‘Turn­around was job one. Now we are mov­ing for­ward’

Modern Healthcare - - Q & A -

“Em­ploy­ers are strate­gi­cally aim­ing cost-shar­ing at ar­eas be­yond pre­ven­tion and disease man­age­ment, where you en­cour­age peo­ple to pur­sue early in­ter­ven­tion and health main­te­nance.”

Last fall, Karen Ig­nagni took over as CEO of Em­blemHealth—a fi­nan­cially trou­bled New York in­surer with 3.2 mil­lion cov­ered lives—af­ter 22 years at the helm of Amer­ica’s Health In­sur­ance Plans, one of the most pow­er­ful lob­by­ing groups in Wash­ing­ton.

Mod­ern Health­care in­sur­ance reporter Bob Her­man re­cently spoke with Ig­nagni about the chal­lenges she faces in her new po­si­tion. This is an edited tran­script.

Mod­ern Health­care: What’s it like to lead a sin­gle health in­surer in­stead of herd­ing cats in Wash­ing­ton, D.C.?

Karen Ig­nagni: This plan has a sto­ried past, a 75-year tra­di­tion and a very strong com­mu­nity fo­cus. With­out a doubt we are in a turn­around sit­u­a­tion. As we chart our course for our turn­around, we also are cre­at­ing an in­no­va­tion story here.

MH: Why did you de­cide to leave AHIP? Did you fore­see Unit­edHealth Group and then later Aetna ex­it­ing the trade group?

Ig­nagni: I couldn’t have fore­seen it. … When I was called about this par­tic­u­lar op­por­tu­nity, I wanted to come here … be­cause of the mis­sion of this plan. This plan has been a main­stay for this com­mu­nity. We are a tri-state so­lu­tion from Con­necti­cut to all parts of New York, and we have a net­work in New Jersey. So we’re uniquely sit­u­ated to be a part­ner with em­ploy­ers, with unions, with the state and with the federal gov­ern­ment in the con­text of Medi­care Ad­van­tage. It was a won­der­fully ex­cit­ing chal­lenge, and I like chal­lenges.

MH: You’re a mem­ber of AHIP. Do you speak of­ten with Mar­i­lyn Taven­ner, the new CEO?

Ig­nagni: I have this old­fash­ioned rule that I’m happy to let AHIP speak for AHIP. Mar­i­lyn is go­ing to build her legacy and pro­vide very strong lead­er­ship.

MH: Just re­cently the rat­ings agency A.M. Best placed Em­blemHealth un­der re­view. What has been most re­spon­si­ble for the com­pany’s fi­nan­cial prob­lems? Ig­nagni:

The first day I started here I did a town hall meet­ing for all of our em­ploy­ees and in­di­cated with a great deal of speci­ficity that we were of­fi­cially in a turn­around sit­u­a­tion. Based on the 2014 fi­nan­cials, that was not a se­cret. It was clear to me that we needed to move very ac­tively and ag­gres­sively to ad­dress those is­sues, but also to talk about growth and the op­por­tu­nity to build on a num­ber of strengths that I saw here.

Best noted that in the last part of ’15, which is the first quar­ter that I was in­volved in, the sit­u­a­tion was dif­fer­ent than it had been pre­vi­ously. The fi­nan­cials demon­strate that the strate­gies that we be­gan to em­ploy on Sept. 1 and be­yond are be­gin­ning to work.

We are go­ing to be look­ing at mak­ing sure that our in­fra­struc­ture is as ef­fi­cient and ef­fec­tive as it needs to be so that we can com­pletely en­gi­neer our turn­around, and we can build on the value-based con­tracts that we have de­vel­oped. We have been the mar­ket leader in val­ue­based pay­ments, and we have taken another leap in that di­rec­tion. We’re twothirds value-based pay­ment … and based on the part­ner­ships that we are se­cur­ing presently, we will in­crease that per­cent­age quite sub­stan­tially.

MH: Does that in­clude ACOs, bun­dled pay­ments and full capitation?

Ig­nagni: Ac­count­able care or­ga­ni­za­tions are def­i­nitely in scope for us. If they are up­side ar­range­ments only, that’s not true value-based. Value-based means be­ing in a po­si­tion where you can share gains, share losses and share re­spon­si­bil­ity with your provider part­ners. As we’ve ex­e­cuted here at Em­blem, we con­sider our clin­i­cians and our hos­pi­tals our part­ners. We are do­ing risk trans­fer as op­posed to sim­ply the up­side ar­range­ments you see through­out the mar­ket to­day.

So when we talk about ac­count­able care or­ga­ni­za­tions, we mean the “A” part, the true

ac­count­abil­ity, and that means look­ing at risk trans­fer­ence and look­ing at risk-shar­ing. We have capitation agree­ments, so we’ve al­ready en­gaged in full-risk agree­ments with cer­tain provider part­ners. We have and are in the process of ex­e­cut­ing bun­dles with providers that are not pre­pared to take full risk or a very high per­cent­age of risk.

Em­blem, be­cause it has had such a long tra­di­tion of care co­or­di­na­tion, man­ag­ing care and the abil­ity to do data-min­ing, we have the tech­ni­cal sup­port sys­tems that our provider part­ners want and need to be able to ex­change risk.

MH: Are hos­pi­tals and doc­tors re­luc­tant when you ask them to take both up­side and down­side risk?

Ig­nagni: We have had long­stand­ing re­la­tion­ships with physi­cian groups that have ma­tured over time and al­lowed us to evolve into capitation-like agree­ments. On the hos­pi­tal side, what I’ve been par­tic­u­larly ex­cited about in com­ing here is the in­ter­est and will­ing­ness of our hos­pi­tal part­ners to ex­plore risk agree­ments.

