1. RIBGH 2019 Healthcare Summit Kim Keck President & CEO
Blue Cross & Blue Shield of Rhode Island
September 20, 2019

2. Agenda Current State: Healthcare costs in Rhode Island
What drives cost?
Actions to date
Additional Work: Cost Trend Target
You

3. HEALTHCARE COSTS IN RHODE ISLAND
CURRENT STATE
HEALTHCARE COSTS IN RHODE ISLAND

4. RISE OF HEALTHCARE COSTS OUTPACE OTHER ECONOMIC INDICATORS
National Commercial Medical Trend and CPI; RI Wage Growth and GSP *
Annual Healthcare Expenditures per Capita **
Source: *1. PwC “Medical Cost Trend: Behind the Numbers 2020”; 2. Fred.stlouis.org; 3. BLS Employment and Wages; 4. US Inflation Calculator
**Kaiser Family Foundation OHIC, Bureau of Economic Analysis

5. RhODE ISLAND’s COST OF HEALTHCARE RANKS AMONG THE HIGHEST IN THE NATION
Highest healthcare spending per capita in the U.S.*
4th
Highest in total drug expense in U.S.*
7th
Highest per capita prescription drug use
12th
Highest per capita spend in U.S. per hospital inpatient day
10th
Highest in nursing home utilization in the U.S.**
*Kaiser Family Foundation, State Health Data Published
**Kaiser Family Foundation, Health Costs and Budgets tool: CMS Chronic condition warehouse,

6. WHAT DRIVES COST?

7. What drives healthcare costs?
Cost of Healthcare = Price of services X Use of services

8. INCREASED USE OF SERVICES: A SIGNIFICANT DRIVER
Increase in BCBSRI Commercial Medical Costs,
High Use Services in Rhode Island
40%
25% more ER visits
40% more specialist visits
34% more prescription drugs

9. ADDRESSING THE ISSUE
ACTIONS TO DATE

10. BCBSRI INVESTMENTS TO HELP REDUCE cost of care
Well-coordinated systems of care with primary care providers as quarterbacks
Quality and cost ratings help members select most efficient PCPs
Products encourage members to choose highest quality care at the best price available
Policy advocacy on affordability at the state level, e.g. Reinsurance
Innovative care and payment models based on patient outcomes, not number of services
Price transparency tools for members and providers

11. STATE OF RHODE ISLAND AND PROVIDER EFFORTS TO SLOW THE INCREASE IN HEALTHCARE COSTS
Policy Efforts
Affordability & Quality Standards
Focus on primary care and patient center medical homes
Limits on hospital rate increases and payments tied to quality
Move from fee for service payments towards outcomes-based payment model
Additional Efforts
Reinsurance signed into law for 2020
Leadership in value-based care and other initiatives
State Innovation Model (SIM) Grant
Aligned quality metrics for primary care, accountable care organizations, hospitals, behavioral health and maternity
Affordability Standards
Reduce costs by improving primary care
Increased investment in primary care
Transform primary care practices into PCMHs
Reduce costs through payment reform strategies
Promoting population based contracting
Adoption of alternative payment methodologies
Improved hospital contracting practices
Quality Standards – hospital cap tied to quality
SIM grant -- $20 million award to test our health care payment and service delivery reform model over the next four years – goal is to achieve measurable improvement in health and productivity of all Rhode Islanders, and achieve better care while decreasing the overall cost of care. Organized delivery and payment system that is outcomes-oriented and person-centric. Value-based care paradigm, engaging patients in their own healthcare.
BUT We could and should be doing more – today there is no coordinated effort to ensure accountability around affordability and quality across all participants in the healthcare system. We hope to see something like that in the future.

12. ADDITIONAL WORK
COST TREND TARGET

13. GOALS OF THE COST TRENDS STEERING COMMITTEE
Reduce growth in healthcare costs
Develop a deeper understanding of cost drivers and cost variation in RI
Determine what investments are needed to sustain ongoing analysis

14. RHODE ISLAND HEALTHCARE COST TRENDS PROJECT
In order to keep healthcare spending growth in-line with state economic growth, cost trend steering committee proposed a 3.2% cost trend target.
Formed with 18 RI stakeholders, recently added 6 more
Grant funded by Peterson Center on Healthcare to initiate trend target work
Annual health care cost growth target = RI Potential Gross State Product
3.2%
Target annual rate of growth of total health care spending in the state ( )

15. COST TREND EARLY ACCOMPLISHMENTS AND WHAT IS COMING NEXT
Established the foundation
Brought together a diverse group
Set priorities to understand cost and quality drivers and data strategy
Voluntarily signed compact
Executive Order by Governor
3rd state in the country to establish cost trend target
Next Steps
Lead change
Continue stakeholder engagement
Expand group
Engage and educate employers
Learn as we go, change expectations

16. A cost trend target does not EQUAL premium increases
Massachusetts Increase in Total Health Care Expenditures,
$1.6
$2.2
1.6%
Growth in Total Health Care Expenditures per capita
10.3%
Rate of Cost Increase
3.1%
1.9%
Employers in Massachusetts are not seeing average premium increases of 1.6%
-0.2%
Commercial
MassHealth
Medicare
Other/Admin
Source: Data represent Massachusetts total health care expenditures in Center for Health Information and Analysis (2018)

17. ADDRESSING THE ISSUE
YOU

18. ACTIONS EMPLOYERS CAN TAKE TO LOWER COSTS
Steer the dialogue
Change expectations
Understand options
Champion new approaches
Promote Choosing Wisely
Empower employee well-being
Lead change

19. Thank You