How Alliances Can Partner with Employers in the Current Healthcare Landscape

1. How Alliances Can Partner with Employers in the Current Healthcare Landscape Aligning Forces for Quality American Institutes for Research®

2. Objectives • Provide an overview of the health care challenges facing employers • Illustrate the benefits of working with an Alliance—an independent and trusted entity—to address challenges • Develop a baseline understanding of the five types of initiatives most likely to impact employers, and highlight partnership opportunities for employers and Alliances

3. Topics • Challenges & opportunities facing employers • How Alliances can help employers • Spectrum of initiatives to address health system changes and key partnership opportunities

4. Challenges & Opportunities Facing Employers

5. Core Challenges Facing Employers • Need to remain competitive and protect the bottom line • High prevalence of chronic illness among employees • Costly claims from overuse of inappropriate care • Poor information on costs and quality to inform purchasing decisions • Skyrocketing premiums • Complicated and time-consuming administration and enrollment • Limited employee understanding of how to use plans • Uncertainty of changing landscape given new mandates

6. Opportunities to Address Current Challenges • Grants and incentives for wellness programs • Marketplaces that allow for pooled purchasing power across small and mid-size employers • New mechanisms for streamlining and standardizing administration • Innovative benefit schemes that encourage high-value care and discourage unproven utilization • Novel care delivery approaches and financing mechanisms that provide a rich test bed for learning, improving quality, and containing costs

7. How Alliances Can Help Employers

8. Model For Change:Working together, employers and Alliances can provide 3 ingredients shown to improve productivity and defray costs Source: Towers Watson and the National Business Group on Health (2010). Raising the Bar on Health Care: Moving Beyond Incremental Change (2010 Employer Survey on Purchasing Value in Health Care Report).

9. Five Ways Alliances Can Help Employers • Provide resources and tools to help employees better manage their health and health care—and potentially lower costs • Provide web-based information on the quality and cost of health care delivered in our community—to help you and your employees make informed decisions • Provide guidance on how to communicate with your employees on health care decisions—to build trust and credibility • Provide information and meetings on “hot topics” affecting employers and employees—and learn about innovative solutions • Help develop partnerships with key stakeholders— including health insurance plans and providers—to help meet your goals

10. Spectrum of Initiatives and Key Opportunities for Engagement

11. The Affordable Care Act: 4 ways employers are affected Starting in 2014… • Businesses with more than 50 full-time employees will be required to offer adequate* health insurance or pay a penalty • Small businesses with fewer than 25 full-time employees or 50 half-time employees with average wages below $50,000 may benefit from health care tax credits • Employees will be required to purchase coverage or face fines • Businesses with fewer than 100 workers will be able to purchase health insurance through an exchange * An insurance plan is deemed “adequate” if it pays at least 60% of health care expenses for a typical population and if employees pay less than 9.5% of family income to purchase it

12. The New Landscape for Employers:Alliance-Supported Initiatives Wellness Programs Health Insurance Exchanges (HIE) Benefit & Network Reform Delivery System Reform Payment Reform Arranged from more immediate to more distal impact on employees

13. The New Landscape for Employers: Alliance-Supported Initiatives Wellness Programs Wellness Programs Health Insurance Exchanges (HIE) Benefit & Network Reform Delivery System Reform Payment Reform Arranged from more immediate to more distal impact on employees

14. Wellness Programs:3 new incentives for employers • Prevention: Plans must offer preventive services for free • Grants: Small businesses with fewer than 100 employees who work at least 25 hours per week (that did not have a workplace wellness program in effect in 2010) will be eligible for wellness grants • Discounts: Starting in 2014, employers can offer discounts of up to 30 percent to employees who participate in employer-sponsored wellness programs

15. Wellness Programs: Partnership Opportunities for Employers & Alliances • Encourage selection of vendors who offer a full continuum of initiatives and define workplace health through long-term performance, enhancements in productivity, and reductions in total risk • Take advantage of forthcoming federal grants programs • Work together to promote prevention among employees, using public reporting data to inform benefit plan designs and highlight areas for employee rewards and incentives

