Health care executives and employers have spent the past year absorbing and adapting to the new rules flowing out of the 2010 health reform law. Six local experts discussed those changes and what more lies ahead during IBJ’s Power Breakfast on Sept. 21 at the Downtown Marriott.
Sheri Alexander, manager of the employee benefits department at Gregory & Appel Insurance
Dr. Ben Park, CEO of American Health Network, an independent physician practice
Jack Phillips, North American CEO of Roche Diagnostics Corp.
Alex Slabosky, CEO of Indiana University Health Plans
Kevin Speer, chief strategy officer of St. Vincent Health
Seema Verma, president of SVC Inc. and an adviser to the Daniels administration on health care reform
IBJ reporter J.K. Wall moderated the discussion.
IBJ: How are accountable care organizations similar and how are they different than managed care and why should we expect a different outcome than what we saw with managed care in the ’80s and ’90s?
SLABOSKY: Well, accountable care organizations are organizations that theoretically are going to take responsibility or become accountable for the cost and quality of care provided to a defined population. But right now accountable care and accountable care organizations is still a concept. Medicare, which has been the big promoter of accountable care organizations, issued regulations in the early part of this year for accountable care organizations and the reception was completely negative and Medicare has had to go back and is rewriting the rules and regulations for accountable care and we’ve yet to see what the final rules and regulations will be, but I think one of the big differences between the accountable care concept and the managed care programs we’ve seen in the past is the theoretical requirement for quality measures. In the past managed care focused on controlling the cost of care while accountable care organizations and accountable care is going to try to deal with efficiency and effectiveness. In the proposed Medicare rules that have been pulled back but I assume in the new rules that will be finally issued there’s a requirement that accountable care organizations report under Medicare for 65 quality measures and these are quality measures covering things on outpatient care, the inpatient side and patient satisfaction. Well, that’s a component that really hadn’t been fully developed in traditional managed care, but a second big difference is most of the managed care programs, the PPOs and such, pay providers on a fee-for-service system, they pay providers to do more, and what accountable care is trying to do is set up a benchmark for an accountable care organization and reward organizations for controlling the total cost of the program and share some of the savings in a program with the accountable care organization, so it’s getting away from traditional fee-for-service reimbursement and trying to deal with the total cost of care for a population, so I think that’s going to be a big difference, but we’re going to have to wait and see. Medicare’s going to come out with its rules very soon and most of the big, large national insurance companies we’ve talked to are developing their own versions of accountable care, but we’ve yet to see them executed, so it’s a big question of how it’s going to work, but I think the big difference is the payment system, the shared savings concept and following quality.
PARK: Well, accountable care organizations in my mind in the way the original regs were written, and I don’t think they’re going to be a lot different, CMS was here in town and we had the chance to talk with them when they were visiting and the concept is that you will invest in infrastructure to improve quality so that your patients spend less time in the emergency rooms, in the hospitals, and that if you look at the accountable care model that’s where the savings come from, I mean that’s the operational way that it works is savings in hospital stays. So financially the way it’s set up is that the accountable care organization, whether it’s a hospital-based one or a physician-based one, goes to the hospital and says “Okay, give me that dollar of savings” and they take 50 cents of that dollar and they put it in their pocket and they take the other 50 cents and they give it back to Medicare, I mean that’s in a simple way the way that it works, I mean the easiest way, and I think employers are — Bending the cost curve isn’t going to be enough, you know, they want it to be broken, I mean they want health care costs to go down and not to just slow the rate of increase.
SPEER: Yeah, I mean I think that both Greg and Alex in their opening comments used the word accountable care versus accountable care organization and as we look at where the market is headed and what’s happening in Washington, DC and the amount of flux that there is, I think as a health care provider in this state we recognize that the way care is going to be delivered and how it’s going to be delivered is going to change and the cost has to go down. Quality, if it’s there, has to be transparent for the consumer to see and that there’s got to be coordination across the continuum for the patient and if you can achieve the coordination across the continuum and you can begin to take out some of the excess or the fixed costs in it, you’ll get to that cost savings that I think is ultimately behind all of this, but the reality is I think everybody at this table and if you’re involved in health care in this room you probably started down this path two years ago, and the concept of an ACO, whether it becomes reality or not, isn’t going to have that much impact on where health care’s headed from a cost perspective, from a quality perspective, and how it’s delivered, it’s got to change and it is changing and it’s going to change with or without an ACO model.
SLABOSKY: I think we may be at a tipping point. You probably heard me say that many years in the past, but if you look at the national economy, if you look at the federal budget, the state budget and you even look at local budgets, we’re simply in a situation where we’ve got to bend the cost curve for health care, and the President, Congress are going to take action whether the health care system likes it or not, so we’ve got to try to develop a system, a mechanism, to bend the cost curve ourselves or we’re going to have a lot of additional rules and regulations imposed on the system, it’s inevitable, so I think one of the big pluses for the accountable care organization or for the concept it’s saying to the health care system, hospitals, doctors, what have you, “Here’s your opportunity to operate within a budget and to manage the system yourself as opposed to having outsiders come in and imposing minute rules and regulations on everything you can do,” so I think this is an opportunity for the various health care systems to respond and reorganize themselves, operating within a budget rather than having somebody tell them everything they have to do.
