‘We’re in the 5th in­ning’ of the ACA ex­change ball­game

Modern Healthcare - - Q & A -

Since May 2014, David Holmberg has been pres­i­dent and CEO of High­mark Health, a not-for­profit based in Pitts­burgh with 2014 rev­enue of $16.9 bil­lion and to­tal in­come of $83 mil­lion. The sys­tem in­cludes High­mark, a Blue Cross and Blue Shield in­surer serv­ing four states, and the seven-hos­pi­tal Al­legheny Health Net­work. Holmberg’s or­ga­ni­za­tion has strug­gled to turn around the fi­nances of Al­legheny, which it ac­quired in 2013. High­mark has been in­volved in a se­ries of clashes with the UPMC sys­tem, which has balked at serv­ing High­mark plan mem­bers since High­mark ac­quired the com­pet­ing hos­pi­tal sys­tem. A court re­cently ruled that UPMC must con­tinue to pro­vide in-net­work ser­vices to High­mark’s Medi­care Ad­van­tage plan mem­bers. Mod­ern Health­care re­porter Bob Her­man re­cently spoke with Holmberg about the feud with UPMC, the fu­ture of the Af­ford­able Care Act ex­change busi­ness and the value of high-de­ductible health plans. This is an edited tran­script.

Mod­ern Health­care: How are things shak­ing out in the on­go­ing con­flict be­tween High­mark and UPMC, the Univer­sity of Pitts­burgh’s health sys­tem?

David Holmberg:

I be­lieve the fu­ture of health­care may ac­tu­ally be de­cided in Pitts­burgh. It’s really as sim­ple as you have a very strong in­sur­ance com­pany that now has a provider sys­tem, and you have a hos­pi­tal-based or­ga­ni­za­tion that got into the in­sur­ance busi­ness about 10 years ago. The two or­ga­ni­za­tions are com­pet­ing, and it’s cre­at­ing in­no­va­tion and new ways of cre­at­ing care de­liv­ery. The two or­ga­ni­za­tions con­tinue to sep­a­rate or move far­ther apart. That was a de­ci­sion made by UPMC want­ing to go its own way.

We’re not fo­cused on how many hos­pi­tals we own. We have the Al­legheny Health Net­work, which is ex­celling at high-qual­ity care. But we’re bal­anc­ing that with our in­sur­ance arm. We’re very fo­cused on build­ing what we think is the model of the fu­ture, which is less about bricks and mor­tar, and more about care man­age­ment and how you en­gage peo­ple where they live, and pro­vide care in more con­sumer-friendly set­tings. We’re try­ing to cre­ate more ef­fec­tive care, a bet­ter con­sumer ex­pe­ri­ence, and at the same time, make care more af­ford­able.

MH: Do you fore­see even­tu­ally work­ing more har­mo­niously with UPMC?


Health­care de­pends on peo­ple em­brac­ing the fact that there’s real change afoot. We’ve got to cre­ate a more ef­fec­tive care sys­tem which the con­sumer finds eas­ier to nav­i­gate, and in which it be­comes eas­ier for them to take re­spon­si­bil­ity for their own health. That means hav­ing part­ner­ships with peo­ple who have sim­i­lar val­ues, providers who are look­ing to do the right things for their pa­tients and for their cus­tomers.

As a payer-led provider sys­tem, we’re not fo­cused on how many heads are in beds in hos­pi­tals. We’re fo­cused on keep­ing peo­ple out of the hos­pi­tal and keep­ing them healthy. We’re will­ing to part­ner with any­one who shares that value and wants to cre­ate in­no­va­tive so­lu­tions for care.

Be­ing a payer-led provider sys­tem, High­mark Health is very fo­cused on cre­at­ing that more ef­fec­tive care. We’ll have a con­ver­sa­tion with any­one who wants to do that. But they have to be will­ing to in­vest in the fu­ture. They have to be will­ing to walk away from their legacy past and fo­cus on what peo­ple need as we go for­ward.

