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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis Business Journal gathered leaders in the state's health care and benefits sector for a Power Breakfast panel discussion Sept. 21.
Panel members included Ryan Kitchell, Indiana University Health chief financial officer; Dan Krajnovich, UnitedHealthcare of Indiana and Kentucky president and CEO; Sally Baker McCarty, Georgetown University Center on Health Insurance Reforms senior research fellow; Nathan Mowery, Activate Healthcare of Indiana president; and Ben H. Park, American Health Network president and CEO.
The discussion was led by IBJ reporter J.K. Wall.
The following is an unedited transcript of the discussion.
WALL: As Greg Morris has said, to kick things
off, he mentioned that a year ago we were just out from
the launch of the health insurance exchanges. One of
our panelists last year, Rob Hillman from Anthem,
memorably said he expected crickets to be chirping on
October 1st and the meltdown of healthcare.gov didn't
prove that true, but we sort of caught our feet and the
exchanges worked out okay, but we're headed into another
enrollment, so we're just still in this kind of
tumultuous mix of changes from the Affordable Care Act
and some other trends, but I'd like to start with the
Affordable Care Act and, Sally McCarty, can you talk to
us about what impact you think the law's had so far,
what do you expect for the future, what's your
prognosis?
MCCARTY: Well, first of all, thanks for having
me here and including me in this august panel. I'm
not sure I'm the right one to ask. If you would've
asked me a year ago, I probably would've told you I
think the two most successful exchanges would be
Oregon and Maryland. That didn't happen, they
probably were the two most disastrous ones, and, of
course, we all know, as you mentioned, healthcare.gov,
all of those problems centered around IT and they're
all in the process or have been fixed, so the open
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enrollment, the first open enrollment, ended up being
a huge success, much to a lot of people's surprise, I
think mostly because of the surge that occurred in the
last month, in March, and they ended up exceeding the
goal of seven million enrollees, so that alone says
that there's some value to this, to all of this, I
think. The number of people who will gain coverage
one way or another through the Affordable Care Act
provisions will probably be in the neighborhood of 25
million by the time the next open enrollment rolls
around in a couple of months, so that alone as to what
effect is going to be kind of hard to untangle all of
that, if anybody ever was inclined to do so, in the
future, and that's a huge deal. I mean everybody
looks at this from their own perspective, we have
providers and issuers and employers here, but looking
from the perspective of a consumer advocate that I've
been for most of my career, the fact that people can
get coverage, that people can get coverage if they
have a pre-existing condition, is a gigantic impact.
It was so discouraging in the past to have to tell
people, and some of those people who needed help most,
"You know, there's nothing we can do, the system just
wasn't built to accommodate you," so, I mean, that's
my No. 1 if you want to talk about impact. I think
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some of the controls on pricing, the MLRs, statewide
risk pools for the individual and small group markets
that will help to keep premiums down, and the rating
limits, the rating factors, all of those provisions of
the Affordable Care Act will again have a very strong
impact, already have I think on both affordability and
accessibility. The latest RAND survey or a recent
RAND survey has the uninsured rate going from 20.5 to
15.8 percent since the initiation of the Affordable
Care Act provisions, and that's big, I mean that's big
for all of us to have that, to get that uninsured rate
ratcheted down hopefully more with the upcoming open
enrollment, and then we all know, we were talking
about this earlier, that there are new insurers, I
think 77 new insurers are going to be offering on
exchanges in the upcoming open enrollment, so somebody
must be doing something right if they want to get in
the Act. So all of that is a pretty sizable impact on
what's been going on. As far as the future, I think,
obviously, this is going to stay around for a while,
too many people are now looking to the Affordable Care
Act provisions, to the exchanges, to the coverage to
age 26 and all of those provisions that have made
insurance coverage more accessible. I don't think
it's going to be a smooth ride the rest of the way by
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any stretch of the imagination and, you know, I think
that at the upcoming open enrollment there will be
some new problems that will be faced.
WALL: Who else has thoughts on the impact of the
ACA, whether that's on insurance or other aspects of
it and your outlook for the future, Dr. Park?
PARK: I think the most important thing about the
ACA has been the dialogue that it started over the
spotty quality, the amount of waste and the uninsured.
There's been a lot of discussion that came out of that
and I think that was probably the most important
thing, followed closely by the Accountable Care
Organizations and access to data. We have 50,000
Medicare patients in Indiana now where we have claims
data on everything that they do and it really has
helped us get insight into how other people are doing
in terms of delivering care, how we're doing, how we
compare ourselves, I mean the data's been huge. The
other thing I think is probably to me one of the most
interesting things, maybe not the most important
thing, is that high-deductible health plans have been
sort of a Republican thing for a long time and for the
most part the Democrats have opposed those and the
Democrats passed a law which caused a huge increase in
the number of high-deductible health plans and then
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the Republicans complained about that, so I thought
that was just, you know, sort of quirky. I think that
the law's far from perfect, but I agree with Sally
that it's here to stay, it's really set the rules for
how we're going to approach quality and efficiency,
and the commercial carriers for the most part are
following suit. Medicare's been an innovator in this
and I think the next few years will be full of
surprises. CMS is emboldened to issue new rules and
regulations, they're changing things all the time and
it keeps us on our toes.
WALL: Who else wants to chime in here?
KRAJNOVICH: Well, I'll just tag onto I agree
completely with both Sally and Ben, and Ben mentioned
about the higher deductible plans and that really
drives a level of consumerism out there that we've all
been trying to get to and struggled with over the
years, but it's so important to have high-deductible
plans because it's easy just to raise the deductible,
it really need to be supported by proper tools,
whether it's transparency tools or tools that provide
information to make the right selection about
provider, pharmacy, imaging and other services, so if
we can arm the consumer with the right tools,
technology in these high-deductible plans, it really
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brings them into the game where we've always said if
they've got skin in the game then they're going to be
conscientious consumers and good consumers of health
care.
