Employer-Led Innovation for Healthcare Delivery and Payment Reform

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1 Employer-Led Innovation for Healthcare Delivery and Payment Reform National Accountable Care Congress November 12,

2 Overview of CalPERS Nearly 1.4 million members More than 1,200 employers State Public agencies Schools Will spend approximately $7.7 billion in 2014 to purchase health benefits Largest employer health benefits purchaser in California and second largest public employer purchaser in the nation 2

3 Reference Pricing: Hips and Knees CalPERS total costs for muscle, bone and joint disorders topped $540 million in 2008 Elective knee and hip replacements - $55 million Hospital costs varied from $15,000 to $110,000 with no difference in quality or outcome 3

4 Reference Pricing: Hips and Knee (continued) Program promotes access to, and use of, higher value providers, treatments, and services to drive down costs while maintaining quality In 2011, CalPERS established a $30,000 payment threshold for hip and knee replacements in our PPO plans Average hip or knee replacement charges declined by 26 percent, or an average of $9,000 per procedure In first two years of program CalPERS experienced estimated cumulative savings of $5.5 million 4

5 Allowed charges for knee or hip replacement surgery by facility type for CalPERS enrollees, Reference based pricing program implemented January 1, Allowed charges adjusted to 2011 dollars data through September only. 5 Source: CalPERS, Center for Innovation, October, 2014.

6 Reference Pricing: Hips and Knee (continued) Anthem looked at claims based quality metrics and noted that it was equal or better between members who used Reference Based Pricing (RBP) facilities and those who did not 6

7 Transparency CalPERS supports transparency in cost and quality reporting Release contractual agreements between plans and providers Advocate for improved financial disclosure Transparency important for CalPERS to develop competitive rates Transparency important for members to make better informed health care decisions and understand how costs vary among providers, hospitals, pharmacies, etc. 7

8 CalPERS Compare Partnership between CalPERS, Anthem Blue Cross, and Castlight Health Allows PPO Basic members to shop and compare medical services and prescription options Members can: Understand prices and options for in-network physicians and hospitals View estimated prices and price ranges Review medical spending 8

9 CalPERS Member Online View of Price Transparency 9

10 Priority Care Project Collaboration between CalPERS, Anthem, Humboldt-Del Norte Independent Practice Association, and the Pacific Business Group on Health Comprehensive care management model integrating care for the most complex medical needs of CalPERS members in Humboldt County Implemented June

11 Priority Care Project, (continued) Goals: Increase health care quality and reduce costs by focusing on those with chronic conditions. Improve member safety, quality of life, and health outcomes through coordination of care and high intensity case management Align incentives for plans and providers Develop replicable and financially sustainable model 11

12 Priority Care Project, (continued) Accomplishments: Provider and Member engagement Effective enrollment strategies Open communication channels for all participants Shareable electronic Care Management software in place Strong, effective Member-RN relationships established and on-going Evidence of cost savings 12