ALEXANDER: The magic word is “transparency,” that’s what I think we’re all hoping for, and I think all our clients and employers that are in this room are very anxious for anything that will help in [bending] the [cost] trend, so that’s what we’re looking for.
IBJ: It seems that there’s been a lot of consolidation amongst hospitals and physicians sometimes in the name of accountable care or as preparation for that. Given that that’s been going on, some studies, including one recently by the Center for Studying Health System Change, said that may offset any savings that the accountable care concept achieves. Kevin, can you talk about that? Do you think that there’s a chance that accountable care won’t save money but actually contribute to the ever-rising costs?
SPEER: One I believe, whether it’s accountable care or it’s simply market forces, that the cost of health care has to change, it has to go down, so I believe that’s inevitable, this process. I think what the concern around the expansion by systems in Indiana and the acquisition of physician practices, outpatient centers, et cetera, they kind of blur over the top of this ACO concept. That process has been underway for probably 36 months and it’s been driven by access to capital, it’s been driven by IT costs, it’s been driven by uncertainty in Washington, DC, the ACO model and whether it will take hold, and so those acquisitions, those mergers, those expansions have occurred I think first and foremost for those reasons and as that occurred this ACO concept got laid on top of it, and so, yeah, today there probably was an uptick in the costs as a result of that but that’s not sustainable, and the model, which I think we’re all striving for, is that continuum of care where you have the right patient in the right place at the right time and if you can achieve that you can reduce costs, you can reduce repetitive procedures, duplication of care, you can get to one common pricing system in one system and so I think the cost savings will be realized. I doubt they’re being realized today but in 24 months if we’re sitting up here and we haven’t realized them something’s wrong.
SLABOSKY: But one of the advantages of the consolidation is more coordination of care. We have a health care system that was composed of a multitude of individual silos, physicians in individual practices, separate hospitals, separate clinics, outpatient surgery facilities and integration is one method, not the only one, of trying to provide better coordination of care through a single electronic medical record, through analysis of practice patterns to try to reduce variations in care, but one of the things we need to do to better bend the cost curve is to increase the coordination of care and it’s amazing how much waste there is in the system simply because of the lack of coordination, where a patient may go to one provider, one physician, have an imaging procedure done, be referred to a specialist and that image is repeated simply because of the image cannot be communicated or moved from one place to another, so there’s a lot of opportunity in better coordination of care.
PHILLIPS: From a diagnostic perspective, too, I completely agree and I think the electronic medical record and things like that will absolutely drive coordination of care. The only thing I would add to that is I believe there’s a huge opportunity in the system for education, education of patients, education of clinicians, education of pathologists, et cetera, on what are the best courses of treatment, what is the best standard of care, what are the best diagnostic tools to be used at certain given times, and I think that’s another, from our view at Roche, that’s another contributor to this inefficient system and I think if we can get our head around that from an education perspective, I think we can make huge progress in the area of improving health but also really driving costs down.
SLABOSKY: Well, and having data that simply wasn’t available a few years ago that allows us to look across the whole spectrum of care and analyze that data to see what treatments, what technologies, what therapies are the most effective and identify often where there are low cost therapies that are not being used.
SLABOSKY: And identify the gaps in our system and the technology, the data analysis, is going to allow us to do a lot of things if we make use of it.
SPEER: And I think that’s linked to this concept of wellness, despite the sticky buns for breakfast. We have to be proactive around our health care. Physicians and hospitals in the future are going to be presumably compensated for keeping someone out of the system as opposed to in the system and what you’re talking about, Jack, is dead-on with being proactive around certain disease categories and taking that wellness program out to the 49th heaviest state in the country, so we have ample opportunity, it’s a target- rich environment.
