excess utilization and the employer revolt

Brian Klepper, PhD ConvUrgentCare Strategy Symposium, Orlando

Excess Utilization and the Employer

Revolt

ConvUrgent CareStrategy Symposium

Orlando1/24/12

Brian Klepper, PhD


Mis-Aligned IncentivesWhen an employer sits down with his health care relationships – broker, health plan, doctor, hospital, drug and device company – everyone else in the room wants health care to cost more, and they’re all positioned to make that happen.

Lynn Jennings, CEOWeCare TLC, LLC


Unrelenting Health Care Cost Growth

and the Potential

forStructural

Failure


Average Annual Health Insurance Premiums and Worker Contributions for Family Coverage, 2009-2011

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2009-2011.

$13,375 $13,770$15,073

$9,860 $9,773 $10,944

$3,515 $3,997$4,129

2009 2010 2011

Worker ContributionEmployer Contribution


Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings, 1999-2011

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2011; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2011 (April to April).

Premium has grown 4x inflation for more than a decade.


11/11/11 – Gallup/Healthways Survey of 90,000 American Adults

5% Drop in Employer Coverage 3 Years


Health Care’s Growing Burden on Federal Budget Crowds Out Other Needs, Like Education and

Infrastructure Replacement


Here’s Health Care’s Percentage of the Larger Economy Over Time


An Inconvenient Truth


Unnecessary/Inappropriate Care & Cost

“Our research found that wasteful spending in the health system has been calculated at up to $1.2 trillion of the $2.2 trillion (54.5%) spent in the United States.

[R]edundant, inappropriate or unnecessary tests and procedures [were] identified as the biggest area of excess, followed by inefficient healthcare administration and the cost of care necessitated by conditions such as obesity, which can be considered preventable by lifestyle changes.”

The Price of ExcessPricewaterhouseCoopers, 2008


Perspective

• Congressional Super Committee was charged with identifying/saving $1.2 trillion over 10 years. (They failed.)

• In 2012 dollars, 54.5% of health care spending providing no value would equal almost $1.5 trillion annually.


Health Care’s Excesses Threaten the Stability of Our Industry and the Larger US Economy

The Inescapable Conclusion


Health Industry Lobbying & The AMA’s RUC

Regulatory Capture


Lobbying & Health Care Policy

"A person can reach no other conclusion than this is a quid pro quo [this for that] activity.“

Lobbyist for Public Citizen

• In 2009 (during the reform proceedings), health care organizations spent $1.3 billion to lobby Congress.*

• 3,330 lobbyists participated: 6 for every member of Congress.*

This means policy is developed to favor the special rather than the public interest.

*Open Secrets. The Center for Responsive Politics


By Design: The AMA’s RUC and Payment

• Relative Value Scale Update Committee (RUC)

• Voluntary, Sole Advisors to CMS on Medical

• 29 Physicians - 27 Specialists And 2 PCPs

• CMS’ Sole Advisors On Medical Services Valuation

• Commercial Health Plans Follow Medicare’s Payment Lead

• Secret Proceedings, Sham Survey Methods, Composition Unrepresentative of Physicians in Market, Financially Conflicted

• CMS Has Historically Accepted 90+% Of Recommendations


Real World Impacts of RUC Influence

• Over-values specialty services while under-valuing PC

• Inhibits PC’s moderating influence and accountability function over specialty services.

• Creates systemic incentives to perform more services, and more expensive services. (Specialists “practicing to the codes.”)

• Payment disparities between PC and specialties. Crisis-level PC shortage now.


Payment Disparities

• Compare Primary Care Office Visit (99214) and Cataract Extraction with Intra-Ocular Lens Implant

• 99214 – 25 Minutes and 3 Different Problems. Could be anything. Palette is all medical knowledge. Medicare pays $111.36

• Cataract Extraction & Intra-Ocular Lens Implant – 15 minutes. Restores sight! 50 year old procedure. Very low risk. Handled repetitively, factory-style. Medicare pays $836.36.

• Hourly rate of Ophthalmologist pay is 12.5x PCP pay.

• PCP’s job is arguably more complex/challenging.

Klepper & Kibbe, Rethinking the Value of Medical Services, Health Affairs Blog, 8/1/11.

http://healthaffairs.org/blog/2011/08/01/rethinking-the-value-of-medical-services/


Pt. Volumes – Primary vs. Specialty Care

• Typical 2012 Established Primary Care Office Visit Duration = 7.5-12 min.

• 30 Years Ago, It Was 20-25

• PCPs Paid By Visit, So Refer Many Time-Consuming Problems

•Most Specialists Profit From Procedures

• Result: Huge Increases in Specialty Visits, OutPt. Diagnostics, Procedures


Procedural Volumes

• Lucrative Procedures Encourage Specialists To “Practice to the Codes.”

• Physicians Who Own Advanced Imagers Order Them Up To 6x More Than Those Who Don’t

• Stents Are No More Effective Than “Optimal Drug Therapy” and Lifestyle Changes, and They Introduce Significant Risk/Cost. Medicare Spends $1.6 billion annually on Drug-Eluting stents.

• Endless Examples of Unnecessary/Inappropriate Procedures, Encouraged By Payment


Health Plans & Primary Care

Question

If More Empowered Primary Care Is Proven To Save Money, Why Don’t Health Plans Pay PCPs To Practice That Way?


