SIHO Insurance Services

Employer & Provider Partnerships
…Balancing the needs of all constituents
Employers
Providers
Strictly Private and Confidential
DRAFT
February 20th 2014
Umar Farooq
Jay Fischer
Tom Witkowski
-
Vice President, Operations
Vice President, Health Systems Development
Director, Network Contracting
About SIHO
• Provider-sponsored health
plan
• Founded in 1987, by a
fortune 100 employer, local
hospitals and local
physicians
• 100,000+ members
• Not-for-profit
Niche
• Community Based
Healthcare Delivery
• Hospital TPA
Administration
2
SIHO Operations
™ TPA and Small Group FI
ƒ Sophisticated IT with Regional Flexibility
™ Private Label Services
™ Proprietary Provider Network - 28,000 Providers
™ In - House Medical Management
™ Multiple Geographic offices
™ Deploy Resources in Partner Communities
™ Partnering with providers in Kentucky and Illinois
3
Changing Marketplace
•
Commercial and Governments Payors Squeezing Traditional
Reimbursement
o At same time, moving towards P4P
o Hospitals restructuring to improve efficiency
•
Recession and HDHP Reducing Utilization
•
Disruptive Innovators – Employer Clinics, Minute Clinics, National
Carve-Outs, Transparency Tools
•
Drive to Clinical Integration and Pop Health demands heavy IT
investments, HIE’s, Physician Engagement
4
Market Demands
™ Employer’s Want…
o
o
o
o
o
o
Reduced healthcare spending
Recruitment & Retention of Employees
More healthcare for less!
To re-deploy excessive healthcare spending into core competency
Reduction in duplicative care
Improved coordination of care
• In extreme emergency, the delivery system functions highly efficiently.
Until discharge, all the pieces work in concert.
• How do we extend the urgency to chronic disease and
mid-level diagnoses.
™ Provider’s Want…
o
o
o
o
o
o
o
To stay competitive, relevant
Be the best: locally, regionally, & nationally
Improve patient health status and quality of care
Reduce the cost of care
Prevent outmigration of local services
Foster direct partnerships with employers thru trusted intermediaries
Maintain margins, for ongoing operations
5
History of Managed Care…to fulfill employer needs
•‘The Baylor Plan’
•Transitional
market
environment
•Pre-paid
hospitalizations
benefit plan for
school teachers
Hospital Executives
noticed unpaid bills
accumulated by
local educators
were burden to
hospital finances
1929 Baylor
University Hospital
(Dallas, TX)
Migrated towards
‘free choice of
physicians and
hospitals’
Earliest plans tied
benefits to a single
hospital
•Narrow Network
Plans – 1929!
*Congressional Research Service: The Market Structure of Health Insurance Industry
(CRS Report to Congress)
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Employers Seek Bundled Payment Programs
National healthcare entities entering
local markets
Mayo & Cleveland Clinic – Lowe’s &
Wal-Mart – Cardiac
Direct self-funded plan carve-outs,
incentivize plan sponsors and members
to seek care with contracted vendor
Disrupts local delivery, playing field
leveled
“Local providers adapt to market
demands”
Local Accountable Care Organization
develops carve out programs for cardiac
and orthopedic
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National Carve-Outs
Cleveland, OH
CARDIAC
Rochester, MN
Jacksonville, FL
TRANSPLANT/CARDIAC
Irvine, CA
Irvine, CA
ORTHOPEDIC
ORTHOPEDIC
Greenville, SC
DIABETES
Baltimore, MD
TRANSPLANT/CARDIAC
Patient care is moving out of the hospital
towards lower cost settings
E-Visit
$39.00
Retail Clinic
$76.00
Physician Visit
$120.00
Urgent Care
$121.00
Emergency Room
$499.00
Healthcare will continue to
move out of hospital and
physician offices. More care
will be delivered via nontraditional channels at a
lower cost.