WALL: Anyone else?
MOWERY: Dan and I were talking before we came up
here about how the health care industry is cyclical
and if you were in the health care industry in the
'90s, some of the aspects of the current discussion
are somewhat similar to us, but the difference in the
discussion today is that there is a regulatory
framework that's driving integration, that's driving
new payment models, that's driving the change which we
didn't really have in the '90s, '90s was pretty much
an economic market-driven model, but today with the
technology enhancements that we have, with the data-
sharing and portable data that we have available as it
relates to patients with the regulatory framework
encouraging it, this feels very different from where
we were in the '90s and I think that we are on the
trajectory, it's the river of no return, we are headed
down that river.
WALL: You don't think this is going to be
unwound like HMOs in the '90s?
MOWERY: Well, we all were preparing for
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capitation and contact capitation and percentage of
premium deals, all purely market-driven economic
models. The economics are a byproduct of essentially
catching up with where the ACA is taking us and where
the markets are having to evolve to catch up, so it
feels very different at this point.
KITTCHELL: From a provider perspective and from
a patient perspective, we know when patients have
insurance, they seek care more often when they need it
and the fact that more people are going to be insured
is a really good thing from a provider perspective.
There's some other aspects of the law that maybe are
less helpful, but that one in particular we think is a
great thing.
WALL: Sally, do you want to come back to what
you want to say about this upcoming open enrollment
and the issues as you see them?
MCCARTY: I think the river, and I'll use a good
one, but I think it's going to be some waterfalls and
things coming up with this open enrollment, and, J.K.,
you did a very good job just recently in kind of
laying out some of the issues that are going to happen
when people go to renew their policies. The second
lowest Silver plan, as everybody probably knows, is
what determines how much of a subsidy people are going
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to get, there's a formula that it all ties to that
premium for the second lowest Silver plan. It's very
unlikely that that premium in any exchange is going to
be the same as it was last year, so subsidy levels are
going to change and also some of the policies will
change, there's some wiggle room where policies can
change without being called a new policy, so I think
the people who go to renew, whether they auto-renew,
whether they're auto-renewed by CMS or whether they're
wanting to go in, they have changes in their status,
income, something like that, some family makeup
change, they would need to go in and make changes, I
think they all are going to face some kind of
challenge about what their new subsidies, what their
new premium is and what their new policy is, so the
word I think that people need to hear who are covered
through an exchange is go in and shop even if you
don't think that there's going to be a change because
there probably will be, so that's going to be rocky,
and then right in the middle of open enrollment people
are going to be getting their 1095 forms that show
what they need to claim as an advanced tax credit,
what they received, the odds of all of those being
correct as we all know are probably pretty slim, so
that's going to be another issue that people are going
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to face, so I think we thought last year was
problematic, I think this year's going to be even more
complicated for a lot of folks, so it's going to be a
very difficult open enrollment season. I think the
people who will have it the easiest are the new
enrollees who are just coming in shopping and finding
a plan.
WALL: Yeah, but for the repeat enrollees, you've
got some lower-priced offerings which is attractive
but that reduces their subsidy level and that can be a
problem.
MCCARTY: Exactly.
WALL: Anyone else have thoughts on just the
exchange enrollment that we're going to start in
November? If not, the other thing I was curious about
and another kind of big trend that is affecting all
kinds of players in health care is this kind of slower
growth that we've seen in the last few years in health
care spending. Certainly compared to the late '90s
and the first half or two-thirds of the early 2000s
the rate of growth here these most recent years has
been a lot smaller and I'm curious why people think
that's happening. There's a bit of a debate whether
that's just the economy, whether it's a new-normal in
health care, whether it reflects the impact of these
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high-deductible health plans and consumerism that
Dr. Park and Dan Krajnovich were talking about. Ryan
Kitchell, can you take the first crack at this and let
us know what do you think is driving it and what it
means for the future?
KITTCHELL: So one thing it's not, we're not
getting healthier and younger, I wish that were the
case. Maybe if we go to Mickey's Camp and he gets the
fountain of youth in there next year, possible, but
otherwise it's not that, unfortunately. That would be
great if it was. You know, it's probably a
combination, as you said, of a lot of things. I do
think the Affordable Care Act is putting reimbursement
pressure on health care spending. I think most viewed
the past trend of health care spending and the growth
rate as something that was unsustainable and so
employers and individuals, as well as health insurers,
I think are putting pressure on that cost growth. I
think providers are responding. I think maybe in the
past providers maybe were more focused just on curing
whatever that ailment was and I think there's been a
growing appreciation that affordability and kind of
that full patient impact and the fiscal piece is just
as important as the clinical piece, and so in general
I think it's a good thing from a society standpoint.
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It will be a little bit of a painful adjustment period
as we go through this given the size of the industry
and the cost structure, but I think when we get
through that phase it will be better for Hoosiers.
WALL: Dan Krajnovich, do you have thoughts on
this?
KRAJNOVICH: Sure, I mean I'll just tag along on
what Ryan mentioned. We're shifting in terms of the
way we reimburse from traditional fee-for-service to
more outcome-based and, you know, as Ryan alludes to,
we're kind of in a rocky phase of really implementing
that but know that's going to continue to expand over
the coming years. Today we spend 34 billion dollars
on reimbursement that's tied to accountable care
initiatives at UnitedHealthcare, so a pretty
substantial number, and we expect that to grow to 65
billion by 2018, so clearly a shift in the way we
reimburse, but it's all based on, again, getting to
better quality, better quality outcomes that we
believe will help keep health care affordable in the
long term.
