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The Health Care Cost Conundrum: Looking Back to Move Forward

Posted By Louise Probst, Wednesday, November 1, 2017
The St. Louis Area Business Health Coalition (BHC) recently marked its 35th year of connecting and representing the region's leading employers on health care issues. While much has changed since the BHC's founding year of 1982, the driving force behind the organization remains the same: concern for annual increases in health care costs which outpace the growth in all other areas of the economy.
 
BHC founding employers recognized that, as purchasers of health benefits, they were inadvertently fueling excessive growth of health care utilization and cost. They knew that their benefit offerings created and unleashed "cost unconscious consumers" into the health care market. Familiar with responding to customer demands, they also understood the role consumers have in shaping products and disciplining markets. BHC founders held deep concern for the long term impact of a market where consumers utilized whatever was produced and at whatever price. They joined together to learn about health care and to leverage their collective power in ways that would help flatten the cost curve and push for medically necessary, high-quality care.
 
As 2018 draws near, it seems appropriate to glean inspiration from the vision and aspirations held by BHC founders. Sometimes, looking back is the most effective way to move forward. Borrowing from a 1970s comic strip, one of the BHC's foremost thought leaders put it best when he quoted, "We have met the enemy, and he is us."
 
Thank you, BHC members, for 35 years of purchaser leadership in health care. Please join us in celebrating this occasion by attending our November 3rd Annual Meeting, Getting to Affordability: Facing the Cost Conundrum.

Warm regards,
Louise Probst

BHC Executive Director

 

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Don't Let Health Care Steal Your Retirement

Posted By Louise Probst, Wednesday, October 4, 2017
Need evidence that skyrocketing health care costs affect everyone? Try this eye-opening estimateA 55-year-old couple should plan to provide the equivalent of 92% of their lifetime Social Security benefits to cover their Medicare financial responsibilities. A 45-year-old couple will spend a projected 122% of their Social Security benefits

These statistics are from a report by Health View Services, a company that provides data and software to financial advisors. Projections were based on data from more than 70 million annual health care cases and assumed 22 years of retirement. Calculations include premiums for supplemental Medicare insurance, Medicare Part B and Part D, out-of-pocket costs for medical, dental, hearing, and vision services, and prescription drug prices. They do not include costs for long-term care.
 
Health care inflation is the culpritThe analysis assumes health care costs grow on average 5.5% a year, and that the annual cost-of-living adjustment on Social Security continues at 2.9%.  

Staying in good health can mitigate medical bills. The report contains scenarios that show how getting diabetes under control can save money and increase longevityBut besides exercising, eating vegetables, and budgeting with realistic expectations for health care spending, what else can we do? 

To start, become a value shopper. Help your employees to understand that costs vary and encourage them to ask why it costs so much. Studies have demonstrated that higher cost of care does not equal higher quality. Cost may be higher due to complications of care or prices that are simply higher.

While health care costs challenge a secure retirement, they also impact many aspects of American life. There is no single solution, but there are actions to be taken and contributions to be made by all. Achieving affordable health care must be everyone's agenda. BHC and MHI leaders from across Missouri recently participated in a national summit on the affordability of health care. More than twenty other communities participated in this call to action.

If there is an action which you would like to take or see taken, please share it with the BHC so that it can be added to the list being collected through various community conversations. 

Warm regards,
Louise Probst

BHC Executive Director

 

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Innovating Our Way Out of the Health Care Dilemma

Posted By Louise Probst, Wednesday, September 6, 2017
This past June, a few BHC leaders were invited to an Innovation Summit showcasing top digital health care firms from Israel and Ireland, facilitated by GlobalSTL. To qualify for the event, each innovator had to have already demonstrated success (e.g. $50 million in revenue). Teams from St. Louis' major health care providers and corporations assembled at Washington University for the event.
 
To start the afternoon, we were inspired by future possibilities. Dan Cave, CEO of Envolve PeopleCare (parent company Centene Corporation) asked each of us to consider "why are we not healthier?" He made a compelling case: the power to resolve our current health care crisis resides with all of us. Individually and collectively, we can lower the demand for health care services through education, employment, and innovation. Vance Moore, President of Business Integration, Mercy, offered a peek at the very different and far less provider-centric health care delivery system of the future. Then the "speed dating" began.
 
