Roles for Government Purchasers in Payment Reform Doug McKeever, - - PowerPoint PPT Presentation

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Doug McKeever, Chief CalPERS Health Policy Research Division October 30, 2014

Roles for Government Purchasers in Payment Reform

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Roles for Government Purchasers in Payment Reform

CalPERS Overview

• Nearly 1.4 million members
• More than 1,200 employers

– State – Public agencies – Schools

• Will spend approx $7.7 billion in 2014 to purchase health

benefits

• Largest employer health benefits purchaser in California

and second largest in the nation

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Roles for Government Purchasers in Payment Reform

Significant Savings Needed to Bend Trend

6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 2010 2011 2012 2013 2014 2015

CPI +1% CPI+2% CPI+3% Historic growth rate (CPI+5%)

CalPERS future healthcare cost by growth rate $ billions $800 million annual savings required to reach CPI+3% by 2015

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Roles for Government Purchasers in Payment Reform

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Roles for Government Purchasers in Payment Reform

Reference Pricing: Hips and Knees

• CalPERS total costs for muscle, bone and joint disorders

topped $540 million in 2008

• Elective knee and hip replacements - $55 million

– Hospital costs varied from $15,000 to $110,000 with no difference in quality or outcome

• In 2011, for CalPERS self-funded PPO plans, Anthem Blue

Cross of California established payment threshold of $30,000 for routine single knee and hip joint replacement hospital stays

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Roles for Government Purchasers in Payment Reform

Reference Pricing: Hips and Knee (continued)

• If member does not elect a designated hospital and there

are provider charges in excess of the threshold, member pays difference between threshold and hospital charges

• Program promotes access to, and use of, higher value

providers, treatments, and services to drive down costs while maintaining quality

• Average hip or knee replacement charge declined by 26

percent, or an average of $9,000 per procedure

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Roles for Government Purchasers in Payment Reform

Reference Pricing

30% 35% 40% 45% 50% 55% 60% 65% 70% 2008 2009 2010 2011 2012*

Percentage of Surgery Patients Choosing Low‐Priced and High‐Priced Hospitals before and after the Implementation of Reference Pricing

Reference Price Implementation Anthem high‐price hospitals CalPERS high‐price hospitals CalPERS low‐price hospitals Anthem low‐price hospitals

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Roles for Government Purchasers in Payment Reform

Reference Pricing

$- $20,000.00 $40,000.00 $60,000.00 $80,000.00 $100,000.00 $120,000.00 Average of Paid Amount

Reference Pricing of $30,000

$- $20,000.00 $40,000.00 $60,000.00 $80,000.00 $100,000.00 $120,000.00 Average of Paid Amount

Reference Pricing of $30,000

2011 Claims – Post Implementation 2010 Claims – Pre Implementation Total Avg Paid Amount: $32,932 Total Avg Paid Amount: $23,112

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Roles for Government Purchasers in Payment Reform

Reference Pricing

CalPERS savings, compared to what would have been paid without Reference Pricing:

• 2011: -19.6% ($2.8 million)
• 2012: -18.6% ($2.7 million)
• Cumulative savings: $5.5 million

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Roles for Government Purchasers in Payment Reform

ACO-like Integrated Health Care Model

• Begun as two-year pilot in 2010

– Blue Shield of California – Catholic Healthcare West (Dignity Health) – Hill Physicians Medical Group

• First year results:

– Reduced inpatient utilization – $15.5 million savings

• Continue to expand integration with health plans

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Roles for Government Purchasers in Payment Reform

Priority Care Project – Humboldt-Del Norte

Goals:

• Increase health care quality and reduce costs
• Improve member safety, quality of life, and health outcomes

through coordination of care and high intensity case management

• Align incentives for plans and providers using shared

savings model:

– 50 percent of the savings to CalPERS – 45 percent to the physician group – 5 percent to Anthem

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Roles for Government Purchasers in Payment Reform

Priority Care Project – Humboldt-Del Norte

Accomplishments:

• Provider and Member engagement
• Effective enrollment strategies
• Open communication channels for all participants
• Shareable electronic Care Management software in place
• Strong, effective Member-RN relationships established and
• n-going

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Roles for Government Purchasers in Payment Reform

Questions

Doug McKeever 916-795-0767 Doug_McKeever@CalPERS.CA.GOV