Solutions for Effective Health and Benefit Plans Healthcare Cost Transparency Tools March 2015
Today’s Presenters Kristine Klepper Senior Vice President/Practice Leader Conner Strong & Buckelew Dan McCormick Senior Vice President Healthcare Bluebook 2
Past, Present and Future 1992 2015 The Future At current trend Annual cost to provide rates, annual $4,000 $23,000 coverage for a family costs will double in 10 years Average employer share 76% 78% - 80% Remain steady? of premium Health spending as % of 11% 17% 20% by 2017 GDP Number of Americans 118 million 141 million in 164 million in with a chronic condition in 1992 2011 2025 3
Cost for Family of Four Annual Medical Cost for Family of Four $25,000 $23,215 $22,030 $20,728 $19,393 $20,000 $18,074 $15,000 $10,000 $5,000 $0 2010 2011 2012 2013 2014 Source: 2015 Milliman Medical Cost Index 4
Major Challenges Going Forward Fragmented delivery system, outdated provider reimbursement model Outdated information systems New technology & the increase of testing and new procedures Poor-quality care, medical errors, fraud, misuse and underuse Chronic diseases such as heart disease, cancer, diabetes and hypertension, mostly driven by harmful individual behavior Prescription drug costs The ACA is about covering people, not addressing the rising cost of health care or the quality gap. Taxes, Record Keeping and Reporting and Cadillac Tax implications 5
Health Care Spending Waste Identified waste $1.2 trillion Behavioral Clinical Operational $303 billion to $493 billion $312 billion $126 billion to $315 billion Obesity/overweight Defensive medicine Claims processing $210 billion $21 billion to $210 billion $200 billion Preventable hospital readmissions Smoking Ineffective use of IT $25 billion $567 million to $191 billion $81 billion to $88 billion Poorly managed diabetes Non-adherence Staffing turnover $22 billion $100 billion $21 billion Medical errors Alcohol abuse Paper prescriptions $17 billion $2 billion $4 billion Unnecessary ER visits $14 billion Treatment variations $10 billion Hospital acquired infections $3 billion Over-prescribed antibiotics $1 billion 6 Source: PWC’s Health Research Institute. The Price of Excess: Identifying waste in healthcare spending
Why Healthcare Cost Transparency? In healthcare, there is no correlation between cost and quality. Prices for medical services can vary greatly - even for the same procedure, in the same area, within the same network. Quality and outcomes can vary with no relationship to price. The only way to know whether you're getting good care at a reasonable price is to see the data. Cost transparency tools provide employees with the information they need about cost and quality to choose the best care at the best price. 7
Who Benefits from Cost Transparency? Employers - Healthcare transparency can help improve the health care that your employees receive, while helping to control skyrocketing medical costs. It also leads to more engaged, activated employees. Employees - With more large employers now offering high-deductible health plans, consumers are faced with increasingly large out-of-pocket expenses. Access to price and quality information helps employees save money. It also empowers them to get the best care. Providers - Greater transparency means that high-quality health care providers will receive the recognition they deserve. 8
Changes as a Result of the ACA Employer Actions to Minimize the Impact of the Excise Tax Add or expand tools to encourage plan 73% participants to be better consumers 57% Implement or expand account-based CDHPs Add or expand incentives/disincentives to 53% 3 engage employees in wellness programs 42% Increase employee cost sharing Reduce spousal subsidy or 37% implement spousal surcharge 30% Eliminate high cost plans Add or expand high performance networks, 27% ACOs, PCMHs or similar delivery models 10% Move to a defined contribution model 1% Other Source: 2014 National Business Group on Health Plan Design Surv ey 9
