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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 Health Care Working Group Salt Lake City, Utah July 22, 2005.

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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 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


Background jointly administered health plans in the retail food industry
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


The current health plan business model is flawed
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


A vision of a new health plan delivery business model
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


The Economic Foundation for the New Business Model: Correcting Costly Myths About the Health Care System

Fact

Myth #1

Plan members think providers are infallible and there is little variation in provider quality

Infallibility Provider Quality

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

Fact

Data proves quality = cost:

Quality

Quality

Cost

Cost

Source: UFCW Working Group – Health Plan of the Future


The Economic Foundation for the New Business Model: Correcting Costly Myths About the Health Care System

Fact

Myth #3

Cost Savings can be mined from plan administration and benefit reductions

Source: UFCW Working Group – Health Plan of the Future


Is the information technology to support quality care decisions available
Is the Information Technology Correcting Costly Myths About the Health Care Systemto Support Quality Care Decisions Available?

  • Private Sector Platforms

  • Health Care Purchasers – Leapfrog Group

  • Non-Profits: NCQA & JCAHO

  • Medicare – www.hospitalcompare.hhs.gov


Cost analysis by quality ranking salt lake city utah area hospitals
Cost Analysis by Quality Ranking Correcting Costly Myths About the Health Care SystemSalt Lake City, Utah Area Hospitals

Average of All Hospitals $8,480

Top Hospital Cost $6,335

Difference between Top and Average Hospital 25.3%

Difference between Top and Most Expensive Hospital 48.3%

Source: HealthShare Technology


Cost analysis by quality ranking salt lake city utah area hospitals1
Cost Analysis by Quality Ranking Correcting Costly Myths About the Health Care SystemSalt Lake City, Utah Area Hospitals

Average of All Hospitals $25,156

Top Hospital Cost $15,851

Difference between Top and Average Hospital 37%

Difference between Top and Most Expensive Hospital 53.5%

Source: HealthShare Technology


Will plan participants accept direction on health care decisions
Will Plan Participants Accept Correcting Costly Myths About the Health Care SystemDirection on Health Care Decisions?

Source: HSC Community Tracking Study Household Survey, 2001 and 2003


Cost savings potential medical delivery efficiencies
Cost Savings Potential: Correcting Costly Myths About the Health Care SystemMedical Delivery Efficiencies

Low est.

Medium est.

High est.

“shallow end”

Source: Mercer – Business Roundtable Study


How federal and state governments can support a quality driven health insurance business model
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 21st 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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