understanding and managing health care risk€¦ · patrick getzen vice president and chief actuary...
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Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. U8119a, 3/12
Understanding And Managing Health Care Risk Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina
BlueCross BlueShield of North Carolina
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BlueCross BlueShield of North Carolina
Largest health insurer in North Carolina and one of the 25 largest health insurers in the nation – over 4,000 employees serving over 3.6 million customers
Serving customers since 1933 Commitment to quality and patient satisfaction Commitment to community services - BCBSNC
Foundation invested almost $70 million in local communities in 2010
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+ Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2009
12.0%
18.0%
14.0%
8.5%
0.8%
5.3%*
8.2%*
10.9%*
12.9%*
11.2%*
9.2%*
7.70%
6.10% 5% 5%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%Health Insurance Premiums
Overall Inflation
Workers Earnings
We Have An Unsustainable Cost Model
•Estimate is statistically different from the previous year shown at p<0.05. No statistical tests were conducted for years prior to 1999. •Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988, 1989, 1990; Bureau of Labor Statistics, Consumer Price Index (U.S. City Average of Annual Inflation (April to April), 1988-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April), 1988-2009.
Component of Premium Increases
Factor Amount 1. Cost per Unit (similar to M-CPI) 3.0% 2. Utilization 0.5% 3. Intensity 0.5% 4. Aging 1.5% 5. Leveraging 2.0% 6. Selection 1.0% 7. Administration 0.5% 8. Total 9.0%
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+ Growth
+ Administration Cost Restructuring
+ Medical Expense Reduction
+ Diversification
+ Re-Engineering
+ Prepare Our People
Blue Cross Blue Shield of North Carolina Strategies
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+ Administrative Cost Goal
+ Shared Services
+ 2014 +
Expense Management
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Blue Cross Blue Shield of North Carolina’s Premium Dollar
Income Taxes Insurer Profits
Operating / Adminstrative Expenses Medical Costs
*BCBSNC 2011 data, excluding self-funded business.
85¢
12¢ 2¢ 1¢
+ Risk Management
▪ Data ▪ Medical Underwriting ▪ Integrated Systems
Current Strategies – Risk Management
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+ Network Discounts
+ Value-Based Contracting
Medical Expense Management - Costs
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Comparison of Networks
In-network
In-network
PPO:
Tiered:
Low-Cost:
Tier 1
OON
OON
OON
In-network
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+ Corporate Strategy
▪ To reduce medical cost while improving quality
▪ Manage allowed trend
Medical Expense Management - Use
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+ Patient-Centered Medical Home (PCMH) ▪ An NCQA program that recognizes practices that integrate patients as
active participants in their own healthcare. Patients are cared for by a physician who coordinates all aspects of patient needs using the best available evidence and appropriate technology.
+ Physician Practice Connections (PPC) ▪ An NCQA program that recognizes practices that use systematic
processes and information technology to enhance the quality of patient care. Meeting PPC standards shows practices have established connections to information, patients and other providers.
Medical Expense Management - Use
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+ PCMHs patients had 17.5% fewer ER visits and 13% fewer inpatient admissions
Medical Expense Management - Use
PCMH Impacts Per 1,000
ER Visits
Non-PCMH 154
PCMH 127
Inpatient Admissions
Non-PCMH 31
PCMH 27
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+ Traditionally focused on discounts and rebates
+ Generic use
Current Strategies - Pharmacy
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Changing Market Dynamics
Percent of Pharmacy Spend by Drug Type
Source: Prime Therapeutics, LLC, data and competitor drug trend reports, 2011
Specialty pharmacy cost may
soon exceed that
of brand-name drugs
▪ Collaborative Relationship
and goals
▪ Value to Stakeholders
▪ Annual gainshare and independent post program evaluation
Provider Collaboration – Carolina Advanced Health
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CAH Group Matched Control Group
Patient
Provider Payer
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+ Affordable Care Act is a game changer
+ Likely results
+ New consumers
+ A need to do things differently
Where Are We Going?
• Good relationships with regulators (state and federal)
• Competitive Pricing
• Outstanding Customer Service
What Will We Need Post Reform?
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• Best In Class Analytics
• Sales analytics / Market segmentation • Risk analytics
• Care management analytics
What Will We Need Post Reform?