PARK: It is, and there’s no reason that we aren’t doing better today. I mean Indiana has very high utilization across the board for services. 2200 bed days are used in the hospital per thousand Medicare patients. If you look at best practices and HealthCare Partners, one of the groups we’ve worked with, they’re at 800 bed days per thousand, that’s a huge decrease and an enormous savings, you know, and I mean there’s three things you have to do well, I think you have to manage the chronic illnesses, that means investing in infrastructure and computer systems and being able to take care of those chronic illnesses that account for 75 percent of health care costs, so you have to do that. You have to get the cost of your services down, and this is an area where we’re particularly vulnerable as a physician group because hospitals get paid a lot more for doing things than what we do and we know because we just lost a group of eight doctors who went to work for Riverview Hospital up in Noblesville and the impact to the community there is about six million dollars in increased cost, and to show you how that happens, one of the patients there called us and said “What happened to my lab tests?” and we said “Well, we don’t know, what do you mean? You don’t see us anymore.” “Oh!” Well, she three months ago had a blood panel that was $80. She came back in to have it rechecked and it was $800. Nothing had changed except for who was billing for it, so we have to get the cost of the services down, too, I mean that’s a problem. And then I think that the coordination needs to occur with the patient. We like to think of it as playing like fantasy football. Does anybody, you know, play fantasy football? Probably everybody. But imagine if you could do it for real and you could go out and pick the best player in every position from any NFL team and so for a quarterback right now you’d probably have to go with Tom Brady. I know, that hurts, but Peyton’s injured, and you would have similar choices for a wide receiver and safety and all of those positions and then you put all of these guys together and you go play the other NFL teams. How well do you think that would work out for the other teams? Not terribly well. Well, we play fantasy medicine but what we do is we look at the very high-cost complicated cases, be it brain surgery or open heart surgery or those kinds of things, and then we direct patients to the best place and the best place always for everything isn’t in the same institution, it varies, and so we think it’s important to use evidence to drive your referrals as well. And last is we try to engage with the employers and with our patients and get them in as part of this conversation so they understand what we’re trying to do and we’re improving their health and when we can everybody wins.
SLABOSKY: Under accountable care when we’re trying to live within a budget to control costs it’s going to encourage us, the health care system, to change our delivery models and the way we provide care. One example we have within our own organization is we looked at claims data for our employees and 5 percent of the eligible members, employees and dependents, consumed 48 percent of our costs, and so we’ve tried to look at that 5 percent and find many of these people are patients with multiple chronic diseases and unfortunately also with psychosocial problems, so we tried to identify these people and direct them into a special program that has physicians, nurses, social workers, who can really work with them directly, maybe even visit them in their home, go with them to their doctor, and help them better use the system, help them better understand their condition and help them better do what they need to do to manage their own care. Under the traditional fee-for-service system that’s not going to be reimbursed, but under a budgetary system where you want to try to control costs there’s a big incentive to try new programs like that.
IBJ: Well, we’ve been talking a lot on the provider side of things, but let me ask a question of Seema Verma because maybe perhaps an even bigger piece of health care reform legislation is the creation of health insurance exchanges, which she’s deeply involved in at least as that effort’s proceeding here in Indiana. Seema, can you talk about how you think the health insurance exchanges maybe along with some of the other regulations and the subsidies prescribed by the health reform law would affect the cost of health insurance for individuals and small businesses over and above the current cost trend anyway?
VERMA: Well, I think that exchanges in and of themselves are not going to address some of the growing cost increases, and if we look at the Affordable Care Act, it did a number of things to expand access but along with that there is a number of things in that bill that will increase costs and the cost of health insurance. Our actuaries have projected at least in the individual market that these increases could be 75 to 95 percent in the individual market, in the small group market it could be 5 to 10 percent, and so before we talk about exchanges maybe going through and then talking about why that’s going to occur, so the first reason is the essential benefits and so we don’t have all the details, Washington has yet to release the details of that, but we know enough to see that there are going to be new requirements about what kinds of benefits are going to be required and so that’s going to increase costs. There are lots of new taxes for the insurers, in Indiana I know in particular it’s hard on them, the device manufacturers, and so all of those costs in terms of those new taxes are going to be passed on to the consumer. There’s new rating rules in the insurance market, whereas a lot of different rating rules before, now they can only rate on age, geography and smoking, and so for a lot of people with chronic illnesses it will bring new people to the market and for those more sicker individuals maybe their costs will be less but it will also increase costs generally to the whole population. And then there’s also changes within the risk pool. In Indiana we have our high risk pool, our ICHIA group, and what that has done for our marketplace is it’s actually helped to lower costs in our individual market. That is partially funded by insurance companies and it’s also funded by the state, but now all of those high cost individuals are coming into the general population, so individuals with HIV/AIDS, people with hemophilia, I mean all of those very, very high cost conditions are now coming into the general marketplace which is going to increase costs for everybody. You also have some changes in the Medicaid population, whereas it may not be covered by Medicaid anymore, our HIT program is changing and a lot of those people are going to be coming into the marketplace. We also have employers dropping health insurance, especially the small employers may not continue to offer health insurance, and the ones that are more likely to drop are the ones that have low wage-earners that can get tax credits through an exchange, and then I think that there’s no requirements anymore or no penalties for employers that are offering health insurance to their early retirees, so you can see a change where you’ve got early retirees in that 50 to 64 age bracket which are coming into the insurance market will also increase costs. So there’s a lot of things that are going on in the marketplace outside of exchanges that are going to increase the costs, and what exchanges I think in essence are is a place to go shopping for your health insurance, it brings insurers and it brings consumers together, but in terms of its ability to impact the cost trajectory I think it has to do with how that exchange is set up. There are some models that states are looking at which are more active purchasers where an exchange would be putting out an RFP, maybe selecting two or three health plans and negotiating prices. I think that type of model, you know, even in some of the surveys that the state has done doesn’t seem to be a whole lot of support for that, I think that type of model could actually drive up costs because it’s going to reduce competition in the marketplace, and so I think the exchange in terms of its ability to impact has a lot to do with its ability to promote competition in the marketplace. I think an exchange that has a lot of requirements for insurers and I think even some of the new regulations around quality, around some of the IT concerns, and every time you make it harder for an insurer to come to an exchange a lot of them may not decide to participate and so if we don’t have broadbased competition, you know, prices are going to go up. And I think also making it attractive to the consumer, if you look at the Massachusetts experience, the only people that are really using the exchange are the ones that are getting some sort of a tax credit, and so if we want to be able to bring more people you’re going to have to do something besides just have a basic product there, you’re going to have to have some incentive for employers and for individuals to come to an exchange.