WALL: Dr. Park, I'll bet you have thoughts on
this.
PARK: We knew that healthcare was eating a
bigger and bigger part of the economy and the
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projections were in some period of time it would be a
hundred percent of GDP and if something can't go on
forever then it's going to stop and it's stopping and
we still spend twice what the rest of the world does
on health care and so we've got a long way to go. The
Medicare trend is negative, negative 2 percent, so on
that population we're spending less money than we did
last year. I think we're going to see that across the
board.
WALL: And you're a provider organization, too,
does that worry you at all or not?
PARK: No, I'm pleased about it — Yeah, yeah, it
does. We've got a few adjustments to make, I mean
everybody does, but for us it's a little bit less of a
problem because we don't have a lot of fixed costs
that we have to deal with and so we're able to get
skinnier and do things perhaps more easily than some
of the other folks, but it's still, yeah, it's
worrisome.
WALL: Nathan, Sally, want to jump in on this?
MOWERY: I would say that I think that,
obviously, is going to be a continuing trend and it
kind of touches on one of the other questions that you
teed up for me and I think Ryan, that is are we going
to continue to see consolidation in the health care
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industry, what sorts of new models may emerge, and the
answer to that is yes, I do think we will continue to
see consolidation, either real legal consolidation
with new partnerships and trusted adviser type
relationships and there will be new emerging models
that come from this I think as we all are wrestling
with the reality of that kind of financial impact of
where we're heading. I agree with Ben, we are on an
unsustainable path for any number of reasons, we're
all getting older every year and there are certain
health conditions that come with that as we age. We
do live in Indiana, we have one of the top five health
conditions from South Bend to Jeffersonville, from
Terre Haute to Richmond, pre-diabetes, high blood
pressure, high cholesterol, et cetera, so those things
are driving some of the costs, so from my perspective
any model that evolves which gets on the front end of
being able to identify health care conditions early so
that you can intervene earlier and begin to change
behaviors earlier will also have a human impact on the
cost trend in the long-run, which is essentially what
an employer-sponsored health and wellness clinic is
all about, it's what Activate Healthcare is involved
with, it's understanding the individual employees and
their family members that we serve and getting to know
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them closely and through data understanding where they
are from a health perspective and jumping in as early
as we can to begin to change behaviors to begin to
hopefully back off from the long-run some of these
worrisome trends that we see.
WALL: Well, that's helpful. I'm going to
actually take both of those topics one at a time,
consolidation and some earlier interventions. As
we've talked about that spending question, certainly
hospitals, which have a lot of fixed costs with
infrastructure, have been hit in visible ways by the
slowdown in spending as in fewer patient visits,
several of the largest systems here had some prominent
layoffs last fall and have just been working for a
couple of years to try to cut costs. Consolidation is
kind of part of that mix and, Ryan, can you tell us
why does consolidation make sense, why now? Maybe
while you're at it can you give us a status update on
where you guys stand with your Methodist-University
consolidation plans?
KITTCHELL: Sure. So on the last question, big
announcement today on where our new hospital's going
to be. I'm just kidding. J.K. wrote first where it
was. You know, on that piece, because, you know,
we're trying to figure out what should be our new
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adult downtown hospital, what kinds of care should be
delivered and how, and really focus on the what and
the how. There's a lot of interest in trying to race
right to the "where" question, I know there are a lot
of folks that are interested in that. We're not there
yet and we're trying to do it in a very deliberate way
and we've got some great clinicians focused on, you
know, the world's changed, this hospital's been around
a hundred years, and so we're really trying to think
about what the next hundred years should look like and
it probably looks different and so once we figure that
out then we'll figure out the "where" question. I
guess on your first piece from a consolidation
perspective, I think it goes to a lot of things we're
talking about, those were built where our length of
stay was two or three times what it is today and so as
volume moves from an inpatient to an outpatient
facility we have more facility and more cost than
would be necessary and it allows us to lower health
care costs. The other great patient benefit is we've
got, you know, world-class doctors downtown about two
miles apart and getting them in one facility, a lot of
the complex patients that we get have multiple issues
and if you can get all of that care under one roof it
can really be very beneficial to the patient, and so
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it's a big deal, it's not going to happen overnight,
but we think it's the right thing to do for patients
both on the clinical and on the cost side.
WALL: Does anyone else have thoughts on provider
consolidation? If not, let's talk about ways to
intervene earlier and, Nathan, you mentioned that and
you're involved in one possible way to do that with
the employer clinic. I'm interested in where you see
that going, I mean they have proliferated in Indiana
perhaps more than anywhere else in the country,
employer clinics have and now have a lot of lives
under their care. Hospitals have also been in the
clinic game and continue to be so. Perhaps we're
reaching a critical mass, perhaps not, but if we are
with the number of people involved in some sort of
clinic, what difference could that make in just how
the broader health care marketplace works?
MOWERY: Thank you, J.K., for giving us all the
questions that we needed to prime ourselves on in
advance of this morning's meeting, I thought that was
very, very helpful so we could organize our thoughts.
The question that you asked me which I think goes to
this point is are employer clinics disrupting the
Indianapolis area health care market, that was your
question, which was actually a great question and it
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made me think about the word "disruption." When I
think of "disruption" sometimes I think of it in a
negative sense, my wife and I are on the patio, we're
having a nice quiet dinner and our neighbor gets his
lawnmower out and decides to mow the yard and it's
very disruptive, that's a very negative definition of
"disruptive." I think we're all going to need to get
comfortable with grappling with the positive
implication of a disruption because disruptions
oftentimes are those things that drive evolution, they
drive change, they drive improvement, they drive
access, they drive those things which we in the health
care industry all say that we care about. So I think
grappling and grasping and embracing the disruption
that's come with the Affordable Care Act, that's
coming with a number of the other market drivers,
which we could discuss if we had time, grappling with
that and embracing that and making it change the way
we think about health care I think is going to be
fundamental to our success in the future as a company.