Controlling Medical Plan Costs Employer Tools and Programs Nurse coaching for care/condition management 85% Disease management 84% Prior authorization for selected services 80% Nurse coaching for lifestyle management 73% Price transparancy tools 71% Self-service decision support tools 71% Data warehouse 66% Employee advocacy tools/services for claims 52% assistance Source: 2014 National Business Group on Health Plan Design Surv ey 10
Healthcare Bluebook Conner Strong & Buckelew - Philadelphia
3x to 10x Variance in price and quality Plan members are in the dark 12
Healthcare Bluebook’s Vision Transform inefficient, broad-panel provider networks into virtual networks of high-value providers 13
Transparency Leader Launched in 2007 | profitable since 2011 180+ direct clients | 5,000+ clients via partners 14
Cost Transparency
Healthcare Price Variance Report Philadelphia Market 16
The Price Problem Colonoscopy (no biopsy) Price Variability Unique Cases $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 17
Start by Understanding Your Excess Cost 18
It’s Not the Physician Cost…. 19
…It’s the Facility. 20
ShopSmart ™ Services Total Total Opportunities Potential Savings Category Procedures Spend to Save Savings Percent Gener al Di agnost i cs 4, 624 $7, 896, 920 2, 459 $2, 735, 785 35% I P / OP Sur ger y & Pr ocedur es 736 $3, 740, 544 402 $1, 140, 354 30% W om en' s Heal t h 6, 800 $5, 008, 379 3, 704 $1, 078, 265 22% Bone & Joi nt 696 $7, 769, 613 436 $2, 173, 131 28% CT I m agi ng 3, 263 $3, 183, 473 1, 911 $1, 733, 976 54% M RI I m agi ng 3, 193 $4, 004, 932 2, 005 $1, 990, 632 50% Ul t r asound 6, 701 $1, 774, 499 3, 082 $703, 976 40% Xr ay I m agi ng 18, 396 $1, 798, 777 9, 396 $945, 085 53% Labs ( Top 30) 104, 914 $3, 331, 610 64, 695 $1, 863, 897 56% Tot al 149, 323 $38, 508, 746 88, 090 $14, 365, 101 37% 25% of total l medical l spend 37% of the spend on ShopSmart servic ices could ld be saved usin ing hig igh-value, in in-network provid iders 22
ShopSmart ™ Services 23
ShopSmart ™ Services 24
Quality Transparency
The Quality Problem Joint Replacement | Philadelphia 100.0 90.0 NATIONAL QUALITY RANK 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 56 Hospitals in the Greater Philadelphia Area 26
Hospital Quality Data Clinical Category: Joint Replacement | Philadelphia, PA City National Hospital City Rating Score Rank Rank √++ 1 Christiana Care Health Services, Inc. Newark 98.7 44 √++ 2 Thomas Jefferson University Hospital Philadelphia 98.5 50 √++ 95.0 3 Doylestown Hospital Doylestown 167 √++ 4 Shore Medical Center Somers Point 94.5 184 Atlanticare Regional Medical Center- City √++ 5 Atlantic City 90.9 293 Division Pennsylvania Hospital of the University of √+ 6 Philadelphia 89.5 366 Pennsylvania √+ 7 St. Mary Medical Center Langhorne 88.4 406 National Percentile Rankings √++ 90 th percentile √ 26 th – 74 th percentile √ - 11 th – 25 th percentile √+ 75 th – 89 th percentile √ -- 10 th percentile -- No data/not eligible 27
Hospital Quality Data Clinical Category: Joint Replacement | Philadelphia, PA City National Hospital City Rating Score Rank Rank √ - 50 Mercy Fitzgerald Hospital Darby 13.2 3,036 √ -- 51 Crozer Chester Medical Center Upland 10.7 3,122 √ -- 52 Memorial Hospital of Salem County Salem 7.8 3,225 √ -- 53 Chestnut Hill Hospital Philadelphia 7.4 3,239 Cape May Court √ -- 54 Cape Regional Medical Center, Inc. 6.1 3,284 House √ -- 55 Cooper University Hospital Camden 5.3 3,313 √ -- 56 Roxborough Memorial Hospital Philadelphia 0.8 3,470 National Percentile Rankings √++ 90 th percentile √ 26 th – 74 th percentile √ - 11 th – 25 th percentile √+ 75 th – 89 th percentile √ -- 10 th percentile -- No data/not eligible 28
Inpatient Quality Scorecard • Data is objectively collected and audited Objective Data • Mortality – Overall Mortality – Condition- Multi- specific Dimensional • Complications Patient-Safety Events Scoring • Core Processes Patient Satisfaction By Clinical • Included quality scores by clinical category Category • Includes virtually all acute, non-fed hospital in US All Hospitals • Ranks hospitals relative to each other Relative Ranking • Adjusts quality scores to account for differences in Risk-adjusted demographics, co-morbidity and complexity • Weights hospital scores according to procedure Volume-adjusted volume 29
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