IPM Pulse

Broadening the Strategic Value of IPM

By Sam Muppalla, Vice President, McKesson Health Solutions, Network Performance Management (NPM)

Over the past few weeks, I’ve covered a lot of ground. We looked at the pressures on health plans and the ways in which those pressures are forcing a new dynamic in how the plans create new, scalable competitive products that enable affordable, high-quality care. We talked about some of the innovations that leading health plans are bringing to the areas of product, network, care model and reimbursement designs. The pilot initiatives in these areas continue to show positive results. The next level of scaling requires an integrated and automated approach to enable health plans to deploy, manage and maintain these innovations in a much more rapid fashion. This all has to be done without increasing health plan costs while delivering new value to a health plan’s customers, providers and members.

It is our position at NPM that achieving this alignment will deliver affordable care. Additionally, through this alignment health plans will gain a competitive and cost savings leadership position. Through collaborative and independent research with our health plan partners, we have identified three main areas of competitive and cost savings leadership. The potential cost savings of achieving alignment are impressive. For example, working with a regional Blues plan with three million members, the potential cost savings due to achieving an integrated approach to network design were projected to be:

Administrative Cost Savings: Total Potential Annual Savings = $13 million to $25 million

• Provider data administration cost reductions: $5 million to $10 million
• Provider outreach cost reductions: $0.75 million to $1.25 million
• Contract management cost reductions: $1 million to $3 million
• Administrative reimbursement cost reductions: $3 million to $5 million
• Provider service cost reductions: $1.5 million to $2.5 million
• Credentialing cost reductions: $1.5 million to $3 million

Medical Cost Savings: Total Potential Annual Savings = $45 million to $100 million

• Streamlined member health advocacy: $5 million to $10 million
• Pay for Performance: $15 million to $40 million
• Network design and performance improvements: $25 million to $50 million

Provider IT Cost Savings: Total Potential Annual Savings = $.5 million to $2.5 million

• Redundant system consolidations: $0.25 million to $2 million
• IT change management cost reductions: $0.25 million to $0.5 million

The total aggregated annual potential for savings is between $59 million and $127 million.

Some Final Thoughts

In 2009, the National Health Expenditure (NHE) rose to $2.5 trillion or 17.6 percent of the Gross Domestic Product (GDP) with private health insurance accounting for 32 percent of the NHE. Yet all of this spending is not translating into any measure of higher quality care as the World Health Organization (WHO) also ranks the U.S. as 72nd in overall level of health in the world. To affect high-quality, affordable care, health plans must be able to harness innovative product, network, care model and reimbursement designs. Network design is the critical element that will orchestrate the operational scaling of innovation. Therefore, automation of network design and efficient implementation of it through end to end integration will be crucial to success of health plans in the post reform world.

Thanks for taking the time to follow me on this journey. If you’ve joined us late in the discussion, fear not. We’ve collected all the related threads in the Unlocking Affordable Care by Aligning Products white paper, which you can download from our website at http://ow.ly/7MFKb.

An Integrated Approach to Alignment and Scalable Innovation

By Sam Muppalla, Vice President, McKesson Health Solutions, Network Performance Management (NPM)

Previously, I wrote about the barriers to alignment across product, network, care and reimbursement innovations. And, yes, I teased you with the three-word preview of what was to come this week: Integrated Building Blocks. The idea of building blocks lies at the heart of an approach to achieving alignment and scaling innovation, so let’s dive in.

Unlocking potential administrative, IT and medical savings — while also creating sustainable alignment of the innovation engines — requires various building blocks be in place as a sound foundation for network design and implementation. These building blocks deliver the required functionality in the most efficient manner. When these building blocks are utilized in an integrated fashion, the current barriers are removed and innovation alignment is achieved.

Four Essential Building Blocks

There are four essential network design automation building blocks that comprise the foundation for innovation: networks, contracting, reimbursement and engagement.

Each of these building blocks enables capabilities by delivering necessary functionality within and across the spectrum of network design. Reaching levels of maturity with this capability unlocks additional value and alignment.

Networks

The network building block enables health plans to differentiate and compete. The purpose is to differentiate their value for each customer segment by aligning the product and care model designs with the underlying network designs. It ensures network performance by facilitating the selection of appropriate providers into networks and the alignment of provider reimbursement with network design objectives. It enables networks to be mapped to member-facing and provider-facing products. The provider-facing products can be used for contracting and provider rate differentiation. The member-facing products can be aligned with benefits and serve as steerage targets for benefit designers.

