Physician and Hospital Challenges under Consumer Directed Health Plans

1
Physician and Hospital Challenges under Consumer
Directed Health Plans
David Levenstein

• September 26, 2007

2
Agenda

• Baycare Health Partners Overview
• Consumer Directed Health Care
• High Deductible Health Plans
• Provider Tiering
• Physicians
• Hospitals

3
What is Baycare Health Partners?

• Formed in 1994, Baycare is a physician-hospital
  organization (PHO) jointly owned by
• Greater Springfield IPA and
• Baystate Health
• Baycare represents a three-hospital health
  system and approximately 1,100 physicians
• Messenger model PHO offers managed care contract
  analysis and clinical integration programs that
  use process and outcome clinical measures and
  shared clinical information networks

4
Tsunami Consumerism in Health Care
Market Sensitivity to Provider Performance
Public Reporting Pay-for-Performance Cost
Shifting Provider Tiering
5
Environmental Assessment Market Forces in Play

• As health care costs increase,
• Payers (government, employers and MCOs) are
• Shifting more financial responsibility for
  medical care to their beneficiaries, employees
  and members
• Designing insurance products that encourage the
  patient, now consumer, to consider cost
  differences when choosing among providers
• Benefit designs vary, but they all share a common
  purpose
• Members will become better informed
  (transparency) about and actively engaged
  (consumerism) in the quality and cost of the
  health care they receive
• MCOs often refer to these new products as
  Consumer-Directed/Driven Health Care (CDHC)
  plans

6
Environmental Assessment Market Forces in Play

• Purchaser Premise Health care expenditures will
  be lower and more rational by using market forces
• Response
• Shift more of the costs for the health care
  services to the patient with the presumption that
  the patient will choose higher value
  (quality/cost) healthcare providers
• Transparency
• Public reporting of efficiency and quality
  ratings of health care providers (hospitals,
  nursing homes, physicians)
• Pay for performance
• Incentivize the high quality efficient providers
• High deductible programs
• Lower premium/ high annual deductibles
• Tiered programs
• Differential copays deductibles based on
  efficiency quality ratings of providers

7
Consumer Directed Health Care A Brief History
2004
2005
2003

• Consumer Directed Health Care (CDHC) plans arrive
  in Western MA
• High deductible e.g., Aetna Health Fund, Tufts
  Liberty, others
• High copay (rather than high deductible) HNE
• Baycare develops position paper on CDHC products
  (approved by the Board in May)
• HPHC Primary Choice and Tufts Navigator become
  commercially available (tiered products)
• Baycare sends Newsletter to membership
  highlighting the emergence of and explaining CDHC
  products
• GIC requires each of the MCOs with which it
  contracts to include a benefit design with tiered
  member copayments for some hospital services
• Baycare develops Principles for Tiered
  Premium/Copayment Pay-for-Performance Programs
• GIC requires each of the MCOs with which it
  contracts to include tiered member copayments for
  visits to at least some types of physicians
• GIC continues to require MCOs to offer its
  members tiered products most now tier both PCPs
  and specialists, but using their own tiering
  methodologies
• Many MCOs offer, tiered, high deductible, and/or
  narrow network products under the Commonwealth
  of Massachusetts Commonwealth Choice Program
  under the Connector Authority

2004
2005
2006
2007
8
Environmental Assessment Market Forces in Play

• Provider perspective
• All the conditions required for perfectly
  competitive markets do not exist in health care,
  making the health care market quite different
  than markets for other goods and services
• Supply limitations and geographic variation
• The purchasers (employers) of health care are one
  step removed from the consumer (patients) and
  providers
• Price information is of little value by itself
• The current state of information is inadequate
• Patient use of information is not likely to
  transform health care
• Consumerism in health care may be the wrong
  prescription, particularly for the
• Financially strapped and chronically ill

9
Adults with High DeductiblesHave Problems Paying
Medical Billsor Are Paying Off Medical Debt
Percent of adults ages 1964 insured all year
with private insurance
Includes only those individuals who had a bill
sentto a collection agency when they were unable
to pay it. Source S.R. Collins, J.L. Kriss et
al., Squeezed Why Rising Exposure to Health Care
Costs Threatens the Health and Financial
Well-Being of American Families, The Commonwealth
Fund, Sept. 2006.
10
Provider Challenges

• Access to data
• Relationship between claims data and MCO bundling
  logic
• Lack of uniform tiering methodologies
• Lack of patient understanding of financial
  obligations
• Provider, not plan, necessarily informs patient
• Interferes with provider-patient relationship
• Bad debt and debt collection

11
Potential Legislative Responses

• MA and RI bills proposed in legislatures
• Requiring carriers to fully explain specific
  patient financial obligations prior to receiving
  care
• Shifting some responsibility to carriers to
  collect member payment obligations on behalf of
  providers