"Delivery System Reform in Rhode Island: BCBSRI's role in 2013 and beyond"

Gus Manocchia, chief medical officer, BCBSRISeptember 20, 2013

The Rhode Island Healthcare Landscape

The U.S. spends more per person on care than any country in the world, with the average family of four spending more than $20,000 annually.

In Rhode Island, skyrocketing healthcare costs contribute to an ongoing weak local economy.

Flaws in the current healthcare system have led to increased costs and fragmented and inconsistent care.

The current system focuses on:

• Patients who are already ill• Paying for the number of services, not the quality of those services • The service provided but not the cost/benefit of providing it

Key Cost DriversThe cost of healthcare services for BCBSRI’s insured members exceeded $1.3 billion in 2011. A breakdown of those costs:

Pharmacy: Drug costs are expected to grow faster than those for both hospital care and other professional services through 2019.

Professional services: Providers’ reimbursement is based on the number of patients he/she sees, not the quality of care delivered.

Hospitals: Increases in hospital reimbursements continue to outpace inflation and account for more than one-third of our members’ claims.

BCBSRI’s perspective on transformation

Informed Patient makes better choices

• We are committed to providing our members with more transparent data on the quality and cost of healthcare services

• We want them to be informed healthcare consumers

• Currently, our members can read and write “reviews” about a provider they have seen

• This fall they will be able to use a member out of pocket estimator as well as a “Ways to Save” tool

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Giving our members tools to be educated consumers- Physician Finder

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Members can search “Estimated Costs by Treatment”

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Members can also search “Estimated Costs by Doctor”

Coordination of Patient Care

• Coordinated, team based care is the future of healthcare

• Rhode Island’s healthcare providers, with the support of payers and regulators, must evolve to an aligned, patient-centric healthcare delivery system resulting in:– Improved patient health outcomes and care experience– Higher quality of care and patient safety– Lower cost of care for patients

In total, 38% of Blue Cross local adult membership has an affiliation with either a PCMH or CSI-sponsored physician.

Patient-Centered Medical Homes

Group Covered Adult Lives

Anchor 6755

Aquidneck 1973

Coastal 24085

Medical Assoc of Rhode Island 5211

RIPCPC 28678

University Internal Medicine 3038

University Medicine 8709

WellOne 1996

Wood River 785

Total 92657

Primary Care Practice Transformation

• RI has the highest per capita rate of NCQA recognized PCMH sites, which offers a level of discipline not found in non-PCMH practices

• 200k unique member encounters by nurse case managers per year• Implementation of team-based care maximizing the use of each individual• Consistent use of EHR systems greatly improved

– 245 PCMH Providers already attested to Meaningful Use• Pre-visit planning saving time and empowering employees• Improved After Hours and Same Day Access through weekend pilots and NCQA required same day visit slots• Patient portal roll out at most sophisticated sites• High sense of camaraderie and collaboration across program – shared learning• Quality, utilization, and cost of care benchmarks increasingly becoming a part of practice life

* Specific to BCBSRI program only 11Our investments in PCMH’s have helped create infrastructure, process, technology, and expertise in patient –

centered care

Benchmark

Blue Cross Commercial members in a PCMH could incur 15% fewer emergency room visits than members who are not in a PCMH.

This 15% translates to a potential of 3,227 avoided emergency room visits.

Avoided ER Mean $/ER Visit Savings

3,227 × $1,200 = $3,872,400

Patient-Centered Medical Homes

Benchmark

Blue Cross Commercial members in a PCMH could incur 11% fewer inpatient admissions and 17% fewer inpatient readmissions than members who are not in a PCMH. This translates to a potential of 756 fewer inpatient admissions and 100 fewer inpatient readmissions. The decreased utilization ultimately equates to more than $12M in potential savings.

