Transforming the Health Insurance Delivery Business Model A LaborManagement Initiative to Manage Car

1
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
2
Background Jointly Administered Health Plans in
the Retail Food Industry

• 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

3
The Current Health Plan Business Model is Flawed

• 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

4
A Vision of a New Health Plan Delivery Business
Model

• 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

5
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
Quality
Quality

• Complication and mortality rates often vary 200
  400
• Service fees and charges often vary by 50

Myth 2 Plan members think quality is
proportional to cost
Fact
Data proves quality cost
Quality
Quality
Cost
Cost
Source UFCW Working Group Health Plan of the
Future
6
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
7
Is the Information Technology to Support Quality
Care Decisions Available?

• Private Sector Platforms
• Health Care Purchasers Leapfrog Group
• Non-Profits NCQA JCAHO
• Medicare www.hospitalcompare.hhs.gov

8
Cost Analysis by Quality Ranking Salt Lake City,
Utah Area Hospitals
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 48.3
Source HealthShare Technology
9
Cost Analysis by Quality Ranking Salt Lake City,
Utah Area Hospitals
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 53.5
Source HealthShare Technology
10
Will Plan Participants Accept Direction on
Health Care Decisions?
Source HSC Community Tracking Study Household
Survey, 2001 and 2003
11
Cost Savings PotentialMedical Delivery
Efficiencies
Low est. Medium est.
High est.
shallow end
Source Mercer Business Roundtable Study
12
How Federal and State Governments Can Support A
Quality-Driven Health Insurance Business Model

• 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 21st 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