IBJ: Sheri Alexander, you’re working with employers again, they are certainly thinking about the exchanges. How are they looking at them, what sort of impact do you think the exchanges might have on the type of benefits that employers offer in the future?
ALEXANDER: Well, I think it depends on the size of the employer, first of all. I think initially the under-50s are going to look very closely, as Seema said. I do think the announcement yesterday of Anthem and Bloom Health may have an impact on this market, very anxious to hear how that shakes out. Over-50 employees I think they’re going to evaluate. If too many of them move their employees or drop their health insurance coverage altogether, then obviously that $2000 fine or penalty is not going to be enough to support the increased costs, but I think what we really have to get to is when we look at the cost line and then we look at the commercial market, what all the employers are paying compared to Medicare reimbursement and Medicaid, we’ve just got to get that squished closer together or it’s just simply not going to work. And then back to what Jack said about education within the provider community, I think it’s very challenging for most of the employees of all of our clients anyway to figure out how to navigate the system. We need to educate the people.
IBJ: You mentioned the announcement between Anthem and Bloom Health in which Anthem is acquiring them, they are operating an exchange for employers.
ALEXANDER: It will be a private exchange.
IBJ: A private exchange where employers could have their workers buy health insurance, still get the tax advantages of doing so. The way Bloom Health operates, as I understand it, is that most employers give their workers a defined benefit and they have a defined amount of money and then they can spend that however they want, but that’s a very different approach than what we’re used to where there’s certainly cost sharing in health benefits for workers, but it’s not a strictly defined benefit. It’s amazing to me that we’re talking about concepts like that, defined benefits for health insurance, as well as other things like employers being a little more willing it seems to maybe have a narrow provider network which was anathema to them for quite some time. Maybe there are other examples that you can add, but why we got to a point where these sorts of things are being seriously considered, whereas even just three or four years ago they really were not.
ALEXANDER: Well, I think the reason why is people want to stay in business and it’s becoming unsustainable, I think most of you would agree, but I wouldn’t say these are really new. If you’ve been around as long as some of us have we’re kind of coming back full circle, narrow networks were very common with HMOs, we still have some around here today and I think we’re going to have more. Defined contribution, you know, you go back 20 years a lot of big employers were doing defined contribution cafeteria plans, so we’re just coming back around again to see if it works. I think the real game-changer is going to be health promotion, population health management, value based benefit design, streamlining access to care, on-site clinics, near-site clinics, really those types of things. People have to be engaged and participate in their health, and again we have to understand how to use the system better. I’ve been in this business 31 years and I still have trouble sometimes figuring it out, so that would go a long way.
IBJ: I want to ask a question of Jack Phillips. Clearly in Indianapolis there’s a big industry around selling drugs and devices. Roche is right in the middle of both of those industries. Some of the things we’ve been talking about already this morning, other things that are happening out of the health reform law or just other trends, how do you see those impacting Roche and its business going forward the next few years?