BCBSRI Commercial Membership Inpatient

Patient-Centered Medical Homes

ROI – Quality Performance

14Our PCMH partners have materially higher quality scores when compared to our network

Expanding our PCMH Footprint

* Specific to BCSRI program only 15

We’ve experienced rapid growth rates in both physician adoption and PCMH membership since 2009 and will continue to drive new ways to enroll our physicians and members in PCMH’s

* The # of PCMH providers has grown from 32 to an expected 330, an annual growth rate of 58%

* The # of members in a PCMH has grown from 15k to an expected 127k , a compound annual growth rate of 63%

# of Providers

% of RI Providers in PCMH’s

# of Members

% of BCBSRI Members in a PCMH

Forecasted Value

Claims Expense w/o PCMH

Claims Expense w/ PCMH

Aggregate Savings

Year 1 $ 1,790.6 M $ 1,772.8 M $ 17.8 M

Year 2 $ 1,898.1 M $ 1,865.2 M $ 32.9 M

Year 3 $ 2,012.0 M $ 1,969.7 M $ 42.3 M

Total $ 93.0 M

Patient-Centered Medical Homes

Adoption of value-based contracting

• Reimbursing providers based value, not volume improves care and affordability– Future reimbursement increases are based on

actions that measurably improve patient experience, health outcomes and cost improvement

– Provider cost and quality data become transparent

– Non-participating (engaged) providers could see fee reductions

Moving to value-based contracting

• Shared savings agreements:– Coastal Medical– University Medicine Foundation

• Bundled payment arrangements in development• Creating new products with provider partners:

– Lifespan– CNE

• New relationships emerging in the market– CNE affiliation with RIPC– CNE merger with Memorial Hospital

PAYMENT MODEL

Spectrum of Payment Models for Health Plans and Providers

Fee for Service

Negotiated Payment for

Volume

Performance Based Fee for

Service

Negotiated Payment for

Volume+

Escalators for Quality and

Patient Experience

(Prospective without “settle

up”)

Shared Savings

Global Targetwith

Shared SavingsIf Interim Costs

< Target

Risk Sharing

Global Targetwith

Shared Savings if Interim Costs

< Targetand

Shared Losses ifInterim Costs

> Target

Full Capitation

Global Targetwith

All Savings /Losses Going to Provider

Care Delivery System Today and in Five Years

Traditional Model BCBSRI / Delivery System Collaboration

Value Creation for Care Delivery

Contractual Fee For Service Relationship

Contractual Relationship with Shared Value

Contractual Relationship with Shared Value with BCBSRI integrated services

Level of Delivery System and BCBS Integration (Financial, Capabilities, People)Low High

CredentialingIn Network Benefits

Pay for PerformanceCare Model Coordination

Aligned vision / planningShared economicsInformation SharingEnterprise alignment with an integrated view of patient

Description

Value Levers

60% 35% 5%

40-50% 30-40% 20-30%

% of members in each model

Today

2015

A simpler, less expensive system

• Parity with national benchmarks for administrative cost levels across the system

• Processes and information are directly related to patient care and simplified

• Unnecessary and redundant process between delivery system and partners are identified and eliminated

Operating Leaner and Smarter

By 2014, we plan to reduce our overall operating expense base by 25% since 2009 through more efficient operations and technology

Focused efforts to improve performance in key areas of staffing, operations, and supplier contracting have resulted in an annual expense reduction of close to $15

million.

SelectRI

SelectRI

• SelectRI is an innovative network option that empowers members to get the care they need at the best price.

• They’ll still have the flexibility to choose any provider in our national network, but when they use SelectRI providers, they’ll have the lowest out-of-pocket costs and access to comprehensive primary care with many extra services.

Lower costs. Enhanced primary care. Better value. SelectRI gives employers and their employees more for their healthcare dollars.

—James Schwartz, MD, Coastal Medical

SelectRI is changing the way care is delivered in Rhode Island through a partnership with Coastal Medical, the state’s largest private primary care group.

SelectRI is changing the way care is delivered in Rhode Island through a partnership with Coastal Medical, the state’s largest private primary care group.

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SelectRI

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SelectRI

Wellness Features• Wellness Portal

– Health Assessment (HA) - $50 Incentive for Completion– Online Tools and Programs– PureRunner Mobile App

• Telephonic Wellness Coaching

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Questions?