It reminds me of an article by Clay Christensen
several years ago that was in the "Harvard Business
Review" called "Can the health care industry reform
through disruptive innovation?" and I think that's a
really good question for all of us. The employer-
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based health and wellness clinic was born out of a
frustration of the employers that each year they were
getting double-digit premium increases year on year
and there were not many tools left in the tool kit for
them to consider, so I think Indiana's very
enlightened benefit consulting and broker community,
they are the ones who I think initially began working
with their employer clients to figure out what could
be done differently in terms of how primary care was
being delivered in the state, and there is a
proliferation of wellness clinics as a result of that.
The Activate model is to engage the patient one-on-
one. We talk about population management, really we
should be talking about patient engagement because if
we don't engage the individual in caring about their
health and in wanting to be around to walk their
daughter down the aisle and wanting to be able to
retire to Florida, if we can't connect with them in a
meaningful way so that they take ownership of their
own health care condition, then I think we're all
going to be having some very serious discussions 10,
15, 20 years down the road, that's what has to happen
and I think that's what Activate Healthcare and other
health and wellness clinics employer-based are focused
on, providing acute care services so it's immediate,
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valuable, it's less disruptive to the work day, is a
great satisfier for the employees. In fact, we have a
clinic at Monarch Beverage, and Phil Terry, the CEO,
is here today, for years the No. 1 benefit when they
surveyed their employees that they liked the most they
got from Monarch was free beer and wine. Hey, what's
not to like about that? Since the clinic has been
there the clinic has taken over the No. 1 slot, it's
such a satisfier to employees to be able to have
quick, unlimited, free access to primary care. It may
be disruptive. It certainly goes a long way to
engaging patients early, understanding what's going
on, and then if they do need to be referred outside of
the clinic, making sure that referral is to a good,
trusted advisor and the patient comes back for overall
management.
WALL: Dr. Park, what do you think about employer
clinics?
PARK: I like them. 30 some years ago when I was
a medical student I worked at an on-site clinic at
Ford Motor Company and we did histories and physicals,
preventative care, we provided acute care, we provided
chronic disease management, we did physical therapy
and x-rays and dispensed medications. That is what
essentially the clinics today for the most part are
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doing. If that trend were really disruptive, I think
it would've been disruptive 30 some years ago. It
wasn't. We have 5000 patients, roughly, in our
employer program now with 14 companies. We provide
those services, plus the additional things which I
think are critical and that's health coaching. We
also do direct contracting for high-end imaging to
reduce those costs, for laboratory services to reduce
those costs. A mid-size employer will see $150,000 a
year in savings from those things alone, so I think
there's savings to be had. The most important thing,
it goes back to the big data. You know, I can look at
the variation and the cost of care provided by various
hospital systems and specialists and I can tell you
that in Indiana the cost of a joint replacement, a
knee joint replacement under Medicare where everybody
gets paid the same varies from as low as $18,000 to as
high as $36,000 and that's not driven by price, that's
driven by the results and by having access to this
50,000 lives, it really allows us to look at those
things and say "Okay, where do we want to send our
patients where they won't be readmitted to the
hospital with an infection, where they won't have to
spend three weeks in a skilled nursing facility
because of the way the surgery was done." So we think
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that that's really going to be the big value. Some
concerns I have about them is some of them do, and
we're trying to work in our clinics to not do this,
but it interferes with the continuity of care with the
primary care physician and, you know, we provide
after-hours coverage through our offices which we
think helps that somewhat, but, still, you know, we
try to get people back to their primary care physician
as an important thing. The other concern I have is a
lot of these clinics are being sold by brokers based
on a significant commission and we don't pay
commissions to brokerage firms for our clinics and I
worry that the wrong motivation might be there in some
cases.
WALL: So you like them, you have some concerns
about them, you don't see them as disruptive to the
other players. Ryan Kitchell, do you have any
thoughts, do you see clinics, are they a big dot on
your radar screen or not at all?
KITCHELL: Yes, so I agree with what's been
shared. We're big supporters of them, they hit on
access and affordability, two things that we think are
great for health care. After a lot of requests we
have been offering these as well, so we have 35 on-
site clinics across the state, and one of the added
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benefits that really hits to the concern Ben made is
on our on-site clinics all of that patient information
is flowing back to the physician and into that
electronic health record and so that primary care
physician or when you're in the hospital knows all of
those episodes of care and what's happened to that
patient so we can give the best care for that patient,
so we think it's a good thing and look forward to
doing more of that.
WALL: One other question about employers. I
actually visited one of Nathan Mowery's clinics, I
won't name them, earlier this year who ended up
putting in a large employer clinic but got to that
point after first saying "Why don't I just get out of
the business of offering health benefits?" and that's
a topic that's been coming up a lot, particularly for
smaller employers, fewer than 50 workers. I'm curious
to whether the panelists see that as likely or will
see lots of employers do that because now there is
subsidized insurance available individually through
the public exchanges or will do an individual strategy
with a combination of the public Obamacare exchanges
and perhaps some private exchanges, those are options
that are changing the game a little bit. I'm just
curious whether people think that a lot of small
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employers will stop offering a group plan or whether
they'll stick with it and why. Sally McCarty, why
don't you start on that.
