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Transforming the Health Insurance Delivery Business Model – A Labor-Management Initiative to Manage Care and Targeting Quality Presentation to the Citizens.

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Presentation on theme: "Transforming the Health Insurance Delivery Business Model – A Labor-Management Initiative to Manage Care and Targeting Quality Presentation to the Citizens."— Presentation transcript:

1 Transforming the Health Insurance Delivery Business Model – A Labor-Management Initiative to Manage Care and Targeting Quality Presentation to the Citizens Health Care Working Group Salt Lake City, Utah July 22, 2005 Presented by: David S. Blitzstein Director, Negotiated Benefits Department United Food & Commercial Workers International Union

2 2 Background: Jointly Administered Health Plans in the Retail Food Industry Sponsor 70 Plans Governed by ERISA Cover 800,000 Full-Time and Part-Time Employees Pay an Estimated $4.8 Billion in Annual Plan Benefits Administered by Equal Number of Labor and Management Representatives Over 50 years of Experience Delivering Health Insurance Benefits

3 3 The Current Health Plan Business Model is Flawed Attempting to Manage Price of Care vs. Actually Managing Care At Competitive Disadvantage in Price Negotiations with National and Regional Managed Care Organizations and PBMs Plans are Dependent on Intermediaries, and Are One Step Removed from Health Care Providers Plans are Not Focused on Health Care Quality and Patient Safety Plan Participants are Expected to Navigate the Health Care System Without Assistance

4 4 A Vision of a New Health Plan Delivery Business Model Directing Care to High Performance, High Quality Providers Empowering Members and Physicians through Access to Information Technology Perform Health Risk Profiling that Analyzes the Health of the Plan Population Identify High Risk or At-Risk Participants Organize Targeted Interventions (e.g. Wellness, Disease Management, and Case Management) for High Risk and At-Risk Participants Assist Participants with Personal Health Advocacy Programs Adopt Plan Designs that Compliment this Model

5 5 The Economic Foundation for the New Business Model: Correcting Costly Myths About the Health Care System Myth #1 Plan members think providers are infallible and there is little variation in provider quality Fact InfallibilityProvider Quality Quality Complication and mortality rates often vary 200 – 400% Service fees and charges often vary by 50% Myth #2 Plan members think quality is proportional to cost Cost Quality Fact Data proves quality = cost: Quality Cost Source: UFCW Working Group – Health Plan of the Future

6 6 The Economic Foundation for the New Business Model: Correcting Costly Myths About the Health Care System Myth #3 Cost Savings can be mined from plan administration and benefit reductions Fact Source: UFCW Working Group – Health Plan of the Future

7 7 Is the Information Technology to Support Quality Care Decisions Available? Private Sector Platforms Health Care Purchasers – Leapfrog Group Non-Profits: NCQA & JCAHO Medicare – www.hospitalcompare.hhs.govwww.hospitalcompare.hhs.gov

8 8 Cost Analysis by Quality Ranking Salt Lake City, Utah Area Hospitals Report on Hysterectomy, Abdominal Total QuartileNamePatients/yrMortalityComplicationsLOSCost 1 st Alta View Hospital2 nd - $6,335 1 st Davis Hospital & Medical Center2 nd - 1 st 10,546 1 st McKay-Dee Hospital Center1 st -4 th 2 nd 6,753 1 st Ogden Regional Medical Center2 nd - 1 st 8,672 2 nd Cottonwood Hospital Medical Center1 st -4 th 6,757 2 nd Latter-Day Saints Hospital1 st -4 th 3 rd 8,316 2 nd St. Marks Hospital1 st -2 nd 4 th 9,286 4 th Jordan Valley Hospital2 nd -4 th 2 nd 12,250 4 th Salt Lake Regional Medical Center2 nd -3 rd 11,847 4 th University of Utah Hospitals & Clinics3 rd -4 th 12,084 Average of All Hospitals$8,480 Top Hospital Cost$6,335 Difference between Top and Average Hospital25.3% Difference between Top and Most Expensive Hospital48.3% Source: HealthShare Technology

9 9 Cost Analysis by Quality Ranking Salt Lake City, Utah Area Hospitals Report of Colon Surgery QuartileNamePatients/yrMortalityComplicationsLOSCost 1 st Cottonwood Hospital Medical Center2 nd 1 st $15,851 1 st American Fork Hospital4 th 1 st 2 nd 1 st 17,096 1 st Latter-Day Saints Hospital1 st 2 nd 3 rd 2 nd 24,886 2 nd McKay-Dee Hospital Center1 st 3 rd 2 nd 3 rd 26,863 2 nd University of Utah Hospitals & Clinics2 nd 1 st 4 th 2 nd 32,183 3 rd Salt Lake Regional Medical Center4 th 3 rd 1 st 34,071 3 rd St. Marks Hospital1 st 4 th 1 st 3 rd 32,219 Average of All Hospitals$25,156 Top Hospital Cost$15,851 Difference between Top and Average Hospital37% Difference between Top and Most Expensive Hospital53.5% Source: HealthShare Technology

10 10 Will Plan Participants Accept Direction on Health Care Decisions? Source: HSC Community Tracking Study Household Survey, 2001 and 2003

11 11 Cost Savings Potential: Medical Delivery Efficiencies shallow end Low est. Medium est. High est. Source: Mercer – Business Roundtable Study

12 12 How Federal and State Governments Can Support A Quality-Driven Health Insurance Business Model States Require the Collective and Dissemination Health Provider Outcomes Data Congress Adopts the Recommendations of the HHS Health Information Technology Leadership Panel Report Issued 5/11/05. Congress Legislates the 21 st Century Health Information Act (H.R. 2234) introduced by Patrick J. Kennedy and Tim Murphy Congress Should Legislate Price Transparency Requirements for Hospitals, Physicians, Drug Manufactures,and Pharmacy Benefit Mangers


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