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Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. U8119a, 3/12 Understanding And Managing Health Care Risk Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina

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Page 1: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. U8119a, 3/12

Understanding And Managing Health Care Risk Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina

Page 2: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

BlueCross BlueShield of North Carolina

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Page 3: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

BlueCross BlueShield of North Carolina

Largest health insurer in North Carolina and one of the 25 largest health insurers in the nation – over 4,000 employees serving over 3.6 million customers

Serving customers since 1933 Commitment to quality and patient satisfaction Commitment to community services - BCBSNC

Foundation invested almost $70 million in local communities in 2010

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Page 4: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ Increases in Health Insurance Premiums Compared to Other Indicators, 1988-2009

12.0%

18.0%

14.0%

8.5%

0.8%

5.3%*

8.2%*

10.9%*

12.9%*

11.2%*

9.2%*

7.70%

6.10% 5% 5%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%Health Insurance Premiums

Overall Inflation

Workers Earnings

We Have An Unsustainable Cost Model

•Estimate is statistically different from the previous year shown at p<0.05. No statistical tests were conducted for years prior to 1999. •Note: Data on premium increases reflect the cost of health insurance premiums for a family of four. Source: KFF/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009; KPMG Survey of Employer-Sponsored Health Benefits, 1993, 1996; The Health Insurance Association of America (HIAA), 1988, 1989, 1990; Bureau of Labor Statistics, Consumer Price Index (U.S. City Average of Annual Inflation (April to April), 1988-2009; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April), 1988-2009.

Page 5: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Component of Premium Increases

Factor Amount 1. Cost per Unit (similar to M-CPI) 3.0% 2. Utilization 0.5% 3. Intensity 0.5% 4. Aging 1.5% 5. Leveraging 2.0% 6. Selection 1.0% 7. Administration 0.5% 8. Total 9.0%

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Page 6: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ Growth

+ Administration Cost Restructuring

+ Medical Expense Reduction

+ Diversification

+ Re-Engineering

+ Prepare Our People

Blue Cross Blue Shield of North Carolina Strategies

Page 7: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ Administrative Cost Goal

+ Shared Services

+ 2014 +

Expense Management

Page 8: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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Blue Cross Blue Shield of North Carolina’s Premium Dollar

Income Taxes Insurer Profits

Operating / Adminstrative Expenses Medical Costs

*BCBSNC 2011 data, excluding self-funded business.

85¢

12¢ 2¢ 1¢

Page 9: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

+ Risk Management

▪ Data ▪ Medical Underwriting ▪ Integrated Systems

Current Strategies – Risk Management

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Page 10: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ Network Discounts

+ Value-Based Contracting

Medical Expense Management - Costs

Page 11: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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Comparison of Networks

In-network

In-network

PPO:

Tiered:

Low-Cost:

Tier 1

OON

OON

OON

In-network

Page 12: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ Corporate Strategy

▪ To reduce medical cost while improving quality

▪ Manage allowed trend

Medical Expense Management - Use

Page 13: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ Patient-Centered Medical Home (PCMH) ▪ An NCQA program that recognizes practices that integrate patients as

active participants in their own healthcare. Patients are cared for by a physician who coordinates all aspects of patient needs using the best available evidence and appropriate technology.

+ Physician Practice Connections (PPC) ▪ An NCQA program that recognizes practices that use systematic

processes and information technology to enhance the quality of patient care. Meeting PPC standards shows practices have established connections to information, patients and other providers.

Medical Expense Management - Use

Page 14: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ PCMHs patients had 17.5% fewer ER visits and 13% fewer inpatient admissions

Medical Expense Management - Use

PCMH Impacts Per 1,000

ER Visits

Non-PCMH 154

PCMH 127

Inpatient Admissions

Non-PCMH 31

PCMH 27

Page 15: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ Traditionally focused on discounts and rebates

+ Generic use

Current Strategies - Pharmacy

Page 16: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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Changing Market Dynamics

Percent of Pharmacy Spend by Drug Type

Source: Prime Therapeutics, LLC, data and competitor drug trend reports, 2011

Specialty pharmacy cost may

soon exceed that

of brand-name drugs

Page 17: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

▪ Collaborative Relationship

and goals

▪ Value to Stakeholders

▪ Annual gainshare and independent post program evaluation

Provider Collaboration – Carolina Advanced Health

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CAH Group Matched Control Group

Patient

Provider Payer

Page 18: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ Affordable Care Act is a game changer

+ Likely results

+ New consumers

+ A need to do things differently

Where Are We Going?

Page 19: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

• Good relationships with regulators (state and federal)

• Competitive Pricing

• Outstanding Customer Service

What Will We Need Post Reform?

