There’s a risk that value-based pay­ment ‘is more lip ser­vice than the real thing’

Modern Healthcare - - Q & A -

Since 2010, Dan Hilferty has served as pres­i­dent and CEO of In­de­pen­dence Blue Cross, a not­for-profit Blue Cross and Blue Shield in­surer based in Philadel­phia that serves nearly 10 mil­lion peo­ple in 24 states and the Dis­trict of Columbia, in­clud­ing 2.5 mil­lion in south­east­ern Penn­syl­va­nia.

It’s part of In­de­pen­dence Health Group. He pre­vi­ously served as pres­i­dent of IBC’s health mar­kets. Be­fore that, he served as CEO of the Amer­iHealth Mercy Fam­ily of Cos., a mul­ti­state Med­i­caid man­aged-care plan. Hilferty serves on the board of the Blue Cross and Blue Shield As­so­ci­a­tion, chair­ing the as­so­ci­a­tion’s health pol­icy and ad­vo­cacy com­mit­tee. He also serves on the ex­ec­u­tive com­mit­tee of the Amer­ica’s Health In­sur­ance Plans board. Mod­ern Health­care reporter Bob Her­man re­cently spoke with Hilferty about man­ag­ing the health of Med­i­caid pa­tients, build­ing provider net­works and mov­ing for­ward with value-based pay­ment. This is an edited tran­script.

Mod­ern Health­care: Your sub­sidiary Amer­iHealth Car­i­tas was awarded a Med­i­caid man­aged-care con­tract in Iowa. How does In­de­pen­dence view the Med­i­caid mar­ket?

Dan Hilferty: Blue Cross/Blue Shield of Michi­gan is our na­tional part­ner in re­spond­ing to RFPs like those in Iowa, Michi­gan and Ne­braska. We be­lieve that with our ex­per­tise in man­ag­ing this very com­plex pop­u­la­tion and work­ing either alone or in part­ner­ship with the lo­cal Blue Cross plan, we can be very com­pet­i­tive.

MH: How is In­de­pen­dence man­ag­ing the care for th­ese com­plex pa­tients?

Hilferty: We are very ac­tive from the start of a pro­gram in reach­ing out to each in­di­vid­ual and fam­ily, mak­ing sure mem­bers get as­so­ci­ated with a med­i­cal home and a pri­mary-care physi­cian. We are very ac­tive through the lo­cal schools, com­mu­nity cen­ters and churches in pro­vid­ing com­pre­hen­sive ed­u­ca­tion op­por­tu­ni­ties.

MH: Why has In­de­pen­dence de­ployed tiered health plans for the com­mer­cial mar­ket, di­rect­ing peo­ple to­ward low­er­cost providers through the dif­fer­ent lev­els of cost-shar­ing?

Hilferty: It’s giv­ing cus­tomers what they want and need in a health ben­e­fit. If some­one chooses a tiered plan, it’s be­cause they’re com­fort­able their provider net­work and the ser­vices they want or need are part of that tiered net­work. We, in turn, are able to de­velop qual­ity mea­sures and pay-for-per­for­mance mod­els with that net­work that help us drive qual­ity and re­duce costs.

MH: What are the is­sues you face in con­tract­ing with providers that are not placed in the pre­ferred tier?

Hilferty: Let’s take Medi­care Ad­van­tage as an ex­am­ple. We said here’s the price point, and we went out to the provider net­work and said, “This is all we’re go­ing to pay for this.” We were pre­pared for some providers to say no. We found there was such a cry from our mem­ber­ship to be part of the prod­uct that vir­tu­ally ev­ery provider signed on. If the con­sumer speaks, the provider net­work will re­spond. The five-county Philadel­phia area is a very provider-rich en­vi­ron­ment. We were able to put th­ese net­works to­gether, and they were di­verse enough that ev­ery­body is able to play if they want to play at a par­tic­u­lar price point. If you’re in a re­gion where there are fewer providers, it’s more dif­fi­cult.

MH: What are some pre­scrip­tion drugs that have caused you cost con­cerns?

