Employers' Forum of Indiana Strategy to Improve Hospital Value Gloria Sachdev, B.S. Pharm, Pharm.D. President & CEO, Employers’ Forum of Indiana gloria@employersforumindiana.org April 13, 2018 Indiana Workplace Wellness Partnership

About the Employers’ Forum of Indiana Healthcare coalition formed in 2001 Members include self-funded employers, health plans, health systems, and other interested parties Aim is to improve the value payors and patients receive for their health care expenditures.

Overview of Value Strategy in Our Attempt to Align Payment with Hospital Quality Hospital VALUE 3. Develop PAYMENT MODEL(S) that incorporate quality and price 1. PRICE Transparency 2. Define which QUALITY Measures to use for payment

Background: Why We Conducted a Hospital Price Transparency Study Source: White et al., High and Varying Prices for Privately Insured Patients Underscore Hospital Market Power, 2013, http://www.hschange.com/CONTENT/1375/1375.pdf.

Background: Why We Conducted a Hospital Price Transparency Study Source: White et al., High and Varying Prices for Privately Insured Patients Underscore Hospital Market Power, 2013, http://www.hschange.com/CONTENT/1375/1375.pdf.

Price Transparency Analysis The best method the Forum believed was to convert allowable payments made by employers to what Medicare would have paid for the exact service, thus report relative prices For Example: the report would show that employers paid Hospital “A” 200% or 2X on average what Medicare would have paid and Hospital “B” was paid 350% or 3.5X on average what Medicare would have paid Aim: to develop a fair method to compare hospital prices for public reporting

Medicare is the Largest Health Insurer in the World The Rationale For Using Medicare to Level Set All Commercial Hospital Payments Medicare is the Largest Health Insurer in the World Medicare makes numerous adjustments in price to assure FAIR payments are made to a hospital including: type & intensity of service hospital’s location patient acuity disproportionate share of medically underserved medical education provided

Medicare Prices Vary, and We Know How and Why Source: CMS, Medicare Provider Utilization and Payment Data: Inpatient Charge Data, FY2013, https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/Downloads/Inpatient_Data_2013_XLSX.zip.

Price Transparency – How We Started HOW WE CRACKED THE PLAN-PROVIDER GAG CLAUSE!... EMPLOYERS OWN THEIR CLAIMS DATA EmployersForum issued an RFP Partnered with Dr. Chapin White at RAND Corp to conduct price analyses Funded by the Robert Wood Johnson Foundation for $105,000 Self-funded employers completed one page authorization form requesting their respective health plan send their data to RAND

Study Involved Study time period was July 2013 to June 2016 ~225,000 covered lives 120 community hospitals in Indiana All hospital inpatient and outpatient services Total paid claims was $695 million Full report of study findings: freely downloadable from RAND’s website: https://www.rand.org/pubs/research_reports/RR2106.html

RAND Study Findings Indiana Hospital Average Price Relative to Medicare (combined outpatient & inpatient prices) 2.72 3.58 2.17 Source: White, 2017, Hospital Prices in Indiana.

RAND Study Findings Hospital/Health-System Average Relative to Medicare (combined outpatient & inpatient prices) 3.70 1.21 Source: White, 2017, Hospital Prices in Indiana.

RAND Study Findings Outpatient Relative Prices Vary Across Hospitals Source: White, 2017, Hospital Prices in Indiana.

RAND Study Findings Inpatient Relative Prices Vary Across Hospitals Source: White, 2017, Hospital Prices in Indiana.

RAND Study Findings Relative Prices Are Trending Up Source: White, 2017, Hospital Prices in Indiana.

Price Report Learnings The 6 large systems generally get higher prices than small systems and independents Relative prices vary widely among hospitals within each system Relative prices are increasing

how does Indiana compare with the rest of the country?

National Benchmark: Trends in Inpatient Prices Source: Selden, et al., "The Growing Difference Between Public And Private Payment Rates ...," Health Affairs, 2015.

National Benchmark: Trends in Private vs National Benchmark: Trends in Private vs. Medicare Payment-to-Cost Ratios Source: American Hospital Association Chartbook, Table 4.4.