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Page 20: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

• Best In Class Analytics

• Sales analytics / Market segmentation • Risk analytics

• Care management analytics

What Will We Need Post Reform?

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Page 21: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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New Consumers

Persona Name Notes

Joe

• 41 years-old, rarely gets sick and goes to the doctor only when necessary. • Employed, but the small company he works for doesn’t offer insurance. • Could afford coverage on his own, but he doesn’t think it is worth the money. • Realizes he’s at financial risk if a major health event occurs, but he thinks health insurance costs too much. • Shops around for the lowest price on just about everything.

Linda

• 28 years-old, and doesn’t currently have health insurance. • Husband is employed, but the company doesn’t subsidize insurance for spouses. • Generally healthy and uses retail clinics or the emergency room for health care. • Likes to get the most for her money – she clips coupons and takes advantage of online deals.

Vanessa

• 35 years-old, starting her own business and does not have health coverage yet. • Wants clear communication about health care and insurance and wants to be able to compare and make good decisions. • Her biggest priorities are price, good information, and help making health care choices. So far, all her choices just seem expensive.

Adrian

• 30 years-old and does not currently have health insurance. • Self-employed and willing to buy insurance, but he hasn’t found a company that offers what he’s looking for in terms of coverage. • Wants good information about health, cost and quality that he can use to make his own decisions about what kind of care he receives. • Researches all his purchases online and likes third-party research and reviews.

• These personas represent the thousands of new individuals shopping for health insurance coverage by 2014. They are generally healthy, don’t have strong ties to health care providers, and don’t see value in traditional insurance products

• They’re looking to spend less and get more value for their money, and make informed decisions about their own health.

Page 22: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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New Consumers

Persona Name What the customer values in a health insurance plan

Joe

Linda

Vanessa

Adrian

Traditional Customers

Price Information Service Access

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Price Information Service Access

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Price Information Service Access

Brand

Ancillary

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

• The new customers are far more price-sensitive than existing customers, and they place far less value on access to providers.

Page 23: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ What is it? ▪ Using different data

– How much, what kinds? ▪ Using different algorithms

+ What is it not? ▪ Not compromising our ethics ▪ Not breach of confidence ▪ Irrelevant data ▪ Algorithms that do not drive value

Health Insights

Page 24: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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+ How is this being used elsewhere? + How Can It Be Used in the Health Care space?

+ What if the ACA were repealed?

Health Insights

Page 25: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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The future is closer than you think...

Health Insights

Page 26: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association. U8119a, 3/12

[email protected]

Page 27: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Current and Future State of Analytics: Implications for Provider Organizations May 10, 2012

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Page 28: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Agenda • Methodology • Environment • Findings • Implications for Provider Organizations

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Page 29: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Methodology • Interviews with health care thought leaders (CIO,

CMIO, CMO, CEO) • Distilled feedback • Authored white paper sponsored by SAS

Institute

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Page 30: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Interview Cohort Profile

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Page 31: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

$50B of Thought Leadership

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Page 32: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Research Triangle

FORCES

IMPERATIVES RESPONSES

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Page 33: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Research Triangle

FORCES

Austerity Regulation Technology Demography Safety/Quality

IMPERATIVES RESPONSES

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Page 34: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Research Triangle

IMPERATIVES RESPONSES

Consolidation/Scalability Quality/Safety “Volume to Value” Population Health New Payment/Business Models Advanced Decision Support Lean Production

FORCES

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Page 35: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Physician Alignment New payment model pilots Focus on clinical integration RT/Predictive Analytics Distributed Analytics “Strange bedfellows”

IMPERATIVES

FORCES

RESPONSES

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Environmental Assessment

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Page 36: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Strange Bedfellows

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Page 37: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Questions • What keeps you up at night? • What are your top 3-5 strategic priorities (next 18-24 months)

and level of readiness or preparedness for them? • How do you define analytics? • Do you see a need for analytics changing over the next five

years? • Of the data that informs decisions, how much is retrospective

and how much is real time? Do you see opportunities for using data to make predictive decisions about care, consumption, or spending?

• How are you viewing your organizational structure relative to health reform, and how, if at all, will that change over the next five years?

