The Colorado Purchasing Alliance: “ Purchasers Leading Market-Based Health Reform” Innovative Purchasing Strategies A Discussion on Improving the Value of Healthcare Services “ The best time to plant a tree was 20 years ago. The second best time is today.” Chinese Proverb
About CBGH An employer-led, multi-purchaser 501c3 facilitating value-based health care through collaboration on: • Quality and price transparency/bench- marking. • Alternative payment methods (e.g., pay for value vs pay for volume ). • Common provider performance measures. • Benefit designs that incentivize consumer engagement and use of high value services. CBGH works with national and regional health leaders and employer coalitions. 2
An IBI study found that employees who experienced a cost-related obstacle to care had 70% more sick days than peers who had no cost hindrances to accessing care. QUESTION : Is this an indictment of “the system” or of the manner in which we have been purchasing and providing benefits for health care??? 3
What Purchasers Must Do To establish their leadership in market-based health reform. • Instead of shift costs to employees, purchasers must confront high prices and health care inefficiencies. • Doing so will require employers to synergistically leverage and align both individual and collective strategies. • Employers must face three major challenges: • Lack of size/purchasing power (to offset concentration) • Lack of sophistication (for purchasing healthcare) • Lack of will/courage (to cause marketplace disruption) 4
Defining and Addressing Key Issues in the… Health Care Marketplace Supply Side Demand Side Employers must impact collectively through Employers must impact individually through group purchasing/direct contracting. culture, education, and incentives. Lifestyle/Risk Pricing/Payment Methods Under-use Driving increased incidence and Hospital • costs of chronic disease Pharmaceutical • Prevention & Primary Care Inappropriate Demand Over-use Errors & Avoidable & Use Est. at 25% to 40% of care Complications From antibiotics to stents From low quality to high price Value-Based Value-Based Purchasing Benefit Designs 5
Changing dynamics for a more effective, efficient marketplace: What market-based health reform looks like: Traditional Purchasing The Colorado Purchasing Alliance • Health plan functions as surrogate purchaser. Encouraged by CRS Section 10.16.1001-15. • • No interaction between buyers and sellers. Employers (buyers) and provider (seller) directly • • Employer has negligible purchasing power. negotiate price, payment, and performance . Value-based insurance designs are essential. • Health Plan/Administrator Employer (Individually Employer as buyers) Employers Providers (Individually Provider Employer as buyers) (Collectively as (Sellers) (Individually Network a Collaborative) as buyers) (Sellers) Employer (Individually Employer as buyers) Health Plan/Administrator (Individually as buyer) 6
• A “Health Care Purchasing Coop” under CRS 10.16.1001 • Employers, Taft-Hartley plans, Employer Trusts • Collaborating with health plans for insured and individual markets • Seeking market-based solutions through altered incentives • Group purchasing for services with pricing/ performance opportunities: • Hospital services (negotiating up from sea level not down from the sky using Rand data) • Pharmacy • Advanced Practice Primary Care • Collaborating with : • Colorado Consumer Health Initiative • Colorado Medical Society’s Workgroup on Quality & Affordability • Colorado Dept. of Health Care Policy and Finance (Medicaid) • Connect for Health Colorado (Exchange) 7
To enable these strategies: What We’re Asking of Employers 1. Think, plan, and act in terms realizing full benefit of change over 3-4 years. • Require TPA/ASO vendor to utilize Alliance contracts (ala the State). • Commit to phasing in (over 3 years) strong value-based benefit design incentives. 2. Submit Letter of Intent. • Demonstrates employer commitment for the community and to the providers. • Allows participation in Interim Board to adopt a budget, multi-year goals., participation agreement. 3. Do your homework! • Know what you are paying as % of Medicare to highest spend hospitals. • Understand the clinical reliability of those hospitals (CareChex.) • Reprice 1 year of Rx claims to determine potential savings for carving out PBM. • Calculate impact of healthcare spend as a percent of average salary over past 10 years. 4. Participation Agreements for 2021 (to be adopted by Interim Board). 8
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