Health care innovators were each given five minutes to present their value propositions. Based on these brief comments, the BHC and other attendee groups picked four to six firms for private 15-minute follow-up conversations. Who would have thought that "speed dating" could be such an effective model for a business meeting?
 
BHC leaders expressed particular interest in the following innovators: Kitman Labs has a solution that focuses on an area of high importance to employers' budgets: musculoskeletal injuries. They use machine learning to identify risk and reduce injuries. Telesofia offers easy to understand educational videos personalized to the patient's clinical situation. If someone on your team is living with Parkinson's Disease, Beats Medical's personalized metronome therapy to improve mobility is worth a look. Virta Health's success in reversing type II diabetes without medication or surgery is offering a refreshing approach to disease management, as is SilverCloud's platform for addressing the mental health needs of populations. If you are interested in learning more about any of these solutions, please contact Melissa Hogan.

 

Warm regards,

Louise Probst

BHC Executive Director

 

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How is Your Health Plan Accelerating Value?

Posted By Louise Probst, Wednesday, August 2, 2017
When it comes to shaping desired behaviors, incentives matter. Whether you're the parent of a small child or the CEO of a large corporation, you know the power of this tool.

This is no less true in today's health care space, where aligning provider pay with outcomes is key to achieving higher-quality, affordable care. One need not look further than CMS' quality improvement program, which linked incentives for achieving good health care outcomes to bundled payments, quality bonuses, and other risk-based arrangements. What's clear from the data is that plans such as Medicare Advantage, which put providers at risk for clinical outcomes, have out-performed private insurance on a number of quality indicators.

So what, exactly, are private sector payers doing to leverage best practices for clinical care and reward value over volume? How can you, the employer, know that you've selected the health plan that will put your health care dollars to work wisely? The BHC is offering members an opportunity to hear directly about these issues from the medical and marketing directors of Aetna, Anthem, Cigna and UnitedHealthcare, and to then pose questions to the CEOs of these companies as they sit side-by-side.  

The Member Meeting on August 10th will provide a unique forum where major St. Louis area insurers discuss their strategies for designing payments to improve provider performance. It also offers you a rare opportunity to make clear how important it is that your employees benefit from the latest innovations in clinical care. There's still time to register! Check out the agenda here.

Warm regards,

Louise Probst

BHC Executive Director

 

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The Results are In: BHC Member Opinions on Federal Health Care Reform

Posted By Louise Probst, Wednesday, July 5, 2017

With the current national focus on health policy in mind, the BHC polled members on their personal level of agreement or disagreement with various opinion statements. Thank you to the 53 members who responded with thoughtful comments. A few highlights are noted below:

  1. Members support repealing both the employer and individual mandate provisions of the ACA, though the margins were not large. Results indicate less opposition to the individual mandate for health coverage than to the employer mandate.
     
  2. Members strongly oppose the Cadillac Tax and taxing individuals on the value of their health benefits. In fact, sixty four percent (64%) of respondents disagree with the idea that individuals should be taxed on the value of their health benefits, even if a tax is necessary to "provide needed access."
     
  3. Members do not believe that the high cost of care is adequately addressed by either the ACA or current GOP proposals.  
     
  4. When it comes to Medicaid expansion, more members are positive or neutral than are actively opposed. 
  5. Members strongly agree that employers have a role to play in driving better value health care.  

While BHC engages with policy makers on specific health policy issues that would weaken ERISA protections, mandate benefits, or impact the quality and affordability of health care, it does not advocate for or against broad health care reform packages. The survey was conducted to enable BHC leaders, members, and staff to understand the range of opinions held by individual members on key issues of federal health policy, particularly those related to taxation and coverage mandates.

 

As many of your responses noted in various ways, the fiscal health of our nation will depend on health care purchasers, including employers and the government, having the courage to pursue better value through advocacy and contracting. I was pleased to see such strong recognition of this opportunity by members. Let's support one another in picking up the pace. 

 

Thank you for the work you do every day to make health care better for your employees and our community.

 

Warm regards,

Louise Probst
BHC Executive Director
 

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High Drug Prices in US: R&D Investments Cause or Cover?

Posted By Louise Probst, Wednesday, June 7, 2017
It's well understood that pharmaceutical companies charge more for their medications in the U.S. than in other countries. This fact helps fuel charges of predatory pricing on the part of the pharmaceutical industry. Explanations for high drug prices are many and varied, yet, drug makers commonly rely on a seemingly compelling argument: Hefty prices are necessary to fund research for the next generation of innovative treatments.
 
