY Health

✓ Restricted Knox Keene HMO-only plan founded in 2015 by John Muir Health and UC San Francisco in the Bay Area

✓ Plan-to-plan contracts with Health Net and United

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Shared “Field of Dreams” Phenomenon

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Potential Plan and Provider Partnerships

CONTAINS ONLY PUBLICLY AVAILABLE INFORMATION

Asymmetric Partnerships

✓ Tripartite arrangements involving Plan, Provider(s) and third-party Data Organizations

✓ Questions abound RE: data integrity and data ownership

Curated Networks on Shared Platforms

✓ Geo-access and other Regulatory considerations in the current climate ++ pricing considerations

✓ Question of market appetite for curated, discounted networks v. broad, full-price networks in a tight job market

Joint Ventures, Acquisitions and Other Models

✓ Integration challenges in the short-term can lead to improved Member/Patient experience in the long-term

ACOs and Other Risk Models

THE ORGANIZED PROVIDER

GROUP PERSPECTIVE

BILL BARCELLONA, SVP

GOVERNMENT AFFAIRS

CARE COORDINATION

Medi-Cal Managed Care

Care Coordination Workgroup

Medicare Advantage

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MEDI-CAL MANAGED CARE

Cal Medi-Connect

Health Homes

Whole Person Care

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DHCS CARE COORDINATION WORKGROUP

NCQA Accreditation - should it be required for

all Medi-Cal Health Plans? What about IPAs?

Member Assessments and duplication

Preventive services and clinical screenings – can

DHCS be more flexible? IHA was an example

EPSDT services – need to be required

Population Management – Whole Person Care

Model (LA Care)

Transitions in Care – inpatient/SNF/ambulatory

services

Point of Care – community based – many layers

SDOH – homeless, housing, social, behavioral

health challenge

FFS only Aid codes and Geographical Areas in CA

Eligibility Barriers and Concerns – accurate info,

county-to-county transfers, jail re-entry and

managed care continuous eligibility, out-of state

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MEDICARE ADVANTAGE

CMS, beginning in 2019,

authorize MA Plans to“allow

supplemental benefits if they

compensate for physical

impairments, diminish the impact

of injuries or health conditions,

and/or reduce avoidable

emergency room utilization.”

Supplemental benefits could

include things that are not

normally thought of as “health

care,” like, for example,

groceries, air conditioners

for beneficiaries with asthma,

and even provider organized Lyft

and Uber rides to and from

and medical appointments.

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REGULATORY COMPLIANCE20

NETWORK ADEQUACY & DIRECTORIES

Timely Access plan and provider compliance increases

in frequency and content and costs the industry

millions each year

The IHA Provider Directory Utility is moving toward

a 2019 launch and will substantially ease provider

compliance

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PLAN AUDITS OF PROVIDERS

Both DMHC and DHCS have increased

requirements for plans to audit providers, and

have increased their own direct auditing of

providers

Plans and Providers need to collaborate on best

practices, and compliance infrastructure

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COST CONTROL

Total Cost of Care

Lg. Group Rate Filings

Cost Database Global Payment

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CONFIDENTIAL NOT FOR DISTRIBUTION © 2018 Integrated Healthcare Association. All rights reserved. 24

• HMOs outperform PPOs in all 19 regions, by an average of 14 percentage points across ten clinical quality measures

• 15 HMO regions above statewide average; all PPO regions well below statewide average

Commercial HMOs Outperform PPOs on Clinical Quality

CONFIDENTIAL NOT FOR DISTRIBUTION © 2018 Integrated Healthcare Association. All rights reserved. 25

• HMOs on average are $383 per member per year less costly than PPOs

Commercial HMOs Less Costly Than PPOs in 15 Regions

DMHC LARGE GROUP RATE FILINGS26

Example taken from Blue Shield Aggregate 2017 large group rate filing

OSHPD HEALTH COST TRANSPARENCY DATABASE

$60 million funding obtained through 2018 Budget Bill

OSHPD tasked to develop statewide cost transparency database

Support greater transparency regarding health care costs

To inform policy decisions regarding the provision of health care

To reduce disparities and health care costs

Develop an advisory committee prior to end of 2018

Committee meetings held during most of 2019

Finalize report to Legislature by July 1, 2020

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GLOBAL PAYMENT & ACO MODELS

Greater Risk Associated

with Higher Quality and

Lower Total Cost

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4300

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5000

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($

PM

PY)

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Clin

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(%

)

No Risk Professional Global Risk Dual Risk (FFS) PPO Risk Only

Degree of Risk Sharing Impacts Quality and Total Cost of Care

Question & AnswerBill Barcellona

SVP for Government Affairs, APG

Joe Gifford, MD

SVP of Population Health, Lumeris

John Pickett

Regional VP, Anthem

Thank You!