These constructs, in conjunction with each other, enable productization of care model and payment innovation. For example, a health plan could define a “Medical Home Network” that consists of medical homes and supporting providers in a given geography. It could then enable PCMH-specific reimbursement (e.g., PMPM capitation + Fee For Services (FFS) for preventive services + P4P for EBM) by defining a provider-facing product and associating specific reimbursement policies with that provider product. Additionally, it could also define a member-facing product (e.g., PPO Value) which combines the medical home network with the general market PPO network. This in turn will allow the health plan to define a benefit extension which gives a 10 percent premium reduction to members who use Medical Home Network providers for their primary care. In short, a health plan is now able to monetize its care innovation (PCMH), align benefit design to network design for steerage, and align its provider payment with member incentives (around preventive services), while incenting higher quality care (P4P).

The network building block also achieves administrative cost leadership through comprehensive provider data governance and automation of core provider processes.

Contracting

The contracting building block is designed to enable health plans to reduce contract administrative costs while increasing provider payment accuracy. It optimizes the management of the provider contracting lifecycle through the automation of contract authoring, offering negotiating and acceptance while ensuring the standardization of terms and policies. This building block achieves reduced medical expenditure driven by contract standards adherence, reduced claims mis-payments, and increased speed to market for new payment innovations. It also can support rules-based enforcement of network level reimbursement guidelines to ensure consistent network performance.

Reimbursement

The reimbursement building block enables health plans to maximize the effectiveness of their medical expenditures by paying for value versus volume and by incenting team-based performance. It is the single source of truth for all forms of reimbursement including traditional claims pricing, episodes of care, shared savings, capitation and P4P. This building block enables the mixing and matching of reimbursement methodologies to incent optimal provider performance. It supports a modeling engine to analyze the financial impact of reimbursement and contract changes. It incorporates network-aware provider/contract selection for claims pricing intake. This is a rules driven, high performance service that leverages provider relationship information to select the right provider, the right governing contract and the right reimbursement model for each incoming claim. Additionally, it includes provider transparency services that enable health plan provider portals to support online pricing lookups and reimbursement status/detail inquiries for providers. These services can be extended to support provider performance scorecards and benchmarks.

Engagement

The engagement building block is designed to increase collaboration and participation. It enables meaningful engagement among health plans, providers and members in order to improve health outcomes and reduce costs. This building block achieves reduced administrative and service costs, increased member participation and adherence, increased provider satisfaction and adoption of care/payment initiatives, and the enablement of collaborative/integrated care delivery models such as PCMH and ACO.

Utilizing flexible, automated and integrated building block capabilities is the key to sustainable success that not only unlocks the promise of affordable care to customer segments but also delivers on reduced administrative, medical and IT costs. Incorporating information technologies that can facilitate, if not altogether replace, the manual interactions will be an important part of every organization’s evolution.

Next week, we’ll wrap up this discussion with a look at some of the potential savings health plans could achieve through alignment and an integrated approach to network design. The potential savings are not slight, so stay tuned. As always, if you just don’t want to wait for next week, visit our website and download the entire Unlocking Affordable Care by Aligning Products white paper; it’s available now.

Facing the Barriers to Alignment Across Product, Network, Care and Reimbursement Innovations

By Sam Muppalla, Vice President, McKesson Health Solutions, Network Performance Management (NPM)

I wanted to follow up on last month’s discussion about Performance-based Networks and Medical Cost Savings. I wrote about the need to align care models, payment, products and networks, and then promised to address some of the barriers standing in the way of achieving alignment. Well, that’s what I’m writing about today.

Health plan operations responsible for supporting the intent of the provider network designs will find it increasingly difficult to maintain strategies that provide affordable care by applying existing methods and systems. Currently, the systems and processes that enable these operations are frequently based on systems that are neither integrated nor automated, rather relying on various manual interventions to achieve some scale of efficiency. Creating and maintaining innovative value-based offerings in this environment requires process excellence coupled with tight coordination executed across multiple departments. As the complexity and frequency of demand for these offerings increase, this approach becomes more challenging to sustain, thus risking long term success of the affordable care promise.

Figure 1: Today’s operational engine interactions are not optimized for enabling innovation.

The traditional systems and processes that health plans have used to respond to specific client demands appear in Figure 1. For example, product demands from consumers may come in through the sales team, which manually interacts with the product management, care management, network development, and health economic teams to design a product to meet the market need. This first set of interactions, in effect, becomes the innovation engine for value-based product designs. Additionally, it becomes the starting point for a myriad of manual and highly paper-based interactions that ripple throughout the enterprise.

