Innovative Purchasing Strategies A Discussion on Improving the Value - - PowerPoint PPT Presentation

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.

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QUESTION: Is this an indictment

• f “the system” or of

the manner in which we have been purchasing and providing benefits for health care???

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.

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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)

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Defining and Addressing Key Issues in the…

Health Care Marketplace

Demand Side

Employers must impact individually through culture, education, and incentives.

Lifestyle/Risk

Driving increased incidence and costs of chronic disease

Inappropriate Demand & Use

From antibiotics to stents From low quality to high price

Under-use

Prevention & Primary Care

Over-use

• Est. at 25% to 40% of care

Pricing/Payment Methods

• Hospital
• Pharmaceutical

Errors & Avoidable Complications

Supply Side

Employers must impact collectively through group purchasing/direct contracting.

Value-Based

Benefit Designs

Value-Based

Purchasing

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Changing dynamics for a more effective, efficient marketplace:

What market-based health reform looks like:

Traditional Purchasing

• Health plan functions as surrogate purchaser.
• No interaction between buyers and sellers.
• Employer has negligible purchasing power.

The Colorado Purchasing Alliance

• Encouraged by CRS Section 10.16.1001-15.
• Employers (buyers) and provider (seller) directly

negotiate price, payment, and performance.

• Value-based insurance designs are essential.

Employer

(Individually as buyers)

Providers

(Sellers)

Health Plan/Administrator Employers

(Collectively as a Collaborative)

Provider Network

(Sellers)

Health Plan/Administrator

Employer

(Individually as buyers)

Employer

(Individually as buyers)

Employer

(Individually as buyers)

Employer

(Individually as buyer)

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• 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)

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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).

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