16. The New Landscape for Employers:Alliance-Supported Initiatives Health Insurance Exchanges Wellness Programs Health Insurance Exchanges (HIE) Benefit & Network Reform Delivery System Reform Payment Reform Arranged from more immediate to more distal impact on employees

17. Health Insurance Exchanges:A paradigm shift starting in 2014… • Starting in 2014, employer groups with fewer than 100 workers will be able to purchase health insurance in an exchange (known as the Small Business Health Options Program, or SHOP) • By 2016, states may open SHOP exchanges to larger employers, signaling the potential to shift employer-sponsored health benefits purchasing & strategy • 13 states have enacted exchanges, including California, Oregon, and Washington • States without state exchanges will use the federal exchange

18. Health Insurance Exchanges:Partnership Opportunities for Employers and Alliances • Combine public reporting with pooled purchasing power to send a strong signal to health plans and providers about improving quality and value • In states where exchanges are in development, create partnerships with the exchanges to encourage benefit designs that align financial incentives with quality • Partner with employers to support the shift to exchanges and navigate the new choices that employees will face

19. The New Landscape for Employers:Alliance-Supported Initiatives Benefit & Network Reform Wellness Programs Health Insurance Exchanges (HIE) Benefit & Network Reform Delivery System Reform Payment Reform Arranged from more immediate to more distal impact on employees

20. Benefit & Network Reform:3 reasons why employers should care • Benefit reform aligns financial incentives with clinical benefit so that lower co-pays or co-insurance encourages use of high-value care • Network reforms encourage high-value provider choices through tiering and contracting • Steering employees and their families toward value-based care may ultimately improve baseline health and productivity in the workplace

21. Benefit & Network Reform:Partnership Opportunities for Employers & Alliances • Use public reporting data to guide opportunities for re-structuring benefits and tiering network designs • If utilization of evidence-based services seems low, consider reducing co-pays or partnering with a third-party administrator to offer rewards/incentives • Implement a campaign to educate employees and encourage use of high-value care

22. Using Data to Design Benefits Case Study: Puget Sound Health Alliance and King County King County (a self-insured, public employer in Washington state) experienced increasing health care costs and wished to minimize costs transferred to employees. In an effort to identify high-value services and align benefits accordingly, Puget Sound Health Alliance (PSHA) provided needed insight to King County. By providing comparative quality reports, PSHA was able to support King County in changing its benefit packages. King County lowered out-of-pocket shares for high-value services and increased cost-sharing for low-value services. And, by working together to create messaging and collateral (“Own Your Health” campaign), PSHA was able to help King County engage directly with its employees. In just one year, savings of $23 million were realized–about $4,000 per employee.

23. PSHA & King County: Lessons Learned • Working with an independent and trusted organization (PHSA) was key to King County’s success • Local quality data are critical for informing benefit plan design • Because research shows employees do not trust employers as sources of health information, the partnership with an external neutral organization is key for creating messaging that works

24. The New Landscape for Employers: Alliance-Supported Initiatives Delivery System Reform Wellness Programs Health Insurance Exchanges (HIE) Benefit & Network Reform Delivery System Reform Payment Reform Arranged from more immediate to more distal impact on employees

25. Delivery System Reform: Changing infrastructure to improve quality of patient care & align payment incentives • Accountable care organizations • Legal entity, usually a network of providers, that assumes accountability for the quality and costs of care provided to a defined patient population within a defined time period • May include PCPs, specialists, hospitals, FHQCs, rural hospitals, and critical access hospitals • Consolidate accountability of costs and quality through a network of providers across disease states • Patient-centered medical homes • Team-based approach to care under the guidance of designated primary care physician practice that coordinates care • While ACOs serve many patients across entities, a PCMH is targeted at one defined group of patients

26. Delivery System Reform:Partnership Opportunities for Employers & Alliances • Identify opportunities to partner with provider groups, delivery systems, and insurance plans • Support practices with health IT infrastructure and publicly available quality data • Quality measurement and data contribute to ability to implement these reforms; take advantage of the public reporting data available to inform employer benefit offerings and to support the implementation of these reforms • Encourage employee selection of plans with an ACO or PCMH component through premium discounts