Winners & Losers

• Winners• Nearly Everyone in the Health Industry (Except

Primary Care)

• Losers• Patients – Unnecessary Care and Risk

• Purchasers (Employers, Taxpayers, Individuals) – Immense Unnecessary Cost

• Primary Care Physicians


Major Health Care Structural Flaws

• Fee-For-Service Reimbursement

• Lack of Pricing/Quality/Safety Transparency

• Subjugation of Primary Care


Will Employers Save Us?


The Prospects Aren’t Good

• They Haven’t Meaningfully Mobilized To Date

• Health Benefits Costs Seen As An HR Rather Than A Risk/Liability Management Function. Many Seem Resigned.

• As We Saw Before, Those Who Can Are Fleeing

• Appears To Be No Larger Sense of Enlightened Self-Interest


The Employer’s Dilemma

“We decided to stop letting the providers take advantage of us.”

Jane WolfeBenefits Manager

Fairfield ManufacturingLafayette, IN


Collaboration in Lafayette, IN

• Relatively small community with high concentration of mid-sized/large employers (e.g., Subaru factory, Purdue University).

• 2nd highest health care costs in IN

• Employers came together 6 years ago, pursued clinics, changed the market.

• This can work anywhere.


Market-Based Reforms

Over the past 20 years, employers (& health plans) have:

• Significantly increased copays for “steerage.”• Introduced generic drugs and mail-order.• Introduced Wellness, DM, Lifestyle Coaching• Introduced Incentives• Renegotiated network discounts.• Given employees “more skin in the game.”


Market-Based Reforms

But over the past 20 years, we mostly haven’t:

Managed the care process, like businesses would.


Market-Based Approaches That Work• Empowering Primary Care

• Large Case Management

• Dynamic Pricing

• Data Collaboratives

• Medical Destinations

• New Technologies (e.g., Minimally Invasive Procedures, Genomics)

• Incentives/Patient Engagement

• Rx Step Therapies

• Lifestyle Management/Obesity Step Therapies

• Employer Leadership


Some Case Studies

• Lowes & Cleveland Clinic for Cardiac Surgeries

• Pepsico & Johns Hopkins –

•Hannaford Grocers & Singapore Hospital

• Intel & Providence Health

• CalPERS, BSC, Hill and Catholic HC West


Effective Onsite/Near-site Clinic Characteristics

• Outside FFS, So No Financial Conflicts, Incentive is for Appropriateness

• Comprehensive Medical Management Platforms That Incorporate Other Key Mgmt Approaches and Influence Care Throughout The Continuum.

• Strong Incentives For Participation. Free Visits, Drugs, Labs. Capture Them, Engage Them, So You Can Manage Anywhere In The System.

• Provable, Significant Savings. Based on hard data, not soft, productivity estimates.


Onsite/Nearsite Clinics – Financial Impact


Onsite/Nearsite Clinics – Competitive Advantage

Savings Grow Over Time, and Create

Competitive Advantage

Illustrative Only


Acting In All Our Interests

Health Care Organizations Comprise 1/6 of the US Economy and 1/10 of Our Jobs.

Only One Group is Larger, With the Influence to Overpower Health Care in Policy:

The Non-Health Care Business Community


What Employers Must Do• Re-Assess Your Health Care Relationships. Stop Assuming That

Health Care Organizations Put Your Interests First

• Follow The Evidence. Institute Value-Based Approaches That Are Proven To Reduce Cost While Improving Quality/Population Health Status

• Collaborate With Other Employers on Health Management Approaches That Work So That You Change The Market.

• Advocate. With Other Employers, Pressure Policy Makers To Develop Health Policies That Are In The Interests of You, Your Employees and Their Families.

Payment Reform Is Paramount!


Brian R. Klepper, PhDis a health care analyst, industry advisor and commentator. He is Chief Development Officer for WeCare TLC, LLC, an onsite primary care clinic and medical management firm based in Longwood, FL and Managing Principal of Healthcare Performance Inc., a consulting practice based in Atlantic Beach, FL. An active author and speaker, Dr. Klepper has provided health care commentary to CBS Evening News, the Wall Street Journal, the New York Times, and the Washington Post. He has published articles on Kaiser Health News, Medscape, Healthleaders, The New England Journal of Medicine, Modern Healthcare, Business Insurance and newspapers nationally.

In December 2010, he founded and now edits Care & Cost, an online professional health care magazine and forum. In February 2011, he founded Replace the RUC!, an effort focused on the most important driver of inappropriate health care cost. He is a regular columnist on the Health Affairs Blog, and other expert health care blogs.

Brian is a Committee Chair on the recently convened American Academy of Family Physicians’ Primary Care Services Valuation Task Force, and a reviewer for Health Affairs and The Journal of Ambulatory Care Management. He serves on the Boards of the Lundberg Institute and the Consortium for Southeast Hypertension Control (COSEHC), dedicated to translational medicine for vascular disease. He is an Advisor to the Patient-Centered Primary Care Collaborative, which advocates for medical homes, and the Center for Value Health Innovation, which helps business identify and implement approaches that have been proven to improve quality and safety while reducing cost.

Contact Brian at 904.343.2921, [email protected].

http://www.wecaretlc.com/

http://www.careandcost.com/

http://www.replacetheruc.org/

http://healthaffairs.org/blog/

http://www.aafp.org/online/en/home/publications/news/news-now/practice-professional-issues/20110720pcvaluetaskforce.html

http://thelundberginstitute.melindaroberts.net/

http://www.cosehc.org/

http://www.pcpcc.net/leadership

http://www.vbhealth.org/

mailto:[email protected]

excess utilization and the employer revolt

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