Bringing Price Transparency to Healthcare

Pathways to Leadership Series

August 26, 2014

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Agenda

• Housekeeping• Speaker Introductions• Presentation• Q&A• Conclusion

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Speakers

Bill Kramer

Executive Director, National Health Policy

Pacific Business Group on Health

San Francisco, Calif.

Robert Shapiro

Chief Financial Officer

North Shore — LIJ Health System

Long Island, N.Y.

Brodie Dychinco

Vice President of Strategy

HealthSparq

Portland, Oregon

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Bill Kramer leads PBGH’s work to advance policy in ways that improve healthcare quality and reduce costs. Bill also serves as Project Director for the Consumer Purchaser Alliance, and on the National Quality Forum Board of Directors, the National Priorities Partnership, the Measure Applications Partnership Coordinating Committee, and the AQA Alliance Steering Group.

Prior to joining PBGH in 2010, Bill led his own consulting practice in which he provided policy analysis and guidance on health reform. Bill was a senior executive with Kaiser Permanente for over 20 years and holds an MBA from the Stanford Graduate School of Business and a Bachelor of Arts from Harvard.

Bill KramerExecutive Director, National Health Policy

Pacific Business Group on Health

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Bob Shapiro has been CFO since August 2000 and oversees financial affairs, treasury, budget and strategic planning, among other functions for North Shore — Long Island Jewish Health System.

Prior to becoming CFO, he was VP Operations/Assistant Administrator. Bob began his career as a senior accountant with Blue Cross Blue Shield of Greater New York in the 1970s. He is an adjunct professor at Hofstra University in Hempstead, N.Y., where he teaches a graduate-level course in health systems finance. He is also a fellow of the Healthcare Financial Management Association.

Robert ShapiroChief Financial Officer, North Shore-LIJ

Health System

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Brodie Dychinco is the Vice President of Strategy for HealthSparq, a consumer transparency business of Cambia Health Solutions. Mr. Dychinco is particularly interested in helping to make choosing health care providers and treatment options more understandable, enabling consumers to take charge of their health.

Mr. Dychinco's efforts were recognized by the Blue Cross and Blue Shield Association in September 2012 with a "Best of Blue" award. His contributions in setting a national transparency standard and roadmap for the Blues, as well as his insight to health plans implementing transparency solutions, earned him the honor of being only the 12th recipient of the Guffey award.

Brodie DychincoVice President of Strategy, HealthSparq

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The Transparency Imperative

Who is the Pacific Business Group on Health?

©PBGH 2011 8

What Purchasers are Looking for:a Full Picture of a Provider’s Performance

Quality + Price = Value

• Clinical outcomes

• Patient-reported outcomes and experience

• Appropriateness based on guidelines

• Total cost of care

Requirements:

• Willingness to share data

• Ability to combine standardized data from different sources

©PBGH 2011 9

The Patients’ Perspective

Patients have

a fundamental right to know

about the quality and cost

of the care they receive.

©PBGH 2011 10

Price Transparency

What it is (or could be):

• A tool for payers, purchasers (employers) and policy-makers

• (Maybe) – a tool for consumers

• A key building block in containing overall health care costs by enhancing healthy competition on price and quality

What it isn’t:

• Publication of hospital or physician “charges”

• The solution to all our problems

©PBGH 2011 11

Price Transparency

Price information should:

• Reflect negotiated discounts

• Include all costs associated with a

service or services

• Identify the consumer’s out-of-

pocket costs

©PBGH 2011 12

Audience(s) Types of Price Information Needed Example

Purchasers/

Payers

The total price of individual

tests and procedures

Price of a routine

colonoscopy for use in

reference pricing

Purchasers/

Payers

The total price of bundled

services

Price for a joint replacement

for use in reference pricing

and Centers of Excellence

contracting

Purchasers/

Payers

The total price of care for

patients with certain clinical

conditions

Price of managing a patient

with diabetes

Consumers,

Providers

Out-of-pocket price to

consumers

Price of an office visit, test or

procedure

Policymakers /

Regulators

Trends in prices within and

across geographies and payer

type

Bundled price of a spinal

surgery

Uses of Price Transparency

Poll Question #1

Which group do you think is applying the most pressure for price transparency?

• Payers

• Patients/Consumers

• Advocacy Groups

• Government/Policymakers

• Providers

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©PBGH 2011 14

Using Price Transparency in

Value-Based Benefit Design

• Set a payment threshold or “reference price” for certain elective procedures

• Patient can choose any provider, but pays full amount above reference price

©PBGH 2013 15

CalPERS: applying the concept

to hip/knee replacements

• Prices varied from $15,000 to $110,000 (commercial PPO population)

• Anthem Blue Cross and CalPERS established a reference price.

• Results:• Increased volume of procedures at

low-cost hospitals by ~7%• Amount paid per surgery ~26% lower

in pilot

©PBGH 2011 16

Safeway: applying the concept

to colonoscopies

• Prices ranged from $887 to $7,245 – an 8x variation – with no apparent differences in quality.

• Use of reference price encouraged patients to use more efficient providers.