The interactions within this innovation engine then set forth a series of parallel and independent sequences with three different operational engines: the provider contracting department, the provider management department and the claims operations department. Each of these areas relies heavily upon their own set of manual and paper-based processes and interactions. The inefficiency of this current approach suggests the potential for an annual administrative cost savings opportunity of $5-25 million, depending on the health plan’s size and current system architecture. In addition to administrative costs, this approach creates inefficiency and waste in IT costs and medical costs that could be between $40-100 million.

So, how can you unlock these savings and eliminate this waste? We’ll discuss that next week. I’ll say only three words here: Integrated Building Blocks. I’m not going to say a word more — but if you can’t wait for next week you can read the entire Unlocking Affordable Care by Aligning Products white paper; it’s available on our website now.

Performance-based Networks and Medical Cost Savings

By Sam Muppalla, Vice President, McKesson Health Solutions, Network Performance Management (NPM)

 Last week, I wrote about Health Plans and the Three Levers of Innovation for Affordable Care. We looked at a number of innovations taking place in the areas of products, care models, reimbursement, and network designs. It’s vitally important to be able to innovate in each of these areas, but even more important to be able to align these network elements properly. The key to affordable care is enabling every member to get the right care, at the right time, from the right provider, and for the right price. But when you look at what it takes to deliver such care, the interdependencies of design of care models, payment, products and networks become apparent, as you can see in Figure 1 below:

Figure 1: Affordable care requires alignment of product, network, care model, and payment design.

Steering the member to the right provider at the right setting is influenced by the member incentives built into the product design and the provider choice component of the network design. The right care is dependent on the care model design and the provider reimbursement design. Overall affordability of care is obviously tied to payment design. Not so obvious are the dependencies between product design and payment design. The member behavior targeted by product incentives should be reinforced by the provider engagement influenced by reimbursement design. All these interdependencies necessitate alignment between product, care model, reimbursement and network design. Alignment is fundamental to scaling innovation.

Network Design Drives Alignment

As shown in Figure 2, network design drives alignment between product, care model and payment approaches. As an illustration, it facilitates the alignment of products and care models by enabling steerage of members to the appropriate care teams or sub-segments of the network. This steerage can only occur if member benefits and incentives (which are embodied in the product design) and the structure of care teams (which are described in the network design) are systematically matched. This systematic matching has to be governed by network-level guidelines for provider performance management.

Figure 2: Network design drives the alignment that delivers affordable, high-quality care.

Focusing on the alignment between products and payment, network design enables this by ensuring that the goals of member incentives are supported by the provider behavior driven by payment design. This enablement is achieved through network-level reimbursement guidelines being automatically enforced during provider contracting.

Finally, network design incorporates network-level reimbursement guidelines to drive alignment between care model and payment design by ensuring that provider behavior envisioned in the care model design is incented by payment design.

As health plans productize new care models and payment innovations, the complexity and the frequency of the abovementioned alignment efforts will mushroom. Customer segmentation and the need for tailored products to serve these customer segments will further amplify the alignment challenge.

The approach of using network design automation to efficiently operationalize alignment is a critical core competency for health plans. By innovating with this approach, it will be possible for health plans to strike the optimal balance between the value to their customers (competitive premiums, high quality care) and the value to themselves (revenue enablement, reduced medical and administrative cost).

Are there barriers to operationalizing alignment? Of course! But stay tuned: Next week, I’ll be writing about the barriers to alignment — and after that, I’ll go into more detail about why it takes an integrated approach to remove these barriers. As before, if you don’t want to wait to read more, you can read the entire Unlocking Affordable Care by Aligning Products white paper now; it’s available on our website.

 

 

Health Plans and the Three Levers of Innovation for Affordable Care

By Sam Muppalla, Vice President, McKesson Health Solutions, Network Performance Management (NPM)

Last week, I wrote about the increasing Pressure to Deliver Affordable, High-Quality Care. In the face of those pressures, many health plans have begun to explore innovative approaches to product, care model, and reimbursement designs. What are they doing? In this second installment of our series about unlocking affordable care, I’d like to take look at how some of the pilots in these areas show promise.

Product Innovation

One path health plans are using to achieve affordable care is through the deployment of value-based insurance designs (VBID). At the heart of this approach is the utilization of member incentives to reduce barriers to high value Rx and services. Conversely, it also incorporates disincentives for low value services or Rx. Typical member incentives include premium reduction, co-pay/coinsurance waiver/reduction, and health reimbursement accounts (HRA). Co-pay increase or cost sharing are typical disincentives. Member steerage to high value providers is another typical goal of VBID. The design of the supporting networks is critical to the success of VBID products. The network design has to ensure that the composition, the quality and the value of the participating providers can fulfill the benefit design and match steerage goals of the member incentives. Furthermore, the network level provider reimbursement guidelines should be complimentary to the member incentives. For example, member incentive for a preventive exam during a Primary Care Physician (PCP) office visit could be matched by a Pay for Performance (P4P) provider incentive (on top of regular capitation) to perform the examination. Without the incentive, the Per Member Per Month (PMPM) capitation might be a disincentive for the PCP to perform the preventative exam.