MCCARTY: I think that if there are employers who
would go that route who would just decide to forgo
offering it would be the smaller ones, the ones that
pay lower wages, minimum wage or maybe slightly above,
because for them it probably, first of all, is the
employers who aren't inclined to be generous anyway
with their employees, so to add health cost coverage
or increased coverage so that their employees are
getting the minimum essential coverage that's required
would mean that it would have to go up from the bare
minimum and I think the employers who aren't inclined
to do that are the ones that would probably forgo
offering and let people take their chances on the
exchanges to see what they can get. I think large
employers, it just doesn't seem that it would pay for
them, they get, you know, good rates and just the law
of large numbers allows them to have that offering and
not give that up as an employee benefit, it would not
behoove either them or their employees to do that, and
then you've got that middle range where I think there
will be a lot of calculated cost-benefit analysis by
those middle-range employers, you know, which is going
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to work out best for them, but I'd say in the long-run
I'd be real surprised if there were many employers who
went the route of just giving up other than the very
small ones that I described.
WALL: Dan Krajnovich, what are you expecting?
KRAJNOVICH: And I agree with everything Sally
just said there where, clearly, the mid-size/large
group employers tend to be a bit more paternalistic
with respect to offering health care coverage to their
employees and dependents still view that as an
important benefit offering, it's still second to pay
as far as what they offer in a package to somebody
coming in as a new hire, and also as I remind people,
too, you know, if unemployment ever dips to a point
where they're really out recruiting for top talent,
offering health care coverage becomes a critical item
in their recruiting talent. So I think for the
foreseeable future mid to large size employer groups
are likely not going to explore the exchanges. We
haven't seen a shift in the small business employers
as of yet, but we are seeing more interest and
activity in looking at those options, you know,
"Should I keep my plan or should I dump in, have my
employees go to the exchange?" especially about 15
employee lives and under, I think those in particular.
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What we've been focused on at UnitedHealthcare is
trying to come up with solutions for those small
business owners, for example we've got defined
contribution strategy called Multi-Choice where it
allows the employer to budget year over year so they
know what their costs are, it allows the employee to
pick from a portfolio of plans so they're not just
having one or two choices, they can find the benefit
plan that best fits their needs. We've introduced an
ASO product down to ten lives, so if you have in
particular a good risk profile, that plan is likely
going to be cheaper than an adjustable community rate
if you go explore that avenue, and we have an exchange
platform that's kind of been embedded with the
Multi-Choice as well, so when you talk about a small
business owner, that's their job, so they don't have
the luxury of an HR person or a benefit director, so
if we can offer an exchange platform which really
minimizes the amount of work they have on their end
with respect to offering a benefit plan, that that
always is a plus from their standpoint.
WALL: You mentioned the ASO plans. If the
employer doesn't actually buy insurance, they hire
UnitedHealthcare or Anthem to be their administrator,
and also community rating, which that's really the
?
thing that small employers are looking at that
Obamacare's rules would say you can only charge the
oldest person covered in your plan three times more
than the youngest person and in the past it was more
like five or six times more, so for any employer that
has younger-than-average workers that rule when it
kicks in could really cause their premiums to go up,
that's the scenario. Now, that probably doesn't hit
as I understand it until 2015, 2016.
KRAJNOVICH: Correct.
WALL: So given that cloud on the horizon, how
dark is the cloud, are people making it seem worse
than it is, and when do you expect the rain to come?
KRAJNOVICH: Well, before you had best risk down
here in terms of price and up to your poorest risk and
so that's going to flatten out as we move forward
here. I have my PR person looking at me, so I won't
make any predictions on the "dark cloud" issue there,
but, again, I think it comes back to I think we'll
continue to see a shift there as far as when the
employers, small business employers, are looking at
those rates and looking at their options in the
marketplace and I think those are going to drive, you
know, are they going to dump into the exchanges or
not, so are there solutions out there that are going
?
to offer them the opportunity to continue to offer
coverage. In the end I think they'd like to offer the
coverage if they could do it in an affordable
standpoint, but if it becomes just too onerous from
cost and administering it, then they're likely to look
to those exchanges. So from our standpoint, again,
we're looking at small business solutions from a
product standpoint but also we look to help those
small business employers that decide "You know what,
we're going to shift and offer our employees 'X'
amount of money to go into the exchange," how can we
work with them in terms of helping that transition
from a group plan to the exchanges.
WALL: Okay. Anyone else have thoughts on this?
Well, I wanted to go back to something you said,
Dr. Park, you were talking about the data that you're
starting to see as well as the high-deductible health
plans and the consumerism that that has helped
encourage. So more customers that have more skin in
the game have more reason to be sensitive to price and
quality, but can they get the information they need
yet and, if not, what still remains to be given to
them to help them make decisions, I guess is the
question I'm asking?
PARK: I think we need to start looking beyond
?
pricing and look at actual cost. We have a
partnership with Milliman, the actuarial firm, and
they're helping us to sort through this data both on
where's the best place to go for a particular problem
and also on what's our performance look like. We're
having Milliman run the numbers on our employer
clinics, as an example, to see if there's savings, I
mean have an actuarial firm put a stamp on it. So I
think that the data is going to drive everything. My
background is in information technology. I was a
computer programmer. I love this stuff and I really
enjoy getting into it and finding out things like the
variation in the cost of a joint replacement. It
helps us tremendously because no integrated system is
going to be best at everything. They're going to be
good at some things, great at some things and terrible
at a few, and so we try to pick the places for our
patients that are at the "great" category.
WALL: Who else has thoughts, I guess to sum up,
what do consumers need in the way of transparency to
really be able to make better decisions? Sally?