MH: In the first half of 2015, High­mark lost $320 mil­lion on its ACA ex­change busi­ness. What caused that? Will High­mark con­sider ex­it­ing the ex­changes, as Unit­edHealth Group has an­nounced it will con­sider for 2017?


I think United’s an­nounce­ment may be the ca­nary in the coal mine. The jury is still out on how this is go­ing to ul­ti­mately play out. We’re see­ing that among the peo­ple who have signed up, there’s more chronic dis­ease, there are more on­col­ogy claims, and there are more diabetes claims. That’s re­quir­ing a dif­fer­ent level of en­gage­ment ver­sus a

“We’ve got to cre­ate a more ef­fec­tive care sys­tem which the con­sumer finds eas­ier to nav­i­gate.”

com­mer­cial cus­tomer, and we’re work­ing through that. Our de­ci­sion to be a part of the ACA ex­changes was based on our fun­da­men­tal re­spon­si­bil­ity to be a so­cial mis­sion or­ga­ni­za­tion. As we go for­ward, there’s got to be an evo­lu­tion, and the gov­ern­ment has got to play a role, as we shape the kinds of of­fer­ings that are on the ex­changes. How do we make this work so that it’s sus­tain­able for the long term?

MH: What are some of the things the gov­ern­ment could do to sta­bi­lize the ex­change mar­ket?

Holmberg: If you think about this as a nine-in­ning ball­game, we’re in the 5th in­ning. The 6th and 7th in­nings are about sta­bi­liz­ing the ex­changes them­selves, and the 8th and 9th in­nings are about cre­at­ing more ef­fec­tive care. More peo­ple are cov­ered to­day than have been cov­ered in the past. In West Vir­ginia, the num­ber of unin­sured peo­ple has dropped in half, which is great news. But now the real bat­tle is ahead. How do you cre­ate more ef­fec­tive care with bet­ter qual­ity and greater af­ford­abil­ity?

The gov­ern­ment can find ways to im­prove the ex­changes tech­ni­cally and ad­min­is­tra­tively. But it needs to ex­plore ways to en­cour­age more younger peo­ple to sign up.

MH: Do you think the stiffer tax penal­ties in 2016 will en­cour­age more younger peo­ple to en­roll?


I sus­pect there’s a cer­tain por­tion of that pop­u­la­tion that will be in­flu­enced by the higher tax penalty. I’m al­ways fo­cused on how we make the prod­uct rel­e­vant for dif­fer­ent in­di­vid­u­als. What’s rel­e­vant for some­body who is 50 is sig­nif­i­cantly dif­fer­ent than for some­body who is 25. We’ve got to make sure there are ben­e­fit strate­gies that ap­peal to both. And that’s where some of the flex­i­bil­ity has to come in, as we try to fig­ure out how to make this work.

MH: What is your per­spec­tive on the shift to high-de­ductible plans?


We of­fer high­d­e­ductible plans. In fact, I’m a real be­liever. I don’t ask our peo­ple to do any­thing I’m not will­ing to do. So I par­tic­i­pate in a high­d­e­ductible plan, and what we of­fer our own employees is what we of­fer to the mar­ket­place. We think the ad­van­tage of th­ese plans is it makes peo­ple think about their health and the de­ci­sions they’re making. That’s a good thing. It’s not for ev­ery­body. Some peo­ple it works bet­ter for, and some peo­ple it’s less ef­fec­tive for, de­pend­ing on their per­sonal sit­u­a­tion.

MH: High­mark also has a health­care provider arm. What are the chal­lenges high­d­e­ductible plans present for providers?


The chal­lenge on the provider side is there are some folks who can’t af­ford to pay. We still take care of them, but we try to work with them to fig­ure out so­lu­tions, so that they can fi­nan­cially be stand­ing when they’re done with their care.

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