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New Consumers
Persona Name Notes
Joe
• 41 years-old, rarely gets sick and goes to the doctor only when necessary. • Employed, but the small company he works for doesn’t offer insurance. • Could afford coverage on his own, but he doesn’t think it is worth the money. • Realizes he’s at financial risk if a major health event occurs, but he thinks health insurance costs too much. • Shops around for the lowest price on just about everything.
Linda
• 28 years-old, and doesn’t currently have health insurance. • Husband is employed, but the company doesn’t subsidize insurance for spouses. • Generally healthy and uses retail clinics or the emergency room for health care. • Likes to get the most for her money – she clips coupons and takes advantage of online deals.
Vanessa
• 35 years-old, starting her own business and does not have health coverage yet. • Wants clear communication about health care and insurance and wants to be able to compare and make good decisions. • Her biggest priorities are price, good information, and help making health care choices. So far, all her choices just seem expensive.
Adrian
• 30 years-old and does not currently have health insurance. • Self-employed and willing to buy insurance, but he hasn’t found a company that offers what he’s looking for in terms of coverage. • Wants good information about health, cost and quality that he can use to make his own decisions about what kind of care he receives. • Researches all his purchases online and likes third-party research and reviews.
• These personas represent the thousands of new individuals shopping for health insurance coverage by 2014. They are generally healthy, don’t have strong ties to health care providers, and don’t see value in traditional insurance products
• They’re looking to spend less and get more value for their money, and make informed decisions about their own health.
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New Consumers
Persona Name What the customer values in a health insurance plan
Joe
Linda
Vanessa
Adrian
Traditional Customers
Price Information Service Access
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Price Information Service Access
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Price Information Service Access
Brand
Ancillary
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
• The new customers are far more price-sensitive than existing customers, and they place far less value on access to providers.
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+ What is it? ▪ Using different data
– How much, what kinds? ▪ Using different algorithms
+ What is it not? ▪ Not compromising our ethics ▪ Not breach of confidence ▪ Irrelevant data ▪ Algorithms that do not drive value
Health Insights
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+ How is this being used elsewhere? + How Can It Be Used in the Health Care space?
+ What if the ACA were repealed?
Health Insights
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The future is closer than you think...
Health Insights
Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. U8119a, 3/12
Current and Future State of Analytics: Implications for Provider Organizations May 10, 2012
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Agenda • Methodology • Environment • Findings • Implications for Provider Organizations
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Methodology • Interviews with health care thought leaders (CIO,
CMIO, CMO, CEO) • Distilled feedback • Authored white paper sponsored by SAS
Institute
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Interview Cohort Profile
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$50B of Thought Leadership
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Research Triangle
FORCES
IMPERATIVES RESPONSES
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Research Triangle
FORCES
Austerity Regulation Technology Demography Safety/Quality
IMPERATIVES RESPONSES
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Research Triangle
IMPERATIVES RESPONSES
Consolidation/Scalability Quality/Safety “Volume to Value” Population Health New Payment/Business Models Advanced Decision Support Lean Production
FORCES
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Physician Alignment New payment model pilots Focus on clinical integration RT/Predictive Analytics Distributed Analytics “Strange bedfellows”
IMPERATIVES
FORCES
RESPONSES
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Environmental Assessment
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Strange Bedfellows
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Questions • What keeps you up at night? • What are your top 3-5 strategic priorities (next 18-24 months)
and level of readiness or preparedness for them? • How do you define analytics? • Do you see a need for analytics changing over the next five
years? • Of the data that informs decisions, how much is retrospective
and how much is real time? Do you see opportunities for using data to make predictive decisions about care, consumption, or spending?
• How are you viewing your organizational structure relative to health reform, and how, if at all, will that change over the next five years?