 

 

Figure 1: Network steerage is a critical component of product innovation. 

Care Model Innovation

Innovative care models provide another approach to the delivery of affordable, high-quality health services. Population management-based care model designs, such as Patient Centered Medical Home (PCMH) and Accountable Care Organization (ACO) designs, are an important advancement towards affordable care. These designs deploy a care team-based approach rather than a traditional siloed services approach to ensure a continuity of care.

The PCMH care model results in continuity of care via a physician who leads the medical team that coordinates all aspects of preventive, acute and chronic needs of patients using the best available evidence and appropriate technology. The emphasis for PCMH is about collaboration to manage a population’s health. Another example of a care model with a team-based approach is the ACO care model. In this care model, the emphasis is on accountability for providing the required healthcare services for a defined population. Health plans are rolling out ACO pilots across the nation. For example, the Pension System (of the California Public Employees’ Retirement System) formed a partnership with the Blue Shield of California Health Maintenance Organization, Catholic Healthcare West, and Hill Physicians Medical Group with the goal of improving quality of care while reducing costs. Some of the early findings are showing positive results:

• 17 percent reduction in patient re-admissions since the pilot began
• Length of stay reduced by one half day
• Almost a 14 percent drop in the total days patients spend in a facility
• 50 percent reduction in the number of patients who stay in a hospital 20 or more days

These results show that it is possible to utilize care models to improve the quality of outcomes while reducing the cost of healthcare.

It is worth noting that health plans are not limited to adopting one care design innovation over another. Greater benefits can accrue to both consumer and provider by combining approaches—leveraging both collaborative and accountable care designs.

Adoption of population management is forcing a change from paying for individual providers’ services to paying for health management of a population across a team of providers. Supporting this requires the reimbursement systems to understand the structure of the care team, role of the various providers within the care team and the relationships between the providers in the care team. In other words, it will need to understand the provider network structure to calculate the reimbursement. Another complexity is that providers participating in PCMH or ACO care models may also be directly contracted with the health plan. Selecting which payment arrangement to use in these scenarios will require an understanding of providers’ relationships with the plan.

Reimbursement Innovation

Along with innovations in product and care model designs, health plans are also innovating in the area of provider reimbursement. These innovation efforts primarily focus on enabling incentives for quality and performance, while controlling the rate of medical cost growth. These objectives reflect the need to move away from a healthcare system that bases provider reimbursement on volume to one that bases provider reimbursement on the value of the outcome. Within this approach, a variety of different models are evolving (see Figure 2).

Figure 2: Mixing and matching payment models is a critical component of reimbursement innovation. 

Evolving in parallel with individual models is an understanding that the ability to mix and match different reimbursement designs will deliver greater value than the utilization of just one design. Health plans are mixing and matching different reimbursement methodologies to optimize provider performance. This implies that a provider is likely to have multiple valid payment arrangements at any given time. Picking the appropriate payment arrangement will require the reimbursement engine to understand the role of the provider in the network and the full context of all of the provider’s relationships.

Next week, I’ll be discussing why the alignment between products, care models, provider reimbursement, and network design is so important when it comes to scaling these innovative approaches. If you can’t wait that long for that discussion, you can read the entire Unlocking Affordable Care by Aligning Products white paper now; it’s available on our website.

Health Plans Under Pressure to Deliver Affordable, High-Quality Care

By Sam Muppalla, Vice President, McKesson Health Solutions,Network Performance Management (NPM) — the leader in Integrated Provider Management (IPM) solutions

Expenditures on healthcare in the United States continue to increase and are rapidly reaching unsustainable levels. Pressures by businesses, households and the government to address these escalating costs and ensure high-quality healthcare are multiplying. This is the first in a series of six blogs that examine the challenges facing health plans and the ways that network design can unlock affordable care by aligning products, care models, and reimbursement.

Health insurance companies are faced with addressing a rapidly changing healthcare environment on multiple fronts. These changes are being driven by the goal of achieving a more affordable, higher quality healthcare system. Shifting market needs, increased regulatory initiatives, and a demand for administrative efficiency are requiring innovative approaches to unlocking affordable care. These pressures are originating from key healthcare stakeholders—employers, members, and the government (Figure 1).

