Transforming the Health Insurance Delivery Business Model – A Labor-Management Initiative to Manage Care and Targeting Quality Presentation to the Citizens Health Care Working Group Salt Lake City, Utah July 22, 2005 Presented by: David S. Blitzstein Director, Negotiated Benefits Department United Food & Commercial Workers International Union
Background: Jointly Administered Health Plans in the Retail Food Industry n n n Sponsor 70 Plans Governed by ERISA Cover 800, 000 Full-Time and Part-Time Employees Pay an Estimated $4. 8 Billion in Annual Plan Benefits Administered by Equal Number of Labor and Management Representatives Over 50 years of Experience Delivering Health Insurance Benefits 2
The Current Health Plan Business Model is Flawed n n n Attempting to Manage Price of Care vs. Actually Managing Care At Competitive Disadvantage in Price Negotiations with National and Regional Managed Care Organizations and PBMs Plans are Dependent on Intermediaries, and Are One Step Removed from Health Care Providers Plans are Not Focused on Health Care Quality and Patient Safety Plan Participants are Expected to Navigate the Health Care System Without Assistance 3
A Vision of a New Health Plan Delivery Business Model n n n n Directing Care to High Performance, High Quality Providers Empowering Members and Physicians through Access to Information Technology Perform Health Risk Profiling that Analyzes the Health of the Plan Population Identify High Risk or At-Risk Participants Organize Targeted Interventions (e. g. Wellness, Disease Management, and Case Management) for High Risk and At -Risk Participants Assist Participants with Personal Health Advocacy Programs Adopt Plan Designs that Compliment this Model 4
The Economic Foundation for the New Business Model: Correcting Costly Myths About the Health Care System Fact Myth #1 Plan members think providers are infallible and there is little variation in provider quality Infallibility Provider Quality • Complication and mortality rates often vary 200 – 400% • Service fees and charges often vary by 50% Myth #2 Fact Plan members think quality is proportional to cost Data proves quality = cost: Quality Cost Source: UFCW Working Group – Health Plan of the Future Cost 5
The Economic Foundation for the New Business Model: Correcting Costly Myths About the Health Care System Fact Myth #3 Cost Savings can be mined from plan administration and benefit reductions Source: UFCW Working Group – Health Plan of the Future 6
Is the Information Technology to Support Quality Care Decisions Available? n n Private Sector Platforms Health Care Purchasers – Leapfrog Group Non-Profits: NCQA & JCAHO Medicare – www. hospitalcompare. hhs. gov 7
Cost Analysis by Quality Ranking Salt Lake City, Utah Area Hospitals Report on Hysterectomy, Abdominal Total Quartile Name Patients/yr Mortality Complications LOS 1 st Alta View Hospital 2 nd - 2 nd $6, 335 1 st Davis Hospital & Medical Center 2 nd - 2 nd 1 st 10, 546 1 st Mc. Kay-Dee Hospital Center 1 st - 4 th 2 nd 6, 753 1 st Ogden Regional Medical Center 2 nd - 2 nd 1 st 8, 672 2 nd Cottonwood Hospital Medical Center 1 st - 4 th 6, 757 2 nd Latter-Day Saints Hospital 1 st - 4 th 3 rd 8, 316 2 nd St. Mark’s Hospital 1 st - 2 nd 4 th 9, 286 4 th Jordan Valley Hospital 2 nd - 4 th 2 nd 12, 250 4 th Salt Lake Regional Medical Center 2 nd - 3 rd 11, 847 4 th University of Utah Hospitals & Clinics 3 rd - 4 th 12, 084 Average of All Hospitals $8, 480 Top Hospital Cost $6, 335 Difference between Top and Average Hospital 25. 3% Difference between Top and Most Expensive Hospital Cost 48. 3% Source: Health. Share Technology 8
Cost Analysis by Quality Ranking Salt Lake City, Utah Area Hospitals Report of Colon Surgery Quartile Name Patients/yr Mortality Complications LOS 1 st Cottonwood Hospital Medical Center 2 nd 1 st $15, 851 1 st American Fork Hospital 4 th 1 st 2 nd 1 st 17, 096 1 st Latter-Day Saints Hospital 1 st 2 nd 3 rd 2 nd 24, 886 2 nd Mc. Kay-Dee Hospital Center 1 st 3 rd 2 nd 3 rd 26, 863 2 nd University of Utah Hospitals & Clinics 2 nd 1 st 4 th 2 nd 32, 183 3 rd Salt Lake Regional Medical Center 4 th 3 rd 1 st 34, 071 3 rd St. Mark’s Hospital 1 st 4 th 1 st 3 rd 32, 219 Average of All Hospitals $25, 156 Top Hospital Cost $15, 851 Difference between Top and Average Hospital 37% Difference between Top and Most Expensive Hospital Cost 53. 5% Source: Health. Share Technology 9
Will Plan Participants Accept Direction on Health Care Decisions? Source: HSC Community Tracking Study Household Survey, 2001 and 2003 10
Cost Savings Potential: Medical Delivery Efficiencies Low est. Medium est. High est. “shallow end” Source: Mercer – Business Roundtable Study 11
How Federal and State Governments Can Support A Quality-Driven Health Insurance Business Model n n States Require the Collective and Dissemination Health Provider Outcomes Data Congress Adopts the Recommendations of the HHS Health Information Technology Leadership Panel Report Issued 5/11/05. Congress Legislates the 21 st Century Health Information Act (H. R. 2234) introduced by Patrick J. Kennedy and Tim Murphy Congress Should Legislate Price Transparency Requirements for Hospitals, Physicians, Drug Manufactures, and Pharmacy Benefit Mangers 12
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