PHILLIPS: So I guess first for the audience just to clarify, Roche, we are solely focused in health care and we have two divisions, one is pharmaceutical, which is focused on delivering treatments, effective medicines to patients to treat disease, and the other very important division is diagnostics and diagnostics is about providing diagnostic tests of all kind through clinicians and laboratories to provide answers to questions about what kind of disease you have and how to best treat that disease, right? In Indiana here up in Fishers for Roche that’s the North American headquarters for diagnostics, just so everybody’s clear on that. So, J.K., back to your question about health care reform and cost pressures and so forth, we see it first of all a couple ways. One is lots of challenges, the challenges we’ve talked about this morning a lot and they’re common challenges that we all have. Frankly, in our industry, for the past decade we’ve been faced with significant cost pressures because laboratory budgets within hospital networks are being cut and so, really, our consumers are really faced with budget constraints across the board that’s really putting pressure on the industry that we’re in diagnostics. The other area that’s impacting our business is reimbursement, so reimbursement is continuing to slide downward and that’s impacting again the health of the overall business. And then, obviously, Seema mentioned device taxes. We’re faced coming up here in pharmaceuticals with taxes but also on the device side we’re going to be faced with a 2.3 percent tax really on all the goods that we sell, and you may have seen that in the IBJ recently, that is a hot topic for device manufacturers because it’s absolutely going to cost us innovation, it’s going to cost jobs, and it’s going to really be an inhibitor to growth. So that’s the gloom and doom, that’s the downside. We see opportunities. I mean, the opportunities here, again we’ve talked about some of these already this morning, over 30 million uninsured coming into the system. Seema talked about some of the challenges around that, but we see also some opportunities. If people begin getting screened early, they go to the doctor early, clearly for Roche and for diagnostic companies like Roche it’s going to provide an opportunity for increased testing and screening. The other thread that we talked a lot about today is the emphasis on quality of care. Quality of care is right in the heart of what we do. If we can help our customers understand how diagnostics impacts quality of care with the right answers at the right time, that’s a big opportunity. And I think finally it’s just really the value of diagnostics, so today greater than 70 percent of medical decisions are made with the use of diagnostics of some kind, but yet it’s less than 3 percent of the healthcare spent. So we talked about education, we talked about really making sure that the entire system understands where the value really is for patient care and we see that as the biggest opportunity. If we can really understand and help the system understand where we can best treat the patient, where we can best have the largest impact on the patient, that’s where the dollars we believe are going to go, that’s where the spend is going to go is where the patients are best impacted and so that’s what we’re driving to is, again, more innovative diagnostics, more innovative targeted therapy medicines but also educating the entire system on really the benefit to the patient.
IBJ: And Kevin Speer or Dr. Park, do you have any thoughts on how just some of the changes going through and then the concept of population health management might alter how providers — what sort of technologies they’re looking to use or how they’re looking to use them?
SPEER: From our perspective what Jack described and I think you described it as personalized health care –and Jack talks about the right answers at the right time, we talk about coordinating care now and in this continuum of care it’s the right care at the right time in the right place, and so you marry the delivery up with the technology and the pharmaceutical and you have an opportunity I think to find synergies that will increase the quality and decrease the costs and from a prospective position it allows you to start to begin to identify that population that Alex discussed that we all have. I mean, 5 to 10 percent of our employee base use 80 percent of the costs and so can you be proactive with those individuals, can you utilize the technologies and the science that Jack’s bringing to the table and then make them a healthier population as well.
SLABOSKY: Well, one of the ways we’re using diagnostic testing is the increased use of biometric testing of a population, so in our organization we have incentives for our employees to come for an annual biometric testing, get an A1c, get cholesterol tested, and so early on we can identify people who may need assistance in these areas but more importantly we can give information to those people who may not have been aware that they had issues with either blood pressure, cholesterol, diabetes, and get them to modify their behavior, so we’re using this diagnostic testing on a mass basis and we’re seeing more and more employers do that, too.
PHILLIPS: The other thing, again back to this education piece, we’ve all in the room probably have had some kind of blood test done, hopefully, hopefully an annual physical, and you receive that report back and you get that report back and I would venture — There’s a lot of health care professionals in the room, so there’s probably a lot of people in the room that could actually understand that report, but the general population looks at that report and it makes absolutely no sense, so think of a world where, again, we could literally take these basic glucose results and calcium results and actually put them on a report that’s a visual report that shows you whether you’re in the green zone, the red zone or the yellow zone and what that means and visually show a patient “Look, this is where your glucose is at, okay, this is serious” and actually have them visually see how that is in a continuum of the overall population and how we treat this disease. Those kind of things, they’re simple, okay, they’re things that are in our world today and other parts of our life, but those things we believe will make a huge impact for the physicians to get this report and then the physician to be able to help manage and educate that patient.
IBJ: We’re going to go to audience questions because we’ve got a huge stack up here, but before I do I’m going to ask one other question myself. For Seema Verma, as Jack was making a comment earlier about the challenges of dealing with 30 million new folks having health insurance and likely utilizing health care more, which is the goal of health reform, you’ve looked at, you and some of the actuaries you’ve worked with have looked at what might have to change in the Indiana Medicaid Program to attract physicians to deal with the extra folks in Indiana, I think the estimate is about 500,000 additional Hoosiers having Medicaid coverage, that’s part of the expansion of coverage through health reform, and the actuaries have estimated that the program would have to pay physicians more to attract them into the program to see more of those patients. Can you talk about what your expectations are there and I’m curious as to whether those expectations are tempered or affected in any way by hospitals employing so many physicians and usually requiring them to see Medicaid patients?
