On the Record with Cheryl DeMars, President and CEO, The Alliance

October 25, 2013

On the Record with Cheryl DeMars, President and CEO, The Alliance

Efforts to reduce increasing health care costs while maintaining a high quality of care have emerged as a center of discussion among business owners and policy makers.

At its annual meeting Tuesday, The Alliance shared two of its initiatives aimed at achieving this goal.

The Alliance is entering phase 2 of its value-based benefit design project that uses the power of health benefit designs to promote high-value care. In January 2015, it will launch its QualityPath initiative, aimed at steering members toward high-performing providers.

Wisconsin Health News caught up with The Alliance President and Chief Executive Officer Cheryl DeMars to elaborate on these projects and address the misconception that high quality health care is only possible at a high price.

Edited excerpts are below.

WHN: It seems like a lot of employers and patients are under the impression that the best health care they can receive must come at a hefty price. How does The Alliance help members find quality health care that is also affordable?

CD: It’s a myth that high quality health care costs more. We find that is not the case in health care, and it’s really not true in other industries, too. If you do a great job of producing a product or delivering health care and you strip out all of the waste and defects, the cost of production is actually less. One of the ways that we can really drive improvement in health care value is by encouraging providers to strip off the waste in the system and reduce the errors so that that they’re delivering high-quality care at a lower cost.

The second part of the answer is to have transparency of information so that we can compare the costs and quality of care and can be rewarding those hospitals and physicians that have done a good job of reducing their costs and improving the quality of outcomes for patients. We’ve made some progress, but we still aren’t where we need to be in terms of having information that employers, consumers and other purchasers need in order to asses important elements of cost and quality.

WHN: What is your value-based benefit design pilot program?

CD: Employers who self-fund their health benefits for their employees have the ability to make changes to their benefit plan to tailor its design to really address the health needs of their employee population. Historically, the range of what an employer might do with the benefit plan design has really focused on altering co-pays or deductibles. Through value-based approaches to health benefit design, employers are beginning to create clinically nuanced benefit plan designs where financial barriers to high value care are removed.

For instance, the most common example is there may be no co-pays or deductibles that apply to the tests and equipment that employees use to manage their diabetes. Getting people with diabetes to manage their conditions is an important goal. It saves money and improves health long-term. The idea behind clinically nuanced plan designs is to remove the financial barriers to accomplishing that goal of managing diabetes. That’s one example of a value-based approach to health benefits. Another is using plan design to encourage the use of high-value physicians and hospitals, and that’s one of the elements of our QualityPath initiative.

WHN: Can you elaborate on the goals of your QualityPath initiative?

CD: There’s a little overlap there. I just mentioned using plan design to encourage the use of high-value physicians and hospitals. That is one of the elements of QualityPath. Through QualityPath, what we will be doing is assessing the quality of individual physicians and hospitals for high-cost schedulable or elective procedures in cardiology and orthopedics.

The first step is assessing the quality of care delivered by hospitals and physicians for cardiac services and orthopedic procedures. We want to be able to understand the quality of the individual physician and the hospital together. Once we assess the quality, then we’ll move on to the contracting stage to negotiate a lowered bundled price for those procedures. That lowered bundled price will be available to employers in The Alliance who have agreed to implement benefit plans that have strong incentives for employees to use those quality-designated providers.

WHN: What criteria will be used to rate providers?

CD: We want to make sure that the procedure was appropriate to begin with. We want patients to be involved in the decision-making process. If there is a gray area in terms of what is the right thing to do, we think patients ought to be involved in a shared decision-making process to decide on the course of treatment for themselves. Finally, we need to ensure that the providers we are encouraging our members to use meet or exceed thresholds for good results for patient outcomes.

To get there, we’re asking that providers participate in registries. Entities like the Society for Thoracic Surgeons, the American Academy of Orthopedic Surgeons and the American College of Cardiology have established registries that physicians and hospitals can participate in. Through that participation, they not only have data that can improve the quality of care that they deliver to patients, but it also provides the data by which we can assess and compare outcomes in a more sophisticated way.

WHN: What cardiac and orthopedic procedures will QualityPath focus on and why?

CD: Total knee replacement and total hip replacement are two of the procedures. Coronary artery bypass graft surgery is a third. The final procedures are elective cardiac catheterization and elective angioplasty. These are areas where our members spend a lot of money and they’re also schedulable procedures. We’re focusing on things where consumers have an opportunity to shop and where the stakes are high for the patient.

WHN: Do you think it will expand to other procedures? If so, which ones and when?

CD: We’re already talking about that. As we’ve started to share our plans for QualityPath, the response has been great from our members and the broader market as well. We’ve already received requests to consider a focus on oncology and maternity care. We will be looking at those, as well as other areas of care. We see this as really a starting point.

WHN: What types of incentives will businesses receive for steering patients to higher quality providers?

CD: The businesses that participate in QualityPath will have access to this lower bundled pricing for these procedures. They will also have the assurance that the odds of their employees getting a good result are better. The employees will have that same reassurance that we’ve done this evaluation of the quality of care of both the physician and the hospital, and these designated providers meet or exceed high standards for quality. They’ll also pay less for the services because their employers have implemented benefit plans that result in a lower cost or no cost for the patient. And employees will also be supported by good information and services to help them get to and effectively use these QualityPath-designated providers.

WHN: Why is this only a voluntary program for The Alliance members?

CD: While we expect that a critical mass of Alliance members are ready to implement this, not all may initially. We are just beginning the process of having our members indicate their support by signing on to our website. We are looking forward to a critical mass of members and other purchasers in the market using these quality ratings to recognize and reward physicians and hospitals. This will be ongoing through the point where the initiative is launched and beyond.

WHN: Why did you choose to move forward with the QualityPath initiative?

CD: The motivation to develop the QualityPath initiative comes from several places. First, our members are looking for ways to get higher value care for their employees – high-quality care at a lower cost. We see this as a starting point to accelerate the process of getting higher value care. At the same time, physicians and hospitals who have been focusing on value improvement are asking us to create the market that recognizes and rewards better value care. And that hasn’t happened up to this point.

Providers that do a great job of controlling their costs and improving the quality of care for their patients often times aren’t recognized with greater market share or more favorable reimbursement. That’s one of the things through our QualityPath initiative that we’re trying to change. The intention here is to move market share to high-value providers.

I think this is a unique time in health care. Employers are feeling a greater urgency than perhaps they ever have to get health care costs under control. The combination of the economic downturn – which is still impacting many employers or is a fresh memory for others – coupled with the passage of the Affordable Care Act and the change that it’s bringing really creates more of a burning platform for employers. We just have to intensify our efforts to drive better-value care.

WHN: What’s been the response from the provider community to this QualityPath initiative?

CD: Thus far, the response has been very encouraging at the notion of employers steering their employees toward high-value provider physicians and hospitals. The message that we’ve heard from the physicians and hospitals that we’ve spoken to is that this kind of market pressure is important and may be what’s required to make the magnitude of change that’s needed in health care.

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