As
employees know all too well, health insurance companies have one
surefire way to lower costs: Ask their customers to pay more.
Intermountain Healthcare,
a nonprofit health system in Salt Lake City, is trying something
virtually unheard-of: promising to sharply cut costs rather than pass
them on.
Its
new health plan, SelectHealth Share, is guaranteeing to hold yearly
rate increases to one-third to one-half less than what many employers
across the country typically face.
To
help keep the rate increases roughly in line with a rise in consumer
prices, Intermountain, which operates 22 hospitals and employs 1,400
doctors, says it will produce savings of $2 billion over the next five
years.
Health
systems and insurers are closely watching Intermountain’s rollout. It
has established itself as a leading health system by tracking and
analyzing costs and the quality of patient care, allowing it to improve
treatments and reduce unnecessary expenses.
Intermountain’s
plan is “the first innovative thing we’ve seen in a long time,” said
Dave Jackson, managing partner for FirstWest Benefit Solutions in Orem,
Utah. “Share has got everybody at the table — everybody’s got
accountability and got things to do.”
Intermountain
has already saved money by renegotiating the cost of surgical staplers,
pitting a cheaper manufacturer against another and saving $235,000 a
year. It saved $639,000 a year by ensuring that heart attack patients
get into the catheterization lab within 90 minutes of emergency room
contact, thereby helping patients recover faster.
Some
systems might be more likely to reduce services or shrink their
money-losing operations if they tried to guarantee a long-term lock on
price increases.
But
a few are heading in a similar direction to Intermountain’s,
experimenting with ways that avoid the traditional piecemeal approach of
fee-for-service care. The idea of locking in rate increases —
Intermountain’s Share program sets the increase at approximately 4
percent — is particularly attractive to employers because coverage then
becomes a predictable expense.
Patricia
R. Richards, the chief executive of Intermountain’s insurance unit,
SelectHealth, said its new effort was not a marketing gimmick. “This is
not a repackaging of the same old stuff,” she said. “We’re fundamentally
changing everything.”
While
there is a lot of experimentation taking place in the health care
industry, including the creation of so-called accountable care
organizations that try to make health systems more responsible for the
long-term care of patients, much of it is at the very early stages, said
Brian J. Marcotte, the chief executive of the National Business Group
on Health, which represents large employers. “You almost have to look at
them like start-ups,” he said.
And
there are financial risks. Intermountain, for example, could incur
significant losses if it wound up having to spend a lot on caring for
patients, which is why few, if any, systems — or insurers — make similar
guarantees.
And
while Intermountain is known for its high-quality care, other systems
that might try to mimic this approach might be tempted to skimp on
services to make sure they do not lose money, said Suzanne Delbanco, the
executive director of the Catalyst for Payment Reform, which represents
purchasers of health care like employers. The challenge is “how to
balance rate guarantees with quality,” she said.
Some
of Intermountain’s goals to improve care and save money are elusive and
tough to evaluate so soon, because the new plan has enrolled only
11,000 people so far this year.
Like
other systems looking for savings, Intermountain is concentrating on
its most costly patients, most of whom have complicated chronic
conditions like diabetes that also might be accompanied by depression or
other problems.
But
tackling such issues can be slow or even grudging. A two-year-old
clinic created to deal with these sick patients was expected to manage
about 1,000 patients, but so far only about 140 are enrolled, many of
whom need a daily check-in. Patients are also staying longer — while the
ultimate goal is to send someone back to a primary care doctor once
stable. Only 19 patients to date have graduated from the clinic and can
now see a regular doctor.
In
caring for patients, doctors must take painstakingly small steps, said
Dr. Timothy A. Johnson, a senior administrative medical director at the
clinic. Someone whose diabetes is dangerously out of control may be more
engaged by another condition, and doctors must adjust “even if it’s the
diabetes that is scary at the time,” he said.
While
it says the clinic appears promising, Intermountain says it will not
have information it can share publicly until this summer. One patient
was going to the emergency room nearly every other day because of
anxiety, for example, and is now going only half as often because the
patient calls the clinic instead.
In
2016, the system expects to achieve savings approximately equal to 8
percent of its volume, or about $500 million. It decided it would not
keep the savings or wrangle with outside insurers about who gets to
pocket the money.
“What
we’ve decided to do is to give it back to the community in terms of
lower rates,” said Dr. Brent James, the executive director for
Intermountain’s Institute for Health Care Delivery Research.
But
what distinguishes Intermountain is that it has agreed to care for
about a third of its patients for a fixed amount, meaning that it is
already at financial risk if its health care costs rise too much because
it did not do enough to keep people healthy or because its treatments
were too expensive.
Other
systems lose money if they find ways to provide less care, and any
savings typically flow to outside insurers. “Your ethics align with
financial incentives,” Dr. James said.
While
offering a guarantee remains a tall order for Intermountain, it is
among the minority of systems ready to do so. Intermountain is “probably
in a better position to take on risk and have the systems and
capability to manage care,” said Mr. Marcotte of the National Business
Group on Health.
Only
a few other systems are taking similar steps. In Albany, CDPHP, a
nonprofit insurer, has been offering employers a plan that caps any rate
increases at under 10 percent in the first and third years. Some
companies are experiencing much lower rate increases.
Many
systems will experiment with becoming more financially responsible for
the care they deliver by offering their own Medicare Advantage plans,
said Paul Keckley, the managing director in the Navigant Center for
Healthcare Research and Policy Analysis.
But
Intermountain also says its success is dependent on the efforts of
everyone involved. Doctors who are not affiliated with Intermountain who
care for patients under the plan must agree to changes like using an
electronic medical record and sharing information about their outcomes.
Employers
must agree to offer coverage that their workers can afford by paying
for at least 70 percent of average premiums and funding a savings
account with a sizable contribution. Businesses must also choose
SelectHealth as their sole insurance company within the area.
The
longer-term contract enables hospitals and doctors to take care of
patients without worrying about whether they will switch if their health
plan changes or skip a needed doctor’s visit because of a high
deductible. Otherwise, said Paul Ginsburg, a health economist at the
University of Southern California, “it makes it very difficult to engage
enrollees early enough to detect their chronic diseases and manage
them,” he said.
Under
the Intermountain plan, employees also are required to take more
responsibility. They have to agree to participate in programs like a
health risk assessment or have a health screening like a cholesterol
check or colonoscopy if they are over 50. They may have to employ a
digital health coach who might send them an email urging them to walk
more, or they may use an online tool to help decide if they need surgery
for their back pain.
“We
have not seen anything similar from other providers,” said Lana F.
Jensen, an official with the Utah County government, which provides
coverage for 700 employees. “This is worth a try. We’ll take a leap of
faith.”
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