Figure 1: Pressures for affordable care are mounting

Employer Pressure

As the competition for the group insurance market increases, health plans need to respond to employer demands for products that deliver greater value. Delivering high value requires products which are tailored to the health of the employer’s specific population and emphasize wellness and prevention. An employer that can offer benefits and programs tailored to meet their employee needs can both improve their workforce productivity and optimize their healthcare spend. The employer’s insistence for reduction in premiums and decrease in the rate of premium growth is challenging health plans to develop more innovative strategies.

Figure 2: Changes to the Group and Individual Market Demand

Consumer/Member Pressure

With the passage of the Patient Protection and Affordable Care Act of 2010 (PPACA), the Congressional Budget Office (CBO) estimates (Figure 2) that approximately 32 million more individuals will require access to healthcare services. This represents a significant increase in the number of new healthcare consumers at a time when health insurance companies are required to guarantee issue and renewability of coverage. Steering this influx of new members to the right care teams will be a very critical core competency for health plans to develop. It is one of the few risk management tools left in the plan’s arsenal in a guaranteed access world. The growth of the individual market is also being accompanied by an increase in member financial responsibility. Members are increasingly demanding greater transparency into their provider quality, performance, and cost information.

Government/Regulatory Pressure

Evolving healthcare regulation puts still more pressure on health plans. New regulations within the PPACA Section 9016, stipulate an 80% MLR cap for small groups (fewer than 100 lives) and an 85% Medical Loss Ratio (MLR) cap for large groups (more than 100 lives). These regulations also cap the percentage of revenues that can be earmarked for operational and administrative expenses at 15-20%. This poses a unique challenge for health plans; it requires plans to innovate in the areas of products, care models, and reimbursement designs without increasing the administrative and operational overhead.

There are roughly eighteen additional PPACA provisions that put further pressure on health plans by promoting increased collaboration (sections: 6301, 4201, 3027, 3011, 3021, 10333, 3022, 3024) and accountability (sections: 2705, 3006 & 10301, 3001, 3025, 2706, 2704, 3023, 3004, 3008 and 3002). The Bureau of National Affairs best summarized these provisions by stating, “The comprehensive provisions in the act regarding payment and delivery reform reflect both the payment system continuum – from fee-for-service to bonus incentives for quality to bundled payments to partial and full global payments as well as the delivery system continuum – from independent clinicians and hospitals to small group practices to multi-provider networks to partially or virtually integrated organizations to fully integrated systems with common ownership and employment.”

These demands mean that health plans need to offer new high-value products that incorporate outcome-based reimbursement to drive quality outcomes and not pay for potentially avoidable costs. According to studies by the Robert Wood Johnson Foundation and Prometheus Payment (2009), “Up to 40 cents of every dollar spent on chronic conditions and 15 to 20 cents of every dollar spent on acute hospitalization and procedures are attributable to potentially avoidable complications (PACs).” With evidence like this health plans are taking a new, hard look at when and how care is delivered.

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Next week, we’ll be looking at how health plans are responding to these challenges with innovations in products, care models, and reimbursement structures. Visit the blog next week for “The Three Levers of Innovation for Care Affordability.” If you can’t wait, you can read the entire Unlocking Affordable Care by Aligning Products white paper now; it’s available on our website.

Final thought for today: On December 8th, we’ll be hosting a webinar on Lean Provider Lessons for Post Reform Success. Plan to attend this free webinar for more insights into designing for affordable high-quality care.

Innovative Alignment Drives Healthcare Affordability

By Ned Moore, Vice President, McKesson Health Solutions, Network Performance Management (NPM) — the leader in Integrated Provider Management (IPM) solutions

Everybody wants affordable, high-quality healthcare. Consumers certainly want it; companies that purchase care on behalf of their employees are demanding it; health plans want to provide it. The question is how to achieve it.

This was a question that brought representatives from many of the country’s largest health plans to the 2011 Network Performance Management Symposium, hosted by McKesson. For the most part, each of these companies had plans in place. By a ratio of 8 to 1, they are already looking at patient-centered medical homes (PCMHs), designing whole new sets of products, reimbursement methodologies, and more—yet they were all still hungry for more ideas and more information.

So over the course of two days, we heard speakers from both industry and academia discussing the work they have been doing to improve the delivery of high-quality, affordable care.

• A large health plan from New England talked about increasing affordability through customizing networks for each customer segment while rolling out new contracts which reimbursement providers based on performance and quality.
• A large national plan presented a case study on its efforts to improve affordability by targeting specific operations that relate to claims payment accuracy. By ensuring that the right provider is associated with the right contract and the right payment every time, the plan has gained significant operational savings.
• A regional plan from the Mid-Atlantic states discussed efforts to combine affordability with better outcomes by aligning provider networks, products, care models, and reimbursement designs.