Hilferty: Clearly pre­scrip­tion drugs are out­pac­ing med­i­cal trends, and we ex­pect this to con­tinue. If you look from a spe­cialty-drug per­spec­tive, the num­ber of prod­ucts in the pipe­line for FDA ap­proval is in the hun­dreds. Take, for ex­am­ple, the sig­nif­i­cant in­creases we saw in hep­ati­tis C drugs, es­pe­cially So­valdi, in 20132014. You mul­ti­ply that across dis­ease states and var­i­ous health plan prod­ucts, and it’s mind­bog­gling to think as more of th­ese drugs come on the mar­ket the im­pact it will have on in­sur­ers.

We think trans­parency is the key—that the drug com­pa­nies, like us as health in­sur­ers and providers, should be held ac­count­able to show the cost and the value they bring to the ta­ble.

MH: How does In­de­pen­dence look at value-based re­im­burse­ments, specif­i­cally cap­i­ta­tion?

“Drug com­pa­nies should be held ac­count­able to show the cost and the value they bring to the ta­ble.”

Hilferty: We are a strong pro­po­nent of value-based con­tract­ing and pay-for­per­for­mance. We started sev­eral years ago. In any con­tract we did with in­di­vid­ual pri­mary-care and spe­cialty clin­i­cians and with providers as a whole, we built in a pay-for-per­for­mance model that dealt with meet­ing cer­tain qual­ity points and hav­ing agreed-upon care path­ways. So that was the start.

This re­ally gets to the im­por­tance of a ro­bust base of data from the payer and the provider. By hav­ing real-time data in front of a clin­i­cian, con­nect­ing that back to the care path­way, and meet­ing cer­tain qual­ity and ef­fi­ciency stan­dards, the clin­i­cian has the abil­ity to ap­pro­pri­ately make more money. It’s the win­win mind­set start­ing with the pa­tient get­ting a bet­ter out­come, in­stead of the we-they, in­surer-vs.-clin­i­cian mind­set.

We de­cided we need to part­ner with pri­mary-care physi­cians in a new way. Un­der our part­ner­ship with DaVita Health­Care Part­ners called Tandigm Health, we pro­vide financial in­cen­tives based on qual­ity.

MH: There was a com­men­tary not long ago in the New England Jour­nal of Medicine that peo­ple are pay­ing lip ser­vice to value-based pay­ment and not ac­tu­ally do­ing it. Is that true?

Hilferty: It’s a valid point. It’s log­i­cal that we should be go­ing in that di­rec­tion, but it takes time. The key thing is that ro­bust base of data that tells a story about an in­di­vid­ual’s his­tory, or a pop­u­la­tion’s his­tory, and what the path for­ward should be. We’re not to­tally there yet. We’re mak­ing tremen­dous strides. Un­til we truly get our arms around that, there is the risk that value-based re­im­burse­ment is more lip ser­vice than the real thing.

MH: How do you en­vi­sion Philadel­phia trans­form­ing health­care-wise over the next five to 10 years?

Hilferty: The In­de­pen­dence Health Group, through the In­de­pen­dent Cen­ter for Health Care In­no­va­tion, put $50 mil­lion aside, and we’re in­vest­ing in star­tups that we think can help us build a hu­man-cen­tered cir­cle around our mem­bers. Our idea is that mem­bers can one-stop shop for all of their health in­sur­ance needs and maybe long-term care.

We cre­ated an in­cu­ba­tor called Dreamit Health, in part­ner­ship with the Univer­sity of Penn­syl­va­nia Health Sys­tem, and in­vested about $1 mil­lion a year in it. We’re in our third year. The first year we se­lected 10 ideas or com­pa­nies that were in the in­cu­ba­tor stage. We brought them to Philadel­phia, gave them money to un­der­stand how to start a busi­ness, gave them the provider and payer data they needed, and gave them men­tor­ing con­tacts. We made it at­trac­tive for them to stay in Philadel­phia. Of the roughly 28 that have been brought in to date, 15 are up and run­ning in Philadel­phia.

In ad­di­tion, we and some of Philadel­phia’s other health­care, higher ed­u­ca­tion and busi­ness in­sti­tu­tions came to­gether to cre­ate a fund to seek out health-re­lated in­no­va­tive com­pa­nies that might be will­ing to move their op­er­a­tions here. We would like to cre­ate a buzz about the Philadel­phia re­gion as a Sil­i­con Val­ley of health­care in­no­va­tion.

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