Hospital merger and acquisition activity has increased
nearly 50 % since 2009, reaching its highest point in the last 10 years.
100
90
80
70
60
50
40
30
20
10
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
As a result of payment reforms, the burden of risk is
being shifted from the payor to the provider
RISK
Health Reform is Changing the Health Delivery System
The OLD
The NEW
Payors
Patients
Primary Care
Physicians
Facilities
Specialists
Fee for Service:
Driven by volume
Specialists
Population Health:
Driven by efficiency
and outcomes
Primary Care
Physicians
Patients
Current Delivery System
Provider and Payor
Price Decreases
Increase Volume
Quality Assurance
Disjointed Agreements
Specialists
Payors
Characteristic
<--<--<--<--<--<---
Facilities
Focus
Goal
Financial Focus
Quality
Contracting
Physician Focus
Future Delivery System
--->
--->
--->
--->
--->
--->
Patient
Decrease Population Costs
Locate Savings and Efficiencies
Quality Driven Payment
One Integrated Contract
Primary Care Physicians
How Providers & Payers are Adapting
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Providers beginning to take on a new risk:
becoming a provider sponsored health plan
•
About 1 in 8 hospitals operated a health plan in 2011, according to American Hospital
Association data
•
Most of these plans are operated by not-for-profit health systems and by nonacademic systems.
•
Most plans have not expanded beyond the provider’s geographic service area.
•
Many health systems and large practice groups throughout the country are seeking
HMO licenses and offering ASO products to self-insured employers
•
Examples:
™ Catholic Health Initiative – 17 States
™ Detroit Medical Center
™ Piedmont & Wellstone - Georgia
™ Franciscan Alliance – Indianapolis
™ IU Health Plans – Indiana
14
Conversely, Payers are seeking to buy Providers
According to Kaiser Health News, with only the exception of Aetna, four of the five
largest health insurers have increased physicians holdings over the past two years.
Some examples include:
™ Humana years ago sold off its hospitals, but is now buying back providers—
e.g.,urgent care center giant; Concentra, and SeniorBridge Family Companies.
™ Cigna—Care Today in Arizona
™ Anthem/Wellpoint purchased CareMore which employs physicians
™ United Health Groups uptum acquired Monarch Healthcare – 2300 Physician IPA
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Providers are now branching out to areas
beyond their traditional scope.
• “We need to get a piece of the premium that is paid by
employers to insurance companies.”
o Bob Shapiro, North Shore LIJ
™ Looking for transactions that provide managed care infrastructure.
™ Looking for transactions that extend the organization's scope of
care ( i.e. primary -> acute ->post acute).
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Physician groups face high overhead costs and declining reimbursement.
The incentive to work together and share resources is at an all time high.
9000
8000
7000
6000
Physician
Mergers and
Acquisitions
2009 BY
QUARTER
5000
2008 BY
QUARTER
4000
3000
2007 BY
QUARTER
2000
1000
0
17
Health Systems shift focus from high intensity acute care
services to lower level prevention, primary care
Financial Models need to keep in step with shared savings and
incentives to improve quality and outcomes
Current Model
New Model
Prescriptions
14%
Prescriptions
13%
Incentive
Pool
8%
Tertiary Care
30%
Local
Delivery
System
43%
Other Rural
13%
Tertiary Care
26%
Other Rural
8%
Local
Delivery
System
45%
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Provider Solutions
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The role of a strategic payor partner
Value
Support strategic needs of Hospital & Employer partners
Enhance level of local control and communication amongst local
providers & employers
Employers
Establish reasonable targets between employers / providers
Diversify payer-mix, allow for fair market competition
Providers
Support wellness activities, change behavior
Share data, with providers freely! (as legally appropriate)
Empower clinicians to manage Population HEALTH!