Additionally, we had numerous panel discussions about how to scale care pilot programs that show promise, about whether (and how) cloud-based information technology services can help change cost structures, about how “retail” healthcare delivery may impact provider management, and more.

Designing for Value

Dr. A. Mark Fendrick, co-director of the University of Michigan Center for Value-Based Insurance Design (V-BID), gave the symposium’s keynote address. While many of the core principles of V-BID have already been incorporated into prescription drug plan designs, Dr. Fendrick broadened the discussion to explore how the principles of V-BID could make a significant difference if applied across all the elements that contribute to the cost of delivering healthcare.

The way to achieve more affordable care, with better outcomes, he argued, is not to focus on reducing spend but on redistributing healthcare spend in ways that really contribute to health. Health plans are using levers such as the elimination of co-pays to encourage procedures and provider visits that are appropriate. At the same time, they can impose significantly higher co-pays to discourage procedures that are unjustified by evidence-based outcomes. These kinds of levers can help focus the members’ behavior to spend on those procedures that really do contribute to health.

The core principles of V-BID are ready to be applied elsewhere, too. Payers are constructing more intelligent provider network designs by utilizing criteria such as cost and performance to better align the network with the specific member population receiving services. Similarly, payers can apply the principles of V-BID to reimbursement, by designing distinct reimbursement methodologies such as episodic or shared savings to promote evidence-based medicine (EBM) utilization and care coordination.

The next iteration of V-BID will push beyond the focus of applying levers to influence membership behavior to designs that incorporate provider network performance and quality, care delivery models, and reimbursement designs. The healthcare market is pushing towards a more holistic model that incorporates all of these components to reach the next level of quality and affordability.

Alignment Facilitates Affordability

So where does all this discussion lead? Ultimately, V-BID, customizing networks, and transforming reimbursements have led to an awareness about the role of alignment across the innovation silos in driving affordability. Health plans need to be able to capture, manage and integrate vast quantities of information at extremely granular levels to begin to construct the innovative product, network, care and reimbursement models that are necessary for the delivery of better, more affordable care. It is also clear that they need to connect the right members to the right networks—and those networks to the right reimbursement programs. They need tools to see how all these elements are interacting, to continually refine them for better outcomes and better cost structures. Lastly, they have to do all of this while ensuring administrative and medical caps compliance.

Ultimately, affordability arises neither from cutting or curtailing whole lines of service nor from forcing people to pay more for services they should be getting. Affordability arises from an ability to align members, plans, providers, and reimbursement models. The competitive distinction for health plans lies in their ability to do so with dynamic, surgical precision. Going forward, plans will be creating more products; working with larger numbers of smaller, more granular populations, supported by larger numbers of smaller, more granular provider networks. These structures will be enforced through benefit and reimbursement designs that promote affordable healthcare behaviors and practices.

2011 Network Performance Management Symposium: Day 2 Wrap

By Ned Moore, Vice President, McKesson Health Solutions, Network Performance Management (NPM) -- the leader in Integrated Provider Management (IPM) solutions

Wow.

The first day of the Integrated Provider Management Symposium had been exciting, but the next day took us to a whole new level. The themes we had heard initially—affordability, alignment, steerage, value and trust—appeared again in the presentations and panel discussions from the moment we opened on day two. It seemed like our presenters took this discussion into a new realm, in which all the ideas became intertwined and complementary.

In the morning, a speaker from a large New England health plan offered some terrific insights into his company’s efforts to align customers with high value products and deliver more affordable, high-quality care. At the center of their strategy to make healthcare more affordable is a drive to develop a much more robust and granular understanding of their provider relationships. The ability to mix and match their provider networks to better align with their various products will enable them to increase the value of their products (better health) to their members. It was a great peek into the activities of a company that is effectively using alignment, steerage, value and trust to ensure care affordability—and doing so with the enthusiastic support of a compellingly high percentage of providers and consumers. More to come on this story.

Ah, but then along came our keynote speaker, Dr. A. Mark Fendrick, co-director of the University of Michigan Center for Value-Based Insurance Design (V-BID) who, well, schooled us on the future of affordable care.

The concept of V-BID is not new. In fact, we’ve seen it before and it is pervasive in the way health plans design benefits to steer members to more informed formulary choices. What is different is applying the same concept to provider networks, and that difference led to a fascinating and animated discussion that challenged every one of us to think anew about how to achieve the stated goal of affordable care.

Far too much time, says Dr. Fendrick, has been spent on the supply side of the healthcare equation: how you cut costs or change the way care is delivered. The demand side of the equation is equally as important—and by addressing the challenge of affordable care with both supply and demand in mind, we can begin to imagine new ways to achieve the most desirable outcome, which is better health.