MCCARTY: I was going to mention something but
actually it ties into what you're saying. The
Affordable Care Act, there was 250 million dollars
appropriated to give grants to states for more
?
transparency in rate review and a lot of the states
took advantage of those grants and actually Indiana
has a really nice rate review website now, thanks to
those grants, so they did those the first couple of
years, and as I said, many of the states now have much
more transparent rate review processes, but also in
the third cycle of those grants they offered money to
any state agency who wanted to do an All Payer Claims
Database and again many states took advantage of those
grants and I think you're going to see a lot more of
these decisions based on some of the big data that's
now being collected and aggregated, and I've worked
with a few states, Minnesota and Oregon, who are
looking for ways to use that in all segments of the
health care delivery system, including regulatory
functions and any way they can crunch that information
to be useful in cost controls and just analysis of all
types, so I think you're going to see, we're already
seeing, a lot more movement to the use of data to make
these sorts of decisions and that's data that wasn't
there before or wasn't collected, and I'm not sure how
happy the provider or the issuers are about it, but I
think it will end up being useful for everybody in the
long-run.
KRAJNOVICH: Just to add, and I certainly don't
?
want to speak for Ryan, but I think providers
certainly are not opposed to it when the data's
accurate and is reflecting truly their position and
procedures that a consumer can go out and look at and
consider, and Ryan and I have had this discussion, I
think we're more at the kind of still infancy stage of
the transparency tools that are coming out there, and
one of the things that I believe is very critical is
the accuracy of those tools. For instance, if a
consumer goes in and gets a cost for a particular
procedure and then goes out for that procedure and
gets a whole different price or cost for that when
they arrive, they're going to become very disgruntled
at the whole transparency model and likely not want to
use it again, so what we really want to aim for is
that that consumer, when they go out and get that
information and use it and it's not just the cost,
it's the quality and everything around the whole
episode of care that's being provided it's accurate,
so United's transparency tool is contract based, so
it's real-time, it's based on the actual rates that we
have and it's episode-based, so it's on the whole
treatment, so if you're going in for a colonoscopy, it
gives you entire cost for that, but, again, it doesn't
have the variations that a claim-based transparency
?
tool would have, so in a claim-based, that tool is
going to be dated in terms of the information,
especially if there's been a new contract that's gone
into place, it's not going to reflect that for another
year or so, and it also will have variability if
there's not a sizable or credible amount of activity
with a particular physician or facility, and so again
I think accuracy of these tools are going to be very
critical as we move forward.
WALL: Ryan, do you have some thoughts?
KITCHELL: Yes. I appreciate Dan's comments, the
accuracy piece is important. The last thing is folks
coming in and having a different expectation about
what something would cost and for our own employees
we've hired Castlight that a number of other big
employers, Lilly, the State of Indiana, et cetera,
have hired to do this and it has been a little bit of
a struggle to get accurate data. Being on both sides
of that transaction we know what that number should be
and it's really complicated and not always accurate,
so we've not seen the level of uptake I had expected
with our own employees using that tool. United has a
tool that we think is more accurate, actually. I
think it is a nice tool, but to go back to what Ben
said, I think for radiology and lab and maybe some of
?
the more commoditized services, that unit price is
probably relevant, but for a lot of other things that
total cost for that episode of care I think is more
relevant than some unit price for one step of the
process and so it's one of the reasons that we've
started a health plan so that we've got different
incentives to manage that whole cost along that
episode of care rather than have a unit price piece,
and we're seeing good results there.
WALL: The question on transparency actually came
from the audience and thank you for that. Another one
from the audience mentions that his wife has been
battling cancer since 2001 and had access to MD
Anderson, a cancer facility in Houston, but since
joining a marketplace plan last year they're now
limited to midwest health care providers. Can you
speak to the impact of the coverage in these
marketplace policies, how much has that changed things
and do we expect that situation to remain the same or
some of those plans will broaden out in the future?
Sally McCarty, I know you've thought a lot about this,
so why don't you take it first.
MCCARTY: Well, I think this ties in very closely
with the transparency discussion and that is because
of all of these things we've talked about, cost
?
controls, issuers have to find other ways to keep
their 20 percent share of that premium dollar and one
of those tools they've used is narrowing down the
networks in their offering and this seems to have been
accelerated, this trend in the exchange policies,
there are a lot more plans being offered with narrower
networks, and, granted, these have been around for a
while. Whenever an employer offers an HMO and then a
PPO, an array of types of policies, there's going to
be a narrow network selection in there in terms of the
HMO, but in that case people were pretty clear on what
they were buying, I think, or are pretty clear. Even
though they're not big here, they are in other places,
but these narrow networks, I don't think people were
expecting them and I don't think the communications
have been very good, apparently not in this situation
as to which providers were covered by that particular
plan, so I think a lot of work needs to be done.
Narrow networks are not necessarily bad in themselves,
especially as those plans are offered in an array of
choices. However, I think clearly from what we're
hearing from consumer advocates across the country,
more transparency needs to occur as to exactly what's
being bought, what's the network, what are your
options going to be when you buy this plan, and I
?
think a whole lot of work needs to be done around
those types of plans.
MOWERY: Can I ask a question of Sally? Do you
think that there will be a regulatory intervention to
address that issue?
MCCARTY: (Nods head affirmatively.)
MOWERY: So to kind of keep the access more open
as opposed — So will it have a limitation on the
narrow network strategy?
MCCARTY: Not necessarily, I don't think, to keep
the networks open, I think to make sure there's
adequate choice, so I think in a place like New
Hampshire last year when there was one plan, that was
a problem because everybody wasn't in that plan,
consider that a narrow network, but I think there will
be interventions as far as the way issuers make sure
they're contracting with an adequate selection of
providers, and as I said, I think the messaging about
"Here's what you're buying, here are your options
you're going to have if you buy this plan," I think
there will be a lot of regulatory intervention around
that.