One of the vari­ables that hos­pi­tals find very in­trigu­ing about Em­blem is our physi­cian group net­work. We have one of the largest group prac­tices in our New York area called ACP New York (Ad­van­tageCare Physi­cians), and it’s a group of both pri­mary-care physi­cians and spe­cial­ists that al­lows us to en­gage in con­ver­sa­tions with hos­pi­tals that in­volves not only the pay­ment ar­range­ment, but the clin­i­cal path­ways and the re­la­tion­ship be­tween the group prac­tice and the hos­pi­tal. We’re in a dif­fer­ent po­si­tion at Em­blem be­cause we have a mini Kaiser. We don’t have the hos­pi­tal part, but we do have the physi­cian part.

MH: Do you think the ACA ex­change mar­kets are sus­tain­able? What needs to be im­proved?

Ig­nagni: We are par­tic­i­pat­ing in Con­necti­cut and New York. To be suc­cess­ful in ex­changes, it’s very im­por­tant to be able to co­or­di­nate care, to do early in­ter­ven­tion and to cre­ate those clin­i­cal path­ways in part­ner­ship with physi­cians to pro­vide a high-value ex­pe­ri­ence for your cus­tomers. Our in­fra­struc­ture of disease man­age­ment and care co­or­di­na­tion is go­ing to be very im­por­tant to be­ing strong par­tic­i­pants on the ex­change.

MH: Your Medi­care Ad­van­tage en­roll­ment dropped a lit­tle bit since you started. Where do you see it go­ing for­ward?

Ig­nagni: I def­i­nitely see us grow­ing in Medi­care Ad­van­tage.

MH: But why the drop?

Ig­nagni: There was a lit­tle bit of drop as we fo­cused on our in­fra­struc­ture, our turn­around. Turn­around was job one. Now we are mov­ing for­ward. We will be bid­ding both on Medi­care Ad­van­tage and on ex­change busi­ness.

MH: What are the big­gest changes hap­pen­ing to em­ployer cov­er­age? Do you think that job-based in­sur­ance will even­tu­ally dis­ap­pear?

Ig­nagni: Em­ploy­ers will de­cide that ques­tion based on their la­bor mar­kets and how em­ployee ben­e­fits are seen as valu­able for their em­ploy­ees. A num­ber of em­ploy­ers be­lieve that it’s a very valu­able ben­e­fit par­tic­u­larly in a la­bor mar­ket that’s tight­en­ing up, where there’s more com­pe­ti­tion for work­ers. I an­tic­i­pate that a num­ber of em­ploy­ers will con­tinue to of­fer those ben­e­fits.

They are ob­vi­ously look­ing at their bal­ance sheets and look­ing at achiev­ing some pre­dictabil­ity. What are the strate­gies to do that? There’s in­ter­est on the part of em­ploy­ers in fash­ion­ing ben­e­fits that en­cour­age in­di­vid­u­als to get into the sys­tem early, treat their health­care con­di­tions and do that with low cost­shar­ing … to think about cost-shar­ing far more strate­gi­cally rather than as a blunt in­stru­ment.

More and more em­ploy­ers are at least talk­ing with us about de­sign­ing those types of ben­e­fit struc­tures for them. We will be do­ing quite a lot of that for our em­ploy­ers and our union cus­tomers and for some of our pub­lic sec­tor cus­tomers. There is a real strong aware­ness in the em­ployer com­mu­nity that new and in­no­va­tive ben­e­fit de­sign can pro­vide a path­way to the bal­ance sheet dis­ci­pline that they’re look­ing for. We can play a ma­jor role in not only giv­ing them the cost sav­ings they need, but im­prov­ing that value for money and value for in­vest­ment.

MH: Are you talk­ing about value-based in­sur­ance de­sign?

Ig­nagni: No, it’s a lit­tle dif­fer­ent than that. That’s one strat­egy em­ploy­ers can look to. Other em­ploy­ers are strate­gi­cally aim­ing cost-shar­ing at ar­eas be­yond pre­ven­tion and disease man­age­ment, where you en­cour­age peo­ple to pur­sue early in­ter­ven­tion and health main­te­nance. It’s dif­fer­ent than your tra­di­tional 80/20, 70/30 kind of re­la­tion­ship.

MH: How do you see this elec­tion cam­paign cy­cle af­fect­ing health­care pol­icy?

Ig­nagni: One of the tan­gi­ble de­vel­op­ments of this elec­tion cy­cle is the move­ment of the high cost of pre­scrip­tion drugs into the po­lit­i­cal sphere. You see quite a lot of con­ver­sa­tion on both sides of the aisle about that. The rea­son is not only the high cost, but the lack of trans­parency, the in­abil­ity to de­ter­mine whether or not the costs are as­so­ci­ated with R&D or with other ad­min­is­tra­tive costs, mar­ket­ing, profit and other costs in the sys­tem. That’s im­por­tant for the Amer­i­can peo­ple to know.

That’s go­ing to be a very im­por­tant fo­cal point of this elec­tion year dis­cus­sion just the way the is­sue in 2008 was bring­ing peo­ple into the sys­tem.

MH: Shouldn’t trans­parency be ex­tended to in­sur­ers and hos­pi­tals and doc­tors, es­pe­cially with this push for con­sumers to shop for prices?

Ig­nagni: It al­ready is for in­sur­ers. We have MLR (med­i­cal-loss ra­tio) where we have to be very spe­cific about dis­clos­ing what’s part of the med­i­cal care side, what’s on the ad­min­is­tra­tive side. Peo­ple can look very trans­par­ently at those dis­tri­bu­tions.

We do not have any­thing sim­i­lar—it’s an opaque process—in the phar­ma­ceu­ti­cal arena.

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