Dr. Fendrick is not one of those who believes that we need to spend less on healthcare. We need to spend money differently, he argues. The challenge lies in spending money on the right procedures, for the right people, at the right time, in order to prevent greater costs later on.

One example was this: A 50-year old adult should be getting a colonoscopy. Period. It should not cost him or her anything, because even a small co-pay can be a disincentive to take the time to schedule and have this procedure. If this procedure can prevent that person from developing a case of colon cancer, the cost of the procedure to the payer is money well spent. In contrast, if a healthy 20-year old books a colonoscopy, that consumer is going to have a hefty co-pay. There’s no medical reason to have that procedure at that age (assuming there’s no history of colon cancer in the family)—and therefore no good reason for the payer to be picking up the complete tab for it.

That’s one level of detailed refinement that Dr. Fendrick holds up as an illustration of cost redistribution. But how to refine insurance plans to accomplish this?

This is where technology plays the key role. Payers need to understand their consumer populations—at very deep levels. They need technologies that can identify risk factors among consumers and link them to care models that can help people avoid the risks to which they might be predisposed. They need technology that can help consumers make better, more well-informed decisions. Additionally, and maybe more importantly, payers need technologies that can align their provider networks to deliver on the promise of those new products or care models.

Indeed, without technologies that can help them build smarter plans and smarter networks—that connect supply and demand in optimized ways—then the kind of massive customization that is at the heart of the V-BID model cannot be created. With that kind of customization, with those highly-tuned and highly-dynamic plans, reimbursement systems, care delivery networks, and population groupings, a whole new experience of care is possible—with better outcomes at an affordable price for payers, providers and members alike.

And on that note, we pretty much wrapped up our day. Could it have ended better? I can’t think how.

 

2011 Network Performance Management Symposium: Day 1 Wrap

By Ned Moore, Vice President, McKesson Health Solutions, Network Performance Management (NPM) -- the leader in Integrated Provider Management (IPM) solutions

What a way to start this year’s Network Performance Management Symposium! It’s the largest symposium that we’ve held to date, and we pretty much filled the Washington Room at the ACE Conference center. A show of hands early on indicated that about half of the 55 or so non-McKesson attendees were joining us for the first time. But what was even more exciting was to see that another 15 hands went up when VP Nanci Ziegler asked who was attending for the second time. Another 8 or so hands went up when she asked who’d been for three years, and then still more went up when she asked who’d been there four years. One gets the impression that we’re adding real value here, which is a great way to start the day.

Nanci then gave us our marching orders: network, learn from one another, and have fun, and I think everyone followed those instructions faithfully over the course of the day.

From the get-go, certain themes kept rising up: steerage was one. Is it a good thing or a bad thing? Clearly, it depended on who was talking. There were those who were concerned that steerage would be perceived as a negative restriction of choice. There were others who viewed steerage as a kind of personalization, a way to help consumers make the best choices for care in a given situation.

Tied into those views were notions of value and trust. In the presentations, in the panel discussions, and in the questions that followed, it was very clear that value is in the eye of the beholder. Plans and providers want to deliver high value to their customers, but they may not always agree upon what constitutes value. In the panel discussion on Retail Healthcare, Dr. David Nace recalled a hospital in which the surgeons whom patients thought provided the best care were often the worst surgeons, both from a technical perspective and an outcome perspective. In contrast, the surgeons who delivered the best outcomes and often were the best from a technical perspective were frequently considered the worst surgeons by the patients receiving care. The differentiator was bedside manner. It turns out that many healthcare consumers define value in terms of their experience in the hospital. If they had a good experience, they felt that they had received value—even though the payers might be able to waive reams of outcome studies in the air that argued the contrary.

And that’s where trust plays in also: Patients develop a bond of trust with their care providers, but in most cases, that trust is based on an emotional engagement. They like the doctor; if the doctor listens, he or she must be good—even if the consumer keeps having to return because they’re not getting better. Payers, though, have a fact-based relationship with both the providers and their customers. They have outcome studies that can quantify the value of the services delivered.

Where we need to go is in helping consumers and providers understand the facts. That can help consumers understand why payers might steer them in one direction or another; it can also help a care provider understand how they are viewed from an outcome perspective. That transparency can only help if for no other reason than it can bring to light any discrepancies in perception. If there’s an error, it can be spotted and corrected.