National Benchmark: Private Prices for Knee Replacement Source: Health Care Cost Institute, National Chartbook of Health Care Prices–2015, April 27, 2016. http://www.healthcostinstitute.org/files/hcci_chartbook__4.27.2016.pdf.

RAND Report Findings: Roll Out to Stakeholders 4 weeks prior Forum leaders get report draft 3 weeks prior Partici-pating emp & health plans get report 2 weeks prior RAND present to partici-pating emp Next Day Health plan leaders met with group of employers and RAND 1 week Forum leaders have meetings with Health-System CEO’s RAND REPORT available publically Sept 2017

Dr. Chapin White, our RAND researcher, presented findings State-Wide Study Roll Out – Forum All-Stakeholder Meeting in September 2017 Slide deck on Forum website http://employersforumindiana.org/media/2017/09/Hospital-Prices-in-Indiana-Findings-Chapin-White-9-20-17-updated.pdf Dr. Chapin White, our RAND researcher, presented findings Forum created tables per health-system noting relative prices along side CMS Hospital Compare Star Ratings These tables are on Forum website http://employersforumindiana.org/media/2017/09/Indiana-Health-System-tables-noting-Relative-Prices-per-RAND-report-and-CMS-Hospital-Compare-Star-Rating-9-20-17.pdf Forum leadership wanted to present hospital price within framework of quality

Example of Forum Summary Health-System Tables

Post Study Employer Initial response Shock/Awe Anger/Frustration Resolute/Determined

Post Study Employer Discussions Value: Must consider QUALITY in addition to price! Provider Payment: Move toward novel provider contracts Percent of Medicare ACOs/shared savings Plan Accountability: Set performance targets for relative prices, with incentives for employers if plan overshoots Benefits: Move patient volume away from high-priced providers Tiered networks Reference-based benefits Narrow networks Take Control: Move away from discounted-charge contracts Direct negotiations Center of Excellence On-Site Clinics

Overview of Value Strategy in Our Attempt to Align Payment with Hospital Quality Hospital VALUE 3. Develop PAYMENT MODEL(S) that incorporate quality and price 1. PRICE Transparency 2. Define which QUALITY Measures to use for payment

Formed a Forum Hospital Quality Task Force Surprisingly, health plans and hospital admin were skeptical that the current hospital measures used by health plans were adequate measures of hospital quality Formed a Forum Hospital Quality Task Force Aim: narrow the ocean of quality measures to a reasonable pool of measures to be used for value-based payment models Task Force Chair = Director of Hospital Quality at National Quality Forum 25 member multi-stakeholder group convening monthly for 6 months, December 2017-May 2018

Overview of Value Strategy in Our Attempt to Align Payment with Hospital Quality Hospital VALUE 3. Develop PAYMENT MODEL(S) that incorporate quality and price 1. PRICE Transparency 2. Define which QUALITY Measures to use for payment

Hospital Value-Based Payment (Aim = Pay for High Quality at Best Price) Since February 2018, the Forum has been partnering with Anthem BCBS, the largest commercial Indiana health plan, to develop a value-based payment model/benefit design We have monthly employer-plan work group meetings attended by a dozen invited employers, Corporate Anthem leadership, and Indiana Anthem leadership A new value-based provider model will launch 1-1-19 We are having preliminary discussions with United Healthcare, American Health Network, and other organizations as well

What NEXT? Data for Benchmarking Contract RAND will conduct another price report to include July 2016 June 2017 data Data for Benchmarking include more Indiana employers & employers across country Analyses Expand analyses conducted per stakeholder input Funding RWJF agreeable to fund $105,000, thus develop price structure for balance

RAND 2.0 Study Invitation The more employers who participate, the better understanding employers will have about their market place and be able to benchmark price against other regions/states All employers in Indiana and across the country are welcome to participate in the Employers’ Forum of Indiana-Rand 2.0 study The Forum-RAND 2.0 study will be the first hospital price transparency study with a national footprint The initial Forum-RAND Indiana study was the first hospital price transparency study published in the country

Thank You! Questions Welcome