VERMA: Yeah, I think we have access problems within the Medicaid program today, so leave aside the Affordable Care Act, in many cases the Medicaid program for hospitals is paying 40 cents on the dollar, for some physicians it may be 10 cents or 20 cents depending on your specialty, whether you’re primary care or not, and that’s been a problem we’ve been struggling with and even though the Legislature has made some attempts to provide some increases that creates access problems and, quite frankly, providers can’t afford to see Medicaid patients and sometimes it even costs them to see these individuals, and so what’s been happening in the marketplace is that providers have had to do cost shifting and essentially what they do is they increase the price for their paying patients to sort of make up for the losses that they’re experiencing in the Medicaid program, and so with the Affordable Care Act what that did was only provide a temporary two-year increase for only primary care doctors and that starts in 2013 and then it ends at the end of 2014, so now you’ve got, as you said, almost a half a million new Hoosiers coming on to the Medicaid program or about one in four, and so I think that really creates challenges for the provider community. Access in general, not just for low income populations, but access in general will be an issue for the state as we bring in all of these newly-insured individuals to the marketplace, and so providers at that point have a choice now of who they’re going to be able to see and if you’ve got Medicaid patients that are actually costing you, I think they’re not going to be inclined to see these Medicaid individuals, and so even though we’re handing out insurance cards, that doesn’t necessarily translate into access. And what the Milliman Projection did was include a modest increase for providers within the Medicaid program. Today they’re paying at about 60 to 65 percent of the Medicare fee schedule and what they put in the projections was to go to about 80 percent and that’s across all programs and so some of our programs actually pay a little closer to Medicare and most of them are below that, so that’s only going to the Medicare fee schedule, and I think that becomes necessary because, as we talked about before, if we don’t do that, then what we’re going to create is more cost shifting and that’s actually going to increase prices for the general population, but that’s going to be a challenge, the cost of providing an increase is 300 to 350 million dollars per year and so Hoosiers or the Legislature will need to figure out how to pay for that and that in and of itself is going to be a challenge with all the other costs we have with the Affordable Care Act.
SPEER: I think access in general, J.K., would be an issue going forward. We have a physician shortage in the state of Indiana. If you look at research done by Debbie Allen at IU around primary care access we’ll probably have inarguably a crisis situation in the future and so clearly Marian University’s decision to establish a doctor of osteopathic program in an environment where a significant number of people in that training program stay in primary care, if we can find ways to expand residency programs and keep those individuals in the state, it’s not a short-term solution, but it’s a 15-year solution and we have to have greater access to both primary care, nurse practitioners, et cetera, to be part of that care team in order to handle the new influx of patients that are going to be out there.
IBJ: Well, the first question from the audience has to do with wellness, that came up in our discussion as well as education, and asks there are work site wellness programs that clearly impact the employees of that employer, but do you see that work site wellness programs actually affect the overall health and well-being of even the families of those workers, does it go beyond, and as we’re talking about these issues of improving health, changing health behavior, hopefully reducing costs, how wide of a reach do work site wellness programs really have? Sheri, do you want to jump in on that one?
ALEXANDER: Sure, I’ll take that one. I think if you have seen one wellness program you’ve seen one wellness program. They come in all shapes and sizes, just like the employees that they are targeted to serve. I think that the question was specific about workplace wellness and reaching the families. I think the majority of them really don’t reach the families. There are a few models out there where the families, especially a spouse, cannot hide anymore and those are gaining some traction, especially in this market, but I think it needs to go beyond a simple change and beyond an employee contribution because folks earn that once and then they’re set for the year and then the next year they go through whatever it is they need to do at the last minute to get that better contribution and then off they go for another year and they don’t think about it, so I think if you can incorporate and design that encourages healthy behavior throughout the year, whether that be in financial incentives or earning your way to better benefits or reward points, there are all kinds of ways to do it, but you can’t just throw it up against the wall and see what sticks, that’s not working.
PARK: The things that we’ve done with our electronic health record as part of our screening when we work with employers directly is we establish goals for every patient and they’re in there and so every visit we talk about those goals, we try to limit it to three things that we’re going to change during the next year and that seems to be pretty darn effective in getting people engaged and then our RN health coaches go through the same electronic health record and reach out to these people and get them in and get them engaged with the primary care physician.
SLABOSKY: Just merely testing people once a year is not adequate. Once you’ve tested your population, whether it’s employees or employees and dependents, you need to provide programs and activities that will help them meet their goals, so within our organization we are providing Weight Watchers free of charge to our employees, making it available on site throughout the year and a number of other programs, health coaching, exercise programs, but you can’t just stop and say “You’ve done your testing and that’s it for the year,” you’ve got to provide programs to help them.
PARK: A shameless plug for an Indiana company, TreadDesk, I don’t know whether you guys know about that, but you walk at your desk, it’s a very slow treadmill, burn about 300 calories an hour while you’re walking at two miles an hour, and I mean this company was truly struggling when they were trying to market in Indiana. They put up a website and they’re shipping these things to California and Colorado like crazy, so a great company, and people should be doing that.
IBJ: Education came up a few times and while we’re on this theme, another audience question was what can employers do to best and fully educate their employees, is there one or two things that the panel would say is the best thing to do?
ALEXANDER: Well, I’ll take that one, too. Education, I think with the multi-generational workforce that we have now we need to customize our communications to reach the audience, so we’d better be texting and Facebooking and Tweeting, those things, so whatever works, and for your older population, they love to get things in the mail and have people talk to them, so I think that’s a real key issue, know your audience.