But can the claim that research and development drives high U.S. drug prices be put to an empirical test? A recent study published in Health Affairs did just that.
 
Using data on prices and sales volume in the U.S. and abroad, researchers analyzed the 15 drug companies that manufactured the 20 top-selling drugs globally in 2015. List prices in the UK, Canada, Ireland, and Denmark averaged 41% of U.S. net drug prices for the 15 companies studied.
 
The researchers then calculated the amount of "excess" revenue companies earned by charging higher prices in the U.S. compared to Europe and Canada. Note the "excess" refers to the revenues created by the price paid in the U.S., above the amount Canadian or European customers paid for the drugs. Excess revenue for these 20 drugs was $116 billion.
 
The results: In total, companies spent just 66% percent of the excess revenue on global R&D. As the table demonstrates, excess revenues as compared to R&D spending varied by company, with Bristol-Myers Squibb's R&D costs claiming about three quarters of its excess revenue, and Biogen's excess revenue from U.S. customers equaling nearly 2.5 times its R&D spending.  
 
According to the researchers, if the excess prices charged to U.S. customers were reduced to cover only 100% of the industry R&D expenditures, the U.S. would have paid $40 billion less in 2015. That's a good chunk of change in a year when CMS reports that Americans spent a total of $325 billion on drugs.

Warm regards,

Louise Probst

BHC Executive Director

 

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St. Louis: A High Value Health Care Community? Prices for Medical Services Below National Averages

Posted By Louise Probst, Thursday, May 4, 2017
report from the Health Care Cost Institute (HCCI) illuminates commercially-insured price differences for three categories of health care services across 61 regions between 2012 and 2014. Communities can now understand how prices for physician, inpatient, and outpatient services compare over time and to other regions. Marked variation in price levels exist among the three categories and across regions when indexed. For instance, when the national average is set to one, the spread across high and low price regions can vary more than 70 points. This variation is important to understand since research shows that higher prices do not correlate with better health outcomes or care quality. 

Prices in St. Louis, as in many Midwestern communities, were below the national average in all three categories in each year. This speaks positively about the value of health care in the Midwest since we know that, on average, quality scores in St. Louis mirror national averages. What we don't know is how these price differences compare when adjusted for wage and other cost of living factors. Also important to note: price comparisons are not the same as total cost of care comparisons (PMPM cost), since they exclude service utilization. Differences in illness burden, patient expectations, and provider practice patterns drive important differences in total cost. Midwest Health Initiative data suggests St. Louis has higher utilization patterns than many communities, even after adjusting for illness burden. A final observation is that St. Louis' price-competitive edge has eroded somewhat during this time. While its prices are still below the national average, they have moved closer to it, suggesting higher price increases over the last three years than other communities. 

Employers can use this information to compare their own experience in St. Louis and other communities where they have a significant workforce presence (mapping tool available here). If you have data on spending for your population in physician, inpatient, and outpatient categories, the BHC would like to help you look at your data as compared to HCCI findings. Please call Patti Wahl for assistance. HCCI is committed to creating insights that are meaningful to employers. The BHC appreciates the opportunity it has to bring an employer perspective to HCCI's work. 

Warm regards,

Louise Probst
BHC Executive Director

 

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St. Louis ReCAST: Addressing Youth Engagement, Mental Health in Trauma-Impacted Communities

Posted By Louise Probst, Thursday, April 6, 2017
More Americans are dying prematurely, notably among our younger generations. So says the 2017 County Health Rankings & Roadmaps, just released by the Robert Wood Johnson Foundation and the University of Wisconsin Population Health Institute. Unsurprisingly, the opioid epidemic was a leading cause of premature death among people ages 15-44 in 2015. But for young people ages 15-24, the picture is somewhat different. This cohort lost more lives to other types of injury death, most commonly motor vehicle crashes and firearms. Suicides and homicides are on the uptick.
 