©PBGH 2011 17

Range of Prices for Colonoscopies

Cost Per Procedure – SF Bay Area MSA

$887

$916

$925

$932

$965

$981

$1,0

15

$1,1

10

$1,1

69

$1,2

49

$1,4

28

$1,4

63

$1,5

30

$1,5

35

$1,6

42

$1,6

43

$1,7

13

$1,7

21

$1,7

28

$1,9

63

$1,9

94

$2,0

99

$2,3

09

$2,3

20

$2,4

51

$2,7

71

$2,8

16

$2,8

76

$2,8

81

$2,9

87

$3,0

13

$3,0

39

$3,0

49

$3,2

71

$3,3

01

$3,3

18

$3,3

33

$3,3

67

$3,6

47

$3,7

69

$3,7

93

$4,5

18

$4,5

76 $

5,5

96

$5,6

82

$5,7

34

$7,2

45

A B C D E F G H

I J K L M N O P Q R S T U V W X Y Z

AA

BB

CC

DD

EE

FF

GG

HH II

JJ

KK

LL

MM

NN

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PP

QQ

RR

SS

TT

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Room & Supplies Professional Medications Diagnostics

Diagnostic Colonoscopy Providers

©PBGH 2011 18

Policies to Advance Transparency

Prohibit gag clauses

Require participation in all-payer databases; provide funding

Allow “qualified entities” to sell data and analyses

Standardize measures of cost and quality

©PBGH 2011 19

Why providers should start nowConsumer expectations

Purchaser expectations

High-value providers will be

the winners – increased

volume

About North Shore-LIJ

• 17 facilities

• 4,507 beds

• 673,524 ED visits

• 254,700+ inpatient admissions

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$17M

$150M

Drivers of Transparency at North Shore-LIJ

1. New York Public Health Law,passed in 2002

2. Large Uninsured Population

3. Increased Patient Financial Responsibility

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Strategy 1: Call Center

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Created collection agency to reduce costs imposed by third-party agencies

Segregated 3rd-party billing and integrated self-pay billing

Led to a call center very familiar with the uninsured—an evolution from a collection agency to a help center.

Strategy 1: Call Center

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Best Practices

Form unit for patients with financial assistance policy

Follow script to ensure consistent communication,

Aggregate functions with regard to payment and

billing

Strategy 2: Patient Tools

• Patient Financial Assistance Programs

• “Understand Your Bill”

• Make a Payment

• Hospital Insurance Plans

• Estimate Your Personal Expense – Calculator

• Submit an Insurance Claim

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Tools on NorthShoreLIJ.com

Spotlight On: Cost Estimator

Patients care about what they can expect to pay out of pocket.

The estimates arepresented as ranges rather than a single number.

Next step: Bundling related procedures often done in tandem

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Why Our Patient Tools Work

We’ve expanded the call center to handle questions about the price estimator.

The rundown includes what insurance coverage is expected to pay and what the deductible is expected to be.

The financial assistance phone number is available when an estimate is not available via the web-based tool.

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North Shore-LIJ

has received

10,000inquiries about

price.

Next Steps for LIJ

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Address government

requirements to post

chargemaster

Competitive Pricing

Move to complete

price transparency

in 5 years

A movement to empower consumers

with interactive tools and information so

that they can choose providers and

treatment options in a more informed,

convenient, and value-driven way.

What is transparency?

Affordable care options exist todayShoulder arthroscopy

In Dallas

$3,000

to

$26,000

In Seattle

$2,000

to

$18,000

In Boston

$4,000

to

$22,000

50%

Lower Cost

Hig

he

r Q

ua

lity A

dh

ere

nc

e

No correlation between cost and quality

web-

based

tools

Where can we go for answers?

wellness

initiatives

health

assessment

DM

programs

Are we ready for Health-azon?

The information consumers value

costquality

convenience social

Poll Question #2

How often do YOU (as a patient) inquire/educate yourself about cost before receiving or seeking medical treatment or care?

• Never

• Rarely

• Sometimes

• Often

• Every time

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Shopping tools do work…

Gallbladder Removal

Inpatient Outpatient Surgical

$19,102 $11,107 $6,360

Cost Estimator users choose

Non-users choose

Average Cost

Least expensiveMost expensive

41% 55%

10% 70% 20%

4%

(2 year period of regional health plan’s claims history)

… when they are used

Inpatient Outpatient Surgical

$19,102 $11,107 $6,360Average Cost

Least expensiveMost expensive

$10,319Average Cost for Cost Estimator users

$14,195Average Cost for Non-users

Gallbladder Removal

(2 year period of regional health plan’s claims history)

Proactive campaigns

Analysis and engagement

Conveniences

Take engagement and design to the next level

Q&A

Bill Kramer

Executive Director, National Health Policy

Pacific Business Group on Health

San Francisco, Calif.

Robert Shapiro

Chief Financial Officer

North Shore — LIJ Health System

Long Island, N.Y.

Brodie Dychinco

Vice President of Strategy

HealthSparq

Portland, Oregon

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