WALL: And do you see that coming from federal
regulators or state by state?
MCCARTY: I know a lot of states are looking at
?
enhancing their network adequacy standards, but also
the federal regulators will be involved as well.
WALL: Okay.
KRAJNOVICH: The narrow networks have been
interesting. We started exploring this several years
ago and Chicago was one of our first markets where we
launched a narrow network and they've had some
success. We've had struggles elsewhere, but, again,
as Sally alluded to, as these exchanges opened up a
lot of the strategies have been designed around a
narrow network offering on these exchanges. It has
created a network access issue. We have filed with
the intent to participate in Indiana for 2015 on an
all access basis across the state, so we'll let you
know how that works out in terms of the attractiveness
of that versus the narrow offerings, but we do see
regulators are clearly looking at that. I think there
was a lot of rumblings this past year with limited
access from folks that had enrolled in the exchange
and didn't necessarily know her doctor wasn't in the
network or the length they may have to drive to get to
a particular facility.
WALL: Ryan, do you have any thoughts?
KITCHELL: Yes. So our health plan's going to
have a narrow network offering on the exchange next
?
year, so it will be an interesting contrast to Dan's
offering that's open access versus some narrow network
offerings. I think in Indiana that has been an open
access employer-based market in general, part of that
adjustment phase that we were talking about from a
sector perspective is going to need to play out on the
consumer side as well where I think last year there
wasn't enough maybe awareness and attention on what
network you were buying when you were buying an
exchange product and I think as folks have understood
what the consequences of that are you'll see more of a
focus on the consumer sector of what the network is
that you're getting.
WALL: While we're talking about benefits I did
want to ask about the potential Medicaid Healthy
Indiana Plan Expansion. I'd just be curious to hear
to what extent you think Indiana's health care
providers were impacted by the State's decision not to
expand this year and how they might be impacted if
indeed this Healthy Indiana Plan 2.0 goes forward.
Ryan, do you want to answer that one?
KITCHELL: Sure. So let me start by commending
the Governor and his team on taking a bold step and
proposing something that had some political risk and a
tremendous amount of work. You know, most importantly
?
it gets about 350,000 Hoosiers that have never had
health insurance and as a provider that's a good thing
because we know they'll seek care when they need it
more often than without. From our perspective it's a
really big deal. The grand bargain on the Affordable
Care Act from a health system perspective was
significant Medicare cuts but getting paid a modest
amount for folks that previously didn't have insurance
both from the exchange and Medicaid and so in Indiana
it's about a five billion reimbursement reduction as
part of the Affordable Care Act over the next 10 years
and so this is a key piece of making up some of that
ground so that we can continue to deliver on our
mission of providing care for folks, so it's a big
deal and I'm thankful that they've stepped forward and
hopeful that CMS quickly approves it.
WALL: Dr. Park, go ahead.
PARK: I think not expanding Medicaid under the
current system was a good move. What they did was to
try to enhance the network of physicians available to
serve the Medicaid population, they offered us
Medicare reimbursement but only for a limited period
of time and not very many physicians opted into that,
and so had they expanded Medicaid with an inadequate
base of physicians it would've been a disaster. HIP
?
offers Medicare reimbursement long-term and so most
physicians are going to sign up for it, and so even
thought we'll be bringing all of these new people in,
we'll also have a markedly expanded network of
providers to serve them and I think it makes sense. I
agree with Ryan, the Governor's to be congratulated on
this one.
WALL: And I know it's way more complicated than
my question will make it, but tell us roughly how much
higher is Medicare reimbursement for the Medicaid
reimbursement?
PARK: It's about 20 percent higher in primary
care services.
WALL: While you have the floor, Dr. Park,
another audience question is how will you address the
primary care crisis? You were talking about it
getting worse, you thought, if the State had expanded
Medicaid without enough primary care providers in that
program. Kind of more broadly there's that issue just
across the whole health care market, perhaps more
demand than there is primary care providers to meet
it. How will that problem get solved in the future?
PARK: The concern I have is that people are
buying primary care services privately, concierge
practices are bringing up. Employer clinics are
?
really an example of concierge care provided through
your employer and people who have enhanced primary
care access, by and large, do better than those who
don't. What we're doing about that, because we still
want to be a broadly-based organization, is we teach
in the PA program at Butler, the nurse practitioner
program at IU and University of Indianapolis, Ball
State, and we get nurse practitioners and physician
assistants from all of those programs and we're
growing that part of our provider base much more
quickly than we are our primary care base because
physicians still aren't really choosing primary care
in the numbers that they need to. If you take
internal medicine docs who go through an internal
medicine residency, only 8 percent of them will end up
practicing general internal medicine and seeing
patients, the rest of them will go into some
subspecialty, cardiology, GI, they'll become a
hospitalist, they'll do something other than practice
in primary care, so for at least the intermediate time
we're going to have a lot more physician assistants
and nurse practitioners in our practices, and over
time, like all economic problems, it will correct and
the reimbursement will change and the primary care
physicians will be paid more, and more people will
?
choose it.
MOWERY: I would add to that that need, and if
you look at the long-term trends in terms of the need
for primary care providers, it's very startling, that
will drive innovation and that will drive change to
address that need, and I think one of the ways that we
will do that is through technology, particularly
through telemedicine, and we have around 20 clinics in
the state of Indiana and then a number of outside.
All the clinics are on the same medical record, and if
an employer has employees located around multiple
places of the state, they can access any one of our
clinics and they can do that through a telemedicine
visit, and so I think we're on the front end of the
change that's going to be unleashed in terms of what a
provider-patient relationship looks like when it's
impacted by kind of the unfettered use of tele-
medicine. I think we're on the front end, I think it
holds great promise for us. We're using it today, but
it will continue to be something that I think perhaps
addresses the primary care shortage because you can be
there virtually.