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Top Leadership Priorities • Source-system integration
• “Following the patient”
• Patient safety at the forefront
• Payment and delivery reform: both driven by regulation and market forces • “Measured Care”
• “Shared Accountability”
• The population paradigm – Joslin Diabetes Center
• Productivity and cost
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“Defining” Analytics • Taking individual points of data and being able to look for or identify
patterns and trends that are of significance • Systems that present data in aggregate against models,
expectations, trend lines and exception reports in order to identify opportunities for improvement, systematic issues
• Runs table from simple table production to complicated statistic analysis
• Measure what matters • Build algorithms based on learning experience and respond to
different perspectives of data
• Beyond information and into knowledge, and hopefully wisdoms to the C-suite
• Tools to derive meaningful information 40
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Tiers of Analytics: Dr. Shultz’s* View
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LEVEL II Multi-dimensional
Analysis
LEVEL I Ad Hoc Data Queries
Intersections between disease groups, locations, clinicians. Historical + real time. Middle managers
Detecting variations of care, behavior, and outcomes. Real time + predictive. Mathemeticians and statisticians (“gearheads”)
Pull summary totals, i.e. number of diabetics in a certain period. Recurring reports, historical. Front-line staff
LEVEL III Expected vs. Observed
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* Director of Information Technology Integration at Vanderbilt University Medical Center
Convergence: Clinical/Financial Integration • Holy grail
• Desire for “one pipe”, “one source”-for clinical, admin, financial data
• Not only about adoption of EHR, but the deeper, richer use of EHR
• Risk contracting/bundles expediting convergence
• Moving from operational performance improvement, to integration of a continuum, to managing populations
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Triple Aim • “Analytics is the future: information is the tradable
commodity”
• Cost and quality are no longer a separate parts of the equation
• Shifting from widgets/units of care to desired outcomes
• Health care overbuilt, need to reduce costs, duplication: must gain efficiencies and increases virtualization
• Revenue centers will now become cost centers
• ABC is top of mind
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User Interface • Physicians
• “We recognize that for us to help motivate physicians to change, we are going to need information to make a compelling case. We do not tell doctors what to do, we show them what they are doing. Analytics is the hallmark of how we manage physicians.” -Dr. Simeon Schwartz, President and CEO WESTMED
• Leadership • Beginning to want more and newer types of information
• This is no longer an “IT project”
• Desire to build data driven organizations
• Bedside • Need to enable information on the fly
Must be nimble and adaptive
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Organizational Impact of Analytics • Impacting job roles
• CIOs: from order takers, to facilitators, to innovators
• The Burgeoning CMIO: from “techno-doc” to legitimate differentiator in practice of medicine
• Focused Factories • Hopkins Armstrong Institute – Peter Pronovost, M.D.
• Enterprise analytics team-building one source of truth for the entire organization when it comes to data mining
• Ramping hiring • Directors of analytics
• Increased analysts
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Revenue Reality • “Sawing limbs, not trimming leaves”
-Rick Schooler, CIO Orlando Health
• Capitation, global payment, bundled payment
• Organizations bullish on changing payments are aggressive in pursuit of data and analytics to drive change
• “Reality tells us we will have to be at 80% of Medicare” -George Conklin, CIO Christus Health
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Aging of Data
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Retrospective
Real Time
Predictive
• 95% historic-5% Current and less than 1% predictive
• All the good stuff is at least 6 months old
• Good for problem identification
• The real time dashboards are the ones that mean something
• Real time becoming more dominant
• Retro + Real: Use Case of VAP
• What can predictive modeling nail: readmissions regardless of disease state, transactional
• Predictive models are all short because a lack of clinical data
• Use Case: making a choice between stent, drugs, device, etc. and being able to show someone outcomes and costs
Next Frontier: Big Data • Genomics • NLP • Social media • EHR depth
• Biggest challenge is learning from and utilizing information generated
• Big data in health care is NOT big data compared to other industries
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Headwinds • Near term attention focused on:
• Health reform
• Core systems
• Meaningful Use
• Integration
• Other regulations: ICD-10, HIPAA 5010, etc.
• Analytics has currency, though it is competing for mind and wallet share
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Timing for Analytics to Take Hold
>3 WINDOW
<7 Handful of “mad scientists in analytics” Market still very immature, needs vision
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Implications • Investments in analytics are increasing • Application of analytics in provider organizations
is embryonic • Source data quality and integrity is critical • Payment model redesign is a major driver
• Population health is a new paradigm • Cost is very important
• Human capital: analytics IQ needs to increase 51
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Thank You
Don McDaniel 443.904.2882
A link to the research
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