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Page 38: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Top Leadership Priorities • Source-system integration

• “Following the patient”

• Patient safety at the forefront

• Payment and delivery reform: both driven by regulation and market forces • “Measured Care”

• “Shared Accountability”

• The population paradigm – Joslin Diabetes Center

• Productivity and cost

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Page 39: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

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Page 40: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

“Defining” Analytics • Taking individual points of data and being able to look for or identify

patterns and trends that are of significance • Systems that present data in aggregate against models,

expectations, trend lines and exception reports in order to identify opportunities for improvement, systematic issues

• Runs table from simple table production to complicated statistic analysis

• Measure what matters • Build algorithms based on learning experience and respond to

different perspectives of data

• Beyond information and into knowledge, and hopefully wisdoms to the C-suite

• Tools to derive meaningful information 40

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Page 41: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Tiers of Analytics: Dr. Shultz’s* View

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LEVEL II Multi-dimensional

Analysis

LEVEL I Ad Hoc Data Queries

Intersections between disease groups, locations, clinicians. Historical + real time. Middle managers

Detecting variations of care, behavior, and outcomes. Real time + predictive. Mathemeticians and statisticians (“gearheads”)

Pull summary totals, i.e. number of diabetics in a certain period. Recurring reports, historical. Front-line staff

LEVEL III Expected vs. Observed

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* Director of Information Technology Integration at Vanderbilt University Medical Center

Page 42: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Convergence: Clinical/Financial Integration • Holy grail

• Desire for “one pipe”, “one source”-for clinical, admin, financial data

• Not only about adoption of EHR, but the deeper, richer use of EHR

• Risk contracting/bundles expediting convergence

• Moving from operational performance improvement, to integration of a continuum, to managing populations

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Page 43: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Triple Aim • “Analytics is the future: information is the tradable

commodity”

• Cost and quality are no longer a separate parts of the equation

• Shifting from widgets/units of care to desired outcomes

• Health care overbuilt, need to reduce costs, duplication: must gain efficiencies and increases virtualization

• Revenue centers will now become cost centers

• ABC is top of mind

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Page 44: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

User Interface • Physicians

• “We recognize that for us to help motivate physicians to change, we are going to need information to make a compelling case. We do not tell doctors what to do, we show them what they are doing. Analytics is the hallmark of how we manage physicians.” -Dr. Simeon Schwartz, President and CEO WESTMED

• Leadership • Beginning to want more and newer types of information

• This is no longer an “IT project”

• Desire to build data driven organizations

• Bedside • Need to enable information on the fly

Must be nimble and adaptive

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Page 45: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Organizational Impact of Analytics • Impacting job roles

• CIOs: from order takers, to facilitators, to innovators

• The Burgeoning CMIO: from “techno-doc” to legitimate differentiator in practice of medicine

• Focused Factories • Hopkins Armstrong Institute – Peter Pronovost, M.D.

• Enterprise analytics team-building one source of truth for the entire organization when it comes to data mining

• Ramping hiring • Directors of analytics

• Increased analysts

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Page 46: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Revenue Reality • “Sawing limbs, not trimming leaves”

-Rick Schooler, CIO Orlando Health

• Capitation, global payment, bundled payment

• Organizations bullish on changing payments are aggressive in pursuit of data and analytics to drive change

• “Reality tells us we will have to be at 80% of Medicare” -George Conklin, CIO Christus Health

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Page 47: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Aging of Data

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Retrospective

Real Time

Predictive

• 95% historic-5% Current and less than 1% predictive

• All the good stuff is at least 6 months old

• Good for problem identification

• The real time dashboards are the ones that mean something

• Real time becoming more dominant

• Retro + Real: Use Case of VAP

• What can predictive modeling nail: readmissions regardless of disease state, transactional

• Predictive models are all short because a lack of clinical data

• Use Case: making a choice between stent, drugs, device, etc. and being able to show someone outcomes and costs

Page 48: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Next Frontier: Big Data • Genomics • NLP • Social media • EHR depth

• Biggest challenge is learning from and utilizing information generated

• Big data in health care is NOT big data compared to other industries

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Page 49: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Headwinds • Near term attention focused on:

• Health reform

• Core systems

• Meaningful Use

• Integration

• Other regulations: ICD-10, HIPAA 5010, etc.

• Analytics has currency, though it is competing for mind and wallet share

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Page 50: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Timing for Analytics to Take Hold

>3 WINDOW

<7 Handful of “mad scientists in analytics” Market still very immature, needs vision

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Page 51: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Implications • Investments in analytics are increasing • Application of analytics in provider organizations

is embryonic • Source data quality and integrity is critical • Payment model redesign is a major driver

• Population health is a new paradigm • Cost is very important

• Human capital: analytics IQ needs to increase 51

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Page 52: Understanding And Managing Health Care Risk€¦ · Patrick Getzen Vice President and Chief Actuary Blue Cross Blue Shield of North Carolina . BlueCross BlueShield of North Carolina

Thank You

Don McDaniel 443.904.2882

[email protected]

A link to the research

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