The report points to fostering youth engagement in communities as an antidote for this malady. To assist, the BHC is pleased to join the coalition of stakeholders supporting St. Louis ReCAST, a project launched to promote well-being and resiliency among high-risk youth and families in a federally designated "Promise Zone" encompassing North City and much of North County. Led by the St. Louis County Department of Public Health, St. Louis City Department of Health, and St. Louis Mental Health Board, ReCAST is leveraging a $4.7 million 5-year grant from the Substance Abuse and Mental Health Services Administration (SAMHSA). Project goals include improving access to trauma-informed behavioral health services and peer-to-peer youth support and violence prevention programs. Residents in the target communities, including youth, will serve as delegates in a participatory budgeting process that gives them a major say in how and where funds get spent.
 
Want to get involved in ReCAST? There are a variety of ways that BHC members and other partners can help out in the coming months, from donating raffle items for a Participatory Budgeting Kick-Off on April 22nd to serving as subject matter experts during the request for proposal process. If you would like more information, please contact Michelle C. Mitchell, Community Engagement Coordinator, at mmitchell2@stlouisco.com.

Warm regards,
Louise Probst
BHC Executive Director
  

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Health Care Reform 2.0: What is Past May be Prologue?

Posted By Louise Probst, Wednesday, March 8, 2017
This week we saw the health care reform debate heat up, with House Republicans releasing their plan, the American Health Care Act  on Monday. At this point it is not clear that the proposed legislation will overcome the ACA's greatest shortcoming: making care more affordable.
 
Tax credits for purchasing insurance on the individual market and measures to incentivize Health Savings Accounts seem to form the twin pillars of this proposal, which keeps much of the ACA in place. Three ACA provisions that will remain intact are: (1) eliminate the use of pre-existing conditions in underwriting, (2) allow children to stay on a parent's policy until age 26, and (3) ban the use of lifetime maximum coverage caps. The ACA value-based purchasing programs also appear to be left in place.
 
Taking steps away from the ACA, the Republican plan removes the mandate for individuals or employers to purchase health insurance and the penalties set forth in the ACA for non-coverage. In order to protect insurers from the adverse selection that can accompany guaranteed access to insurance, those with gaps in coverage would be subject to 30% premium surcharges. Rate bands which differentiate the price between younger and older subscribers have been expanded. The "Cadillac" tax, which would impose taxes on employers who offer rich plans, has been delayed until 2025; however, its future seems uncertain.
 
Medicaid expansion will be able to remain in place through 2020, after which federal funds for new Medicaid enrollees will stop. States will be given flexibility in structuring their Medicaid programs and the current spending match will be replaced with a per capita allotment, without adjustments for high spending communities. High risk pools will return.
 
If the early response is any indication, consensus will not come easily. What do you think? We look forward to learning your opinions.

 

Warm regards,

Louise Probst

BHC Executive Director

 

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Question of the Hour: Getting to Affordability?

Posted By Louise Probst, Thursday, February 16, 2017
In 2015 federal spending on health care programs exceeded spending on Social Security for the first time. It's no wonder then, that as Congress considers replacing the ACA, affordability is top of mind.

Information in the BHC's recently released 2017 St. Louis Health Care Industry Overview: Volume I suggests that managed care plans shifting to value-based provider contracts seem to be making gains toward more affordable care. Most striking is the report's findings on Medicare Advantage (MA) plan performance.

New research shows MA plans out-performed fee-for-service (FFS) Medicare on quality, and may have contributed to a drop in FFS Medicare costs through a spillover effect. Poor and minority counties with the largest increases in MA enrollment saw the largest drop in FFS Medicare costs.

Increasingly, MA outperforms commercial plans - both nationally and locally. In Missouri, local MA plans outperformed commercial insurance plans on controlling blood sugar in diabetics, managing hypertension, and reducing hospital admissions.
The gaps across these products were wide.

Consider the cost implications for diabetes, with a national price tag of $322 Billion. St. Louis commercial plans saw a steep decline in the number of patients with their blood sugar in control during 2015, while MA plans reported notable improvements. Nationally, commercially-insured people with diabetes cost 3.7 times more than do people without the disease. The ROI could be considerable.

How to explain these performance disparities? The Centers for Medicare and Medicaid Services (CMS) Star Ratings program incentivizes plans to focus on prevention and positive health outcomes. In turn, MA health plans include payments that reward clinicians for better quality results. These levers compel provider attention to care management.

The BHC's recent survey of local health plans found many adopting value-based incentives. Join BHC's February 9th Member Meeting discussion of how employers can use value-based models to reduce costs while improving care quality.   

Warm regards,
Louise Probst
BHC Executive Director

 

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