WALL: We have a question from the audience about
telehealth services, what you think about them,
whether they should or shouldn't be reimbursed, and I
?
think I would add to it whether the state legislature
should or should not allow telehealth to happen
without a prior in-person visit. What are your
thoughts on that?
MOWERY: Yeah, I think that's a great question
that I'm sure legislators are getting multiple
perspectives on, and every state is looking at that
differently. Today I think where we are here is you
need to have an initial face-to-face contact with the
provider and then telemedicine can be done after that,
so there needs to be that sort of face-to-face touch
point. Will that be the status permanently in
Indiana? I think there will continue to be pressure
on what that looks like and I think every state is
probably going to look at it somewhat differently and
you are going to have some potential conflicts among
states in terms of their respective views of
telemedicine. Sally has an opinion on this, too,
because we talked about this at breakfast.
WALL: All right, tell us your opinion, Sally.
MCCARTY: Somebody once said "Change is good, you
go first." I think that's sort of the telemedicine
mantra. I think there's a lot of other systems that
are going to have to adjust in order for that to be a
viable alternative, but I do think that it is a viable
?
future alternative, but we're talking about the
medical licensing system and all of that. If you're
going to talk to a specialist in Seattle, does that
specialist have to have a license in Indiana and how
that works. But my provider network, which is IU, I
just received a survey by e-mail about what kinds of
things I would be willing to do through telemedicine
and I thought that was pretty interesting, so it's
definitely the trend of the future and definitely I
think will be a good way to address some of the
concerns about primary care shortages.
WALL: Dr. Park, you're in the thick of this,
what do you think about telemedicine?
PARK: Well, IU and AHN are piloting a telehealth
program, we're waiting on the final rule. The
legislation is actually done, there's enabling
legislation that's been done, and we're waiting on the
final rule from the Medical Licensing Board to go
ahead and pilot this, and we think it's a great thing,
and we've done online visits using a product for 20
years now and I think you'll continue to see that part
grow. I'm not completely convinced that's going to do
away with the primary care shortage, though, I mean,
because a doctor is sitting here and doing it on
telehealth, I mean that doesn't really enhance the
?
number of hours a day that you'll get primary care
from that person. So it's an interesting thing, I
think it's going to get traction slowly, but I think
it's the right direction.
WALL: Dan Krajnovich, the original question was
about reimbursement of telemedicine. You're running a
health plan. Why do you want to or not want to
reimburse your telemedicine?
KRAJNOVICH: Didn't think of that one. Again
just listening to all of my colleagues here talk about
it, I mean clearly it's something that I think is
going to pick up traction. UnitedHealthcare has been
involved with some telehealth in the past and
currently, so obviously we do support it to some
degree. I think, again, there's a question mark in
terms of where this is going, how much impact is it
really having with respect to the PCP shortage there
and the amount of time they're spending relative to
telehealth services, is there a real differential
there between delivering via telehealth versus not, so
I still say it's somewhat of an uncertainty.
WALL: I'll ask one last question, this will be a
lightning round thing, from the audience about
Accountable Care Organizations, they get talked about
a lot, a big part of the Affordable Care Act. The
?
question is do you think they'll be able to save
health care? Dr. Park, you're in the midst of ACOs,
what do you think about them?
PARK: We have three of them, one is a
partnership with Franciscan, one is a partnership with
Premier in Bloomington and the other one is our own in
Columbus, Ohio, and we only have one of those that's
beating the benchmark. It's a difficult road. You're
trying to practice population-based health care but
your population keeps moving. 25 percent of the ACO
lives turn over every year.
WALL: Meaning they stop seeing the doctors that
are in your organization and go somewhere else?
PARK: Well, you know, they get well, I mean they
don't need us for a year, and so we don't get those
well people attributed to us and then they come back
the next year.
WALL: When they're sick.
PARK: And another 25 percent are well. We can't
get them all well at once. So there are problems with
it. I think it's a step in the right direction. I
think you're going to need, instead of attribution,
you're going to need up-front assignment so you know
your population that you're serving, you know those
people, who they are, and I think that that would be
?
an important change. I think it needs to be more
community-based. Our problem is that we had the
lowest cost of any ACO that I've seen for our
benchmark. We looked at other people's and their
benchmarks were like $12,000 a year and ours was like
8400.
WALL: That's per patient?
PARK: Yeah, $8400, because we've been doing all
of this stuff and we don't have as much room to
improve, so it would be great if it were community-
based and assignment was done in advance, I think if
that happened they'll work.
WALL: Who else has thoughts about ACOs?
KITCHELL: So you can chalk me up in the "no"
category, too, on this. So we have the largest ACO in
the state, about 50,000 lives in the Medicare Shared
Savings Plan, and maybe to add to what Ben said, we
see a couple just fundamental problems with the
program. So, one, you don't know what lives you're
accountable for until after the fact based on this
attribution model. The network is broad, and so we
talked about kind of the advantages and disadvantages
of the broad and narrow network, 50 percent of the
50,000 lives that we have are outside the IU Health
system in other systems around the city and so it is
?
hard to be accountable for their care when they're
outside your system and you don't know what you're
doing. And then finally, the data is really slow to
actually kind of be actionable, and so we have a
Medicare Advantage Plan and stack that up side by side
and you know who your members are, you're getting
real-time data, and it's a narrower network and so
we're having much better success on the health plan
side than an ACO structure.
WALL: Does anyone want to make the last word,
give the last word? All right, well, we'll wrap it up
there.
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