PHILLIPS: The other think I’d add to that, J.K., is I think what we see at Roche is it’s all about the culture and it starts at the top, it starts at the leadership level, and, you know, it involves the culture that you want to have, the beliefs you want your employees to have, how you want them to behave at work and with others, but then also the type of company we want to be and then just really every day, it’s got to be an everyday event, it can’t be a onetime event or once a year event or once every six months event, it’s got to be something that’s every day that’s in the culture and I think once you have it embedded, whatever is important to you and what you’re passionate about, which for all of us today I’m sure fitness is one of those or a healthy employee base should absolutely be one of those, then you embed that into what you do and the culture that you live every day and I think that’s where you can make some big strides, and then I think to what you said, Dr. Park, I love that idea of having goals, if you establish goals for individual employees and patients and help them figure out how to see what they need to do, you know, over the next month and not over the next year, I think that can make big progress as well.
SPEER: I agree with Jack’s comments. We take our wellness program out to employers around the state. It is a cultural issue, it starts with the CEO. If the CEO believes in it and makes it part of the culture of that organization, you see it start to trickle down throughout that organization, and as you talk to the leaders of these businesses, probably many of whom are in this room, they talk about the financial investment they’ve made to move someone from graduation from college to a position where they take on more leadership roles and to have that person suffer a heart attack or stroke or diabetes, take them out of that queue, they’ve lost a tremendous financial investment and then taking that culture from the employee to home and you see that in the bariatric programs, the counseling that goes on pre-bariatric surgery is a family counseling because, in all honesty, if mom or dad has bariatric surgery but the spouse at home fixes fried chicken every night and continues to plan on doing that in the future, the surgery is irrelevant, it’ll do no good, and so it has to be a cultural and societal change, and from our perspective from working with employers around these wellness programs, those companies who from the CEO down it’s part of the culture have the greatest success.
PARK: J.K., I think it has to start, too, in the schools. There’s a wonderful organization called PE4life.org and what they’ve shown is that by putting heart monitors in the schools and having kids exercise every day they reduce disciplinary problems by one-third and improve standardized test scores by 20 percent. We don’t have anything that comes close to that and the state should be all over it.
IBJ: Well, the next question from the audience I think refers to some changes made by Medicare over the last couple of years in its reimbursements to physicians and has reduced reimbursements to physicians in specialties, has tried to raise reimbursement to some primary care physicians, so the question is it reasonable to attempt to control health care costs by reducing the pay of specifically specialist physicians?
PARK: That’s a hard one, I mean we have oncologists and nephrologists in our group, as well as a lot of family docs and internists, but the reimbursement probably has gotten a little out of whack in terms of the services and primary care we believe does need to be rewarded a little bit more. We like to see it more on a performance basis. We don’t think the base pay needs to come up that much, but we get money now from what’s called PQRI, we get money from Meaningful Use, we get money for E-Prescribing, we get money from Quality Health First, the Anthem program, and all of those things add up to significant dollars and there’s pretty good coordination between them as to what they’re going after. We think accountable care will be just sort of the next iteration of pay-for-value and we like to see a system that fully endorses that and we think we could work it out inside our organization how the pay-for- value distribution gets distributed.
SPEER: Well, we have a reimbursement problem, whether it’s for specialists or primary care or for hospitals. The changes in Washington, DC, I think we’ve all been watching those, predicting they’re coming. I don’t think they’ve been much of a shock anymore to anyone. As I mentioned in my first comments that uncertainty is what’s driving I think a lot of the consolidation, acquisition, you described it two years ago in the IBJ as a “land grab,” that’s what’s going on and it’s reimbursement driven. I think you have an issue with medical students choosing the primary care specialties and looking at tremendous debt loads to get out of college and undergrad and then choosing a profession which is going to pay them towards the bottom end of that spectrum, so in the specialties of medicine, the primary care specialties are typically towards the lower end. They’re choosing not to be primary care doctors for that reason, you’ve got a debt issue, you have a reimbursement issue. We need to fix the debt issue, the reimbursement issue would be mitigated slightly, and we probably need to have some balancing of the reimbursement system among specialists.
VERMA: I would agree with that. I mean, I think a lot of the things we talked about today in terms of accountable care organizations, managed care, coordination of care, management of chronic disease, all of that centers around primary care and so without a robust primary care network I don’t think we’re going to be able to implement those things as well, and when the reimbursement is sometimes four times as much for specialty care versus primary care you really are not incentivizing medical professionals to go into primary care when they’re graduating from medical school and they’re looking at a $300,000 debt or bill for going through medical school and going into primary care that pays a hundred, $150,000 a year, that’s not going to be as attractive as going into a specialty that pays three times as much, so I think overall we really need to do something about the reimbursement for primary care.
IBJ: The next question from the audience is if you could eliminate one federal restriction or limitation, what would it be?
PHILLIPS: One federal restriction?