27. The New Landscape for Employers:Alliance-Supported Initiatives Payment Reform Wellness Programs Health Insurance Exchanges (HIE) Benefit & Network Reform Delivery System Reform Payment Reform Arranged from more immediate to more distal impact on employees

28. Payment Reform:3 mechanisms provide an entré for engaging local providers in rewarding better outcomes & efficiency • Performance-based adjustments(also known as pay-4-performance) provide financial rewards or penalties to providers based on quality indicators and outcomes • By using bundled payment, health systems have the opportunity to reward efficiency and evidence-based care by transforming multiple claims into a single payment (for one “episode” of care) based on predetermined expected costs • By setting fixed payments for patient care, global payment encourages medical groups to focus on quality, coordinate services for high-risk patients, and reduce the risk of expensive care

29. Payment Reform:Partnership Opportunities for Employers & Alliances • Help employer groups identify benchmarks and reward providers who meet those benchmarks • Encourage use of quality data to drive engagement of high-performing providers • Work locally with providers to engender and measure changes as a result of payment reform

30. Case Study: Payment Reform in Wisconsin The Wisconsin Collaborative for Healthcare Quality and the Wisconsin Health Information Organization implemented the “Partnership for Healthcare Payment Reform,” a multi-stakeholder project that includes employers. The project involves 2 pilots with participating providers: • a bundled payment for total knee replacement and • a shared savings project (which will transition to episode-based payment) for adults with diabetes. Lessons learned to date • Different systems can present major operational issues; foster relationships between technical staff and bring them on board early. • Leadership and prioritization of the changes are critical for success – ensure active leadership and commitment to change. • Communication and shared lessons learned across stakeholders promote trust and progress. • Local quality and cost data can inform partnership opportunities and benefit designs.

31. Resources • “The Case for Public Reporting of Cost and Resource Use Measures,” an AIR issue brief that describes the value of cost and resource use public reporting: http://www.rwjf.org/files/research/73714.caseforcost.pdf • AIR’s Communication Toolkit, a ready-made product employers can use, free of charge, to communicate with their employees about complex health topics: http://www.helpyouremployeeshealth.com/ • Catalyst for Payment Reform, a multi-stakeholder coalition, including employers, that develops resources, such as model health plan contract language: http://www.catalyzepaymentreform.org/

32. References • AF4Q National Program Office. (2011). Wisconsin: Payment Pilots as an Alternative to Fee for Service. Retrieved from: http://forces4quality.org/af4q/download-document/5263/2326. • Carey R. (2010). Health insurance exchanges: Key issues for state implementation. Retrieved from http://www.rwjf.org/files/research/70388.pdf. • Carman KL, Maurer M, Yegian JM, Dardess P, McGee J, Evers M, and Marlo KO. “Evidence That Consumers Are Skeptical About Evidence-Based Health Care.” Health Affairs, 29(7): 1400-1406, 2010. • Centers for Medicare and Medicaid Services. (n.d.). Retrieved from http://cciio.cms.gov/programs/exchanges/. • Kaiser Family Foundation. (2012). Health reform source. Retrieved from http://www.kff.org/healthreform/upload/8213-2.pdf. • Miller HD. “From Volume to Value: Better Ways to Pay for Health Care.” Health Affairs, 28(5): 1418-1428, 2009. • National Business Coalition on Health. Case Study: California Public Employees’ Retirement System (CalPERS). National Business Coalition on Health’s Value-Based Purchasing (VBP) Guide. Retrieved from: http://www.nbch.org/VBP-Home, 2010. • National Conference of State Legislatures. Ncsl.org. Retrieved from http://www.ncsl.org/issues-research/health/state-actions-to-implement-the-health-benefit-exch.aspx, 2012. • Neuschler E and Curtis R. Health benefit exchange: California vs. federal provisions. Retrieved from http://www.chcf.org/~/media/MEDIA LIBRARY Files/PDF/H/PDF HealthBenefitExchangeCAvsFederal.pdf, (2011). • Weinburg M and Haase L. State-based coverage solutions: the California health benefit exchange . Retrieved from http://www.commonwealthfund.org/~/media/Files/Publications/Issue Brief/2011/May/1507_Weinberg_california_hlt_benefit_exchange_ib.pdf, 2011.