Wellmark CFO David Brown talks discusses cost, care trends during CBJ Health Summit keynote
By Chase Castle
Health care providers in Iowa are eager to adopt new cost models that incentivize public health, according to a senior Wellmark executive, although further coordination is needed to successfully implement those and other Affordable Care Act policies.
David Brown is executive vice president, chief financial officer and treasurer for Wellmark Blue Cross and Blue Shield, an independent licensee of Blue Cross and Blue Shield based in Des Moines. He told the roughly 260 attendees at the CBJ’s 2016 Health Care Summit that Iowa’s health network must address rising national health care costs
Towers Watson, a Virginia-based professional services firm that specializes in risk management and human resources consulting, last year compiled data from 444 midsize to large U.S. employers. The survey found that health care costs have slowed in recent years, but are still growing at more than double the rate of inflation.
Mr. Brown said even as the rate of inflation is slowing, the cost of health care still outpaces average national increases in employee wages and workplace revenues.
“It’s eating into profitability and it’s eating into people’s household income and what they have left to spend, so this is not a sustainable situation,” he said.
To reduce those costs, the entire spectrum of health care parties, including employers, insurers, brokers and patients, must be involved, Mr. Brown said at the Feb. 12 event, held at the Cedar Rapids Marriott.
“The only way we can address this problem, is we really have to focus on all the elements of the system, and we all have to work together, ” he said.
Wellmark is charged the equivalent of about $366 a month by each of its roughly 1.8 million customers. About one-fourth of that cost goes toward potentially preventable events (PPEs), which include unnecessary hospital admissions and readmissions, services delivered at an emergency room that could have been delivered at clinic or potentially preventable complications.
“Bad things can sometimes happen,” Mr. Brown said. “But in a lot of cases, that [condition] may have been able to be prevented. And so if that could have been prevented, that’s a lot of cost that we’re spending for someone having to come back.”
“Even if we could cut that cost in half, think of what that would do to the cost of health care,” he added.
How the medics measure up
An additional challenge is improving the effectiveness of health care.
Mr. Brown said there’s a great disparity in the quality of care delivered by different accountable care organizations (ACOs), which are groups of doctors or other health care providers who voluntarily come together to coordinate treatment for Medicare patients. ACOs then share in the cost savings they achieve for the Medicare program by avoiding the duplication of services and preventing errors.
Wellmark’s proprietary quality score used to grade ACOs focuses on “patient-centered quality measures.” Those include the overall patient experience, based off of factors such as patients’ confidence in their providers, the ease of accessing care and how organized the provider was – all factors that can impact health outcomes.
Out of eight ACOs within the Wellmark network, the groups’ overall ratings ranged from roughly being in the bottom 38th percentile of ACO ratings nationally up to the 80th percentile, with the remaining ACOs scattered in between.
“There’s a huge diversity of quality,” he said.
Consensus on the criteria and means of evaluating health care providers could be a key step toward improving health care quality, and ultimately patient outcomes. To date, however, little agreement between the parties developing health care ratings exists.
“It’s very hard to measure the quality of providers,” Mr. Brown said. “And I can tell you, there’s not a system that works great.”
In 2013, for example, the research and consulting firm The Advisory Board evaluated 12 hospital ratings systems, including The Leapfrog Group, U.S. News and World Report, the Hospital Compare website by the federal Centers for Medicare & Medicaid Services and others. The group found that the systems greatly varied in terms of what data the ratings are based on, how the data is calculated and the transparency of the groups’ various methodologies.
“If you look at all the different metrics and the ways they evaluate providers, there’s a big variability in there so it’s actually very hard to get a great measure of what makes a great doctor or what doesn’t,” Mr. Brown said. “So there’s a lot of work to do to figure this out. This isn’t an easy problem to solve, but the benefits of solving it are enormous.”
ACOs, which were a centerpiece of the Affordable Care Act, strive to move providers away from the conventional fee-for-service health model toward fee-for-value, wherein the partnered providers share a portion of the costs historically passed onto patients. The shared-savings model sets maximum cost targets. If those targets aren’t exceeded – meaning services are delivered below the expected cost – the insurance company returns a portion of the savings to the provider.
However, if quality scores go down, the provider is not awarded any portion of the shared savings in order to prevent productive but potentially costly care from being withheld.
In Iowa, Mr. Brown said most health providers are eager to adopt the shared-savings model, but implementing the coordination necessary is a challenge.
“So the good news is, everybody is very aligned on trying to do the right thing. It’s just that doing the right thing is sometimes hard and we don’t have very easy solutions,” he said.
The 2016 Health Care Summit was presented by the University of Iowa Health Alliance, and sponsored by TrueNorth Companies, Wellmark Blue Cross and Blue Shield, Delta Dental, CarePro Health Services, Health Solutions, the Eastern Iowa Sleep Center, the University of Iowa College of Public Health – Healthier Workforce Center for Excellence, Amperage Marketing, McCrossen Consulting, the Cedar Rapids Marriott and Mercer.