SPEER: My lawyer just got up and left the room, that doesn’t make me feel very good. Yeah, I mean, I think one or three would be a good start. I think for health care reform to be effective you’ve got to change the way that the government looks at anti-competitive behavior, you’ve got to look at Stark and you’ve got to look at anti- kickback because all three are really impediments to that continuum of care and the coordination we’re talking about, and I haven’t seen any movement on that. In fact, if you get the leaders in Washington together who are responsible for those three areas, none of them have any intention of revising those three principles, and absent a revision I don’t think we’ll get in a health care system to where we need to be in order to deliver a more effective product.
PARK: I agree, it needs to be more pro-competitive and eliminating the restriction on physician ownership of facilities would go a long way to doing that.
VERMA: I think in terms of the Affordable Care Act, the timelines, I think there’s a lot to get done between now and 2014 and there’s very little preparation and a lot of unanswered questions at this point, and so I think we need some more time. In some cases there are no regulations, I mean I think in terms of the exchanges some of the regs’ major pieces have yet to be released.
SLABOSKY: Well, getting back to accountable care, the feds issued proposed regulations for accountable care I believe early in the year and they were just simply totally unacceptable to organizations who supported accountable care, and they need to be realistic in drafting and proposing the rules and regulations accountable care organizations are supposed to offer. If we’re going to test this concept, they’ve got to be realistic and the first draft simply wasn’t. Well, just the simple complexity of the regulations, there needs to be a greater simplicity in terms of the accountable care organizations because you’re going to be dealing with lots of hospitals, lots of physicians, and the complexity was just overwhelming and they’ve got to be realistic that people cannot devote full-time compliance people to analyzing the rules and regulations, we want to get out and try and experiment with these concepts, but they weren’t presented in a way we could do that.
IBJ: Another question from the audience is also related to accountable care organizations and about palliative care. Since a huge percentages of the cost of medical care do come in the last month or two of life, palliative care is one way that’s been shown is lower cost. In the efforts to respond to accountable care or to form organizations that could function as accountable care organizations is palliative care being rolled in at this point or not?
PARK: Sure, sure it is. The HealthCare Partners folks, I know that nationally 40 percent of Medicare patients die in the hospital and most of us would agree that’s not ideal, and under their model only 20 percent do and many more people get hospice care, and if you look at hospice care, you know, a recent study came out looking at lung cancer and what they found is people who received hospice care lived longer than people who got aggressive therapy, so it’s a quality of life issue and it’s deeply personal, you need to have these conversations with people. People wouldn’t choose the course that they oftentimes get if they had someone to talk it through with them.
SLABOSKY: I would suggest you take a look at what happened in La Crosse, Wisconsin, I believe it’s Gundersen Lutheran Hospital in La Crosse, Wisconsin and they made a community effort several years ago to involve organizations within the community, churches, religious groups, to start explaining to the population about end-of-life care before they needed end-of-life care and they were able to explain the concept of hospice, explain the concept of palliative care and the concept of advance directives and get a huge number of people, a very high percentage of the population of the community to sign advance directives and keep track of these advance directives, but La Crosse is an example of a community-wide project to inform people about this whole issue and they were very successful and this is a model that I think other communities ought to take a look at.
IBJ: How did they avoid getting the label of a “death panel”? Was it controversial?
SLABOSKY: Well, as I understand what they did was they went out and started explaining hospice and exactly what Ben talked about, that people who go through hospice actually may live longer than people who were getting continued care in the hospital, they explained the concept and they really got away from this image of a “death panel,” but you’ve got to do this before people are in need of end-of-life care and you’ve got to do it well in advance and you’ve got to do a good job of explaining it and that’s what they did in La Crosse.
IBJ: Dr. Park, you made the comment that bending the cost curve is really not good enough, that the curve needs to be broken. With that in mind, aren’t all of these things, like better use of IT and on-site clinics, just pecking around the edges, don’t we need a more sweeping approach? You can answer that or anyone else can.
PARK: I think we do and I think where accountable care is heading is it’s essentially giving people a fixed amount of dollars and saying manage the costs within that and that causes you to be very innovative about your approaches, you develop disease registries for taking care of folks, you have nurse call centers that get them in to see when they need to be seen, you start looking at people who have pre-diabetes and you work with behavior modification programs to keep them from becoming diabetic, so it has to be a very broadbased engagement of the patient and the employer on the benefit design side as well.
SLABOSKY: Well, for accountable care to work, again conceptually to work, it’s not going to be successful if you only have a few scattered accountable care projects because you cannot ask physicians and hospitals to change their behavior if they don’t have the vast majority of their patients under a budgetary system. If they only have 10 percent of their people under a fixed budget and everybody else still under a fee-for-service system, you’re not going to be able to change behavior, so we’ve got to see this accountable care at least tested on a large number of people, and I think Medicare was successful when they instituted DRGs a number of years ago, you saw a rapid consistent change across the country in hospital stays, and if Medicare can roll out accountable care successfully for the entire Medicare population, you’re going to see the commercial carriers pick up the concept and you’re going to see a big movement to budgetary health care.