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Independent Hospital ACO partners with Local Employers
Attributes
¾ 2 local hospitals form ACO
¾ Includes local employers on
governing board
¾ Enrolls local hospital
employees and will offer to all
employers at renewal
Program Specifics
¾ Value-Based Plan Design
¾ Wellness & Disease
Management
¾ Open Access PCP’s
¾ Narrow Network
¾ Patient Navigators
¾ Narrow tertiary provider
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Critical Access Hospital Partners with Local Employers
Problems
•
Employers increasingly move to
consumer directed health plans
o High-deductible health plans
•
Providers experience higher levels
of uncollectable A/R
o Sell AR at 30 cents / dollar
Solutions
•
•
•
•
Direct managed-care discount
from hospital to employer’s who
allow first-dollar converge for allservices at critical access hospital
Diminishes write-offs specific to
enrolled employer
Decreases outmigration
Increases employee satisfaction
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Clinically Aligned Product Concept
• Hospital Health Plan as initial model for local group
health plans includes comprehensive wellness program
• 3-Tier plan design: clinically integrated network Tier 1
• Self-funded and Fully-insured products
• Promote continuity of care, in-network coordination
• Reduce outmigration, solidify referral patterns
• Captive population for clinical Initiatives
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Fostering Better Outcomes Through Narrow Networks
Tier 1
• Domestic Hospital
• Preferred Tertiary Provider
• Customized Professional
Network
Tier 2
• Rental Network of choice
Tier 3
• Standard out-of-network
plan design
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Participating Organization Benefits
Hospital Benefits
Local Employer Groups
Partner Benefits
• Increases hospital
service revenue
• Increases competitive
position of hospital
• Increases
infrastructure for ACO
• Increases local control
of products
• Increases
relationship/value to
local employers and
municipalities
• Decreases hospital
benefit plan costs
• Increases quality of
life & productivity
• Increases
predictability medical
spend
• Increases ability to
reallocate capital
towards core business
• Decreases absenteeism
• Decreases medical
spend
• Increases market share
from rivals
• Increases value to all
constituents:
providers, employers
and SIHO
• Increases
infrastructure and
relationships with
providers for ACO’s
• Increases ability to
solidify market
position within local
communities
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Employer Clinics:
To take advantage of this opportunity, hospitals may want to consider these steps:
™ Examine the Marketplace:
o Hospitals should determine what the state of employer based clinics and access to
primary care is in their local community
o A key driver in employer interest is lack of primary care access, hospitals can make
their primary care offerings more appealing by ensuring they are geographically
close to employers and employees
™ Build Relationships with Employers
o
o
Hospitals should actively gauge employers interest in worksite clinics
Outreach could potentially lead to access to more commercially insured patients,
which are generally the more desirable, better paying patients.
™ Consider Partnering with a Vendor
o
o
Vendors can offer valuable experience when designing a employer clinic to meet
local community demands.
Hospitals may not be equipped to conduct the sales outreach needed, outside
vendors can be a key component to employer outreach
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Commercial ACO Development & Readiness
Steered Network
Products (using hospital
based network’s)
Employer Clinics
Patient Centered
Medical Homes (PCMH)
Community Wellness
Programs
Migration to
Accountable Care
Organization
Pay for Performance
Population Management
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Hospital Managed Care Strategies
Provider Network
Management
Private Label Services
Health Plan
Administration
ACO Development &
Clinical Integration
Population Health &
Wellness
•Optimized Networks
•Member Tools & Education
•
•Medical
Management, Health Coaching, Reporting,
•
•ID Cards, EOB’s, Member Servicing, Network Services
•Client/Member Services, Account Management, Pharmacy
•Network Services, Claims Adjudication, HRA/HSA
•
•Financial
Services, Reporting/Data Analytics, Legal Expertise
•
•Consulting,
Eligibility, Risk Sharing, Member Education
•Analytics, Risk Stratification, Evidence Based Medicine
•Predictive Model & Reporting, Employer Based Clinics
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THANK YOU!
Questions..
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