The common thread among all of these themes was the goal to reach a new level of affordability for members, providers and payers. Our customers understand the time is now to rethink their strategic value in terms of access, cost and quality. It was clear our customers are achieving new levels of affordability through innovating in a number of ways—for example, designing new products, care models, networks, and reimbursement methodologies. What was also clear in these discussions was the importance of alignment across these initiatives in order to achieve administrative sustainability, increased scalability, and aid in terms of furthering the progress of specialized population management.

And it turns out that technology has something to offer everyone in this case. The transparency needed to share the facts with consumers and providers requires a level of technical infrastructure and support that can only now be delivered. We also heard repeatedly that everyone needs more tools to facilitate better decisions—tools that payers can use to identify high quality care providers who can participate in certain networks, tools that care providers can use to facilitate claims and reimbursements, tools that purchasers can use to select the best plans and networks for the consumers in their plans, and even tools that consumers can use to compare plan and coverage options with greater transparency.

The ability to use technology to create more targeted populations and networks, though, was clearly on the minds of many symposium participants. By using technology to map plans, networks, and reimbursement options in different ways to meet the needs of different populations, payers may be able to create plans and networks that are more personalized for providers and consumers—without increasing their own administrative overhead. One question that remains is whether network design drives product offerings or vice versa.

The day drew to a close with as many thought-provoking questions as answers that had been raised, but I sensed that everyone had gained a great deal from the discussions. There were new things to think about for everyone. At the same time, it was also clear that some people in the room had tried things that other people in the room were thinking about—so one could almost anticipate the discussions that they’d be having later on in the day.

So, all in all, an excellent start to this year’s symposium. Stay tuned to see what day two holds.

Health Plan Brand Experience: More Than Just Words

By Nanci Ziegler, VP, Customer Experience, and Robert Capobianco, Director of Marketing for McKesson Health Solutions, Network Performance Management (NPM) -- the leader in Integrated Provider Management (IPM) solutions

We recently attended a presentation by Bruce Temkin, managing partner, The Temkin Group, which highlighted the importance of an organization’s brand. Below are some of the high points we walked away with and thought they were worth sharing.

Quote from Bruce Temkin: “The organization’s brand is the fabric that aligns all employees with their customers in the pursuit of a common cause.”

All too often, the notion of a brand experience conjures up the imagery of a room full of marketing folks scrambling over a whiteboard thinking about words and graphics for the next corporate PowerPoint. However, an organization’s brand is far from a trivial component to an organization’s strategy – it embodies the promises and values the organization believes in and wants to deliver to its customers. In fact, reform and market trends are forcing health plans to rethink the way they deliver and produce value to their customers – in essence a new brand experience - to deliver greater access to higher quality care at a more affordable price.

What is critically important is the brand comes alive through the experience of our stakeholders: providers, members and employers. As the realization of the brand is delivered through experiences, this implies that a brand cannot be owned by the organization – it is indeed shared between the organization, its employees and its customers. The brand experience is critical to our strategic success because once the experience doesn’t live up to the brand promise (e.g. a negative brand experience), we have most likely lost the trust of that stakeholder. If this happens across multiple constituents, it impacts an organization’s ability to be successful in the marketplace and decreases their competitive posture.

Branding experience considerations for health plans:

1.       Brand Fabric = Make Promises + Embrace Promises + Keep Promises

Ensure the promises you are making are embraced by your organization. It is important that not only do your brand promises make sense to your customers but they must also make sense to your employees. Your employees’ buy-in will be critical to your ability to keep/deliver on your promises.

2.       Brand = 1 Part Functional + 1 Part Accessible + 1 Part Emotional

Think about your brand components: Functional, Accessible and Emotional – all too often, we only think about the functional (What can I do) and accessible (How easy is it to do) aspects. The emotional aspect of your brand is a strategic differentiator. One only has to think about Apple to understand this concept – the emotional (e.g. innovative, cool, modern, great design, etc.) aspect of their brand allows their customers to look beyond the expense of their products and has made them a market leader.

3.       Measure Your Promises Which Doesn’t Always = Satisfaction

It is a common mistake of many organizations to equate the brand experience to having high levels of satisfaction. This is helpful if one of our promises is indeed satisfaction, but if it isn’t, all you are measuring is noise. In order to understand the effectiveness of your brand leadership, you must measure your actual brand promises. For example, if it is higher quality care, you will need to ensure you have the ability to capture quality metrics and outcome data to understand your progress.

Your healthcare brand is more than just words – it embodies the promises you make to your customers. It needs to be defined not only to the macro themes but also down to the specific actions that make it real. The experience your customers have makes your brand come alive and is the key to your brand integrity. The first pathway to understanding if your brand and your promises are congruent is to ask: What is the actual brand experience of my customers, and what do we want it to be?

Where there is a gap there is opportunity!