A forum presented by Horizon Blue Cross Blue Shield of New Jersey and The Atlantic casts the debate over a state-level population health plan against national healthcare cost trends.
NEWARK, N.J.—Cutting healthcare spending is hard. Cutting spending in a state with the second highest costs in the country is really hard.
When healthcare costs that much more than everywhere else, as it does in New Jersey, it’s not just because people get sick (in fact, on average, they are healthier). According to experts who gathered today for the forum, “Inventing the Future of Health,” cost here is a function of the culture, which has thus far not kept pace with the movement toward “population health” created by plans like Group Health in Seattle, Kaiser Permanente in Northern California, or Geisinger in Central Pennsylvania.
Several dozen business and healthcare leaders heard both a national perspective on healthcare costs, and how these trends play out in at the state level, at the New Jersey Performing Arts Center not far from the headquarters of Horizon Blue Cross Blue Shield of New Jersey, which presented the session with The Atlantic.
The forum was not billed as backdrop for OMNIA, the population health initiative that Horizon BCBS rolled out September 10, 2015, through a tiered hospital plan. But the speakers offered the broader context for why a commitment to value-based payment models is overdue here. Horizon’s President and CEO Robert Marino and Kevin P. Conlin, executive vice president for health management, kicked off the morning with a discussion of how OMNIA represents a progression from smaller, less publicized forays into value-based care by the state’s largest insurer, which covers 3.9 million people and enjoys larger market share than Blues in most states.
Those hospitals included in a preferred tier will be sent more patients in exchange for accepting smaller payments and agreeing to share information to reduce readmissions and target at-risk patients beyond the hospital walls. For consumers, the plan offers lower premiums and co-payments for using preferred hospitals or doctors. Unlike narrow networks, patients are not barred from using other Horizon providers. Horizon has projected that 72% of its 250,000 first-year enrollees will be from small businesses, the self-employed, and 40,000 residents who are uninsured—groups all struggling to keep up with the state’s high healthcare costs.
But OMNIA has hit several bumps. Legislators and mayors whose local hospitals were left out of the preferred tier have objected, and Horizon officials were summoned to a daylong hearing October 5, 2015, to explain how the plan and network took shape. Senators with oversight for health policy and insurance regulation have called for an attorney general’s investigation.
Early steps in population health. In 2014, Conlin said, existing patient-centered medical home efforts have produced improvements of 7% in cholesterol measures for patients with diabetes and 6% in other diabetes measures; 5% fewer emergency department visits, an 8% lower readmission rate, and a 9% lower total cost of care. Horizon has already created episode-based payment bundles for 16 clinical care conditions. Statewide, some 750,000 Horizon members and 6000 doctors already take part in value-based payment models.
Fee-for-service persists, however, and later in the session, Laurel Pickering, president and CEO of the Northeast Business Group on Health, said that’s because some hospitals think the model still works. “Not every health system is on a value-based path,” she said.
Quite simply, the way care is delivered must be done differently, said Barry Ostrowsky, president and CEO of Barnabas Health. “Clinical care that is received in New Jersey is second to none,” he said, but the culture of care delivery has to change, and the transition won’t be easy. Too much healthcare is consumed within the hospital—too much is consumed, period—and more must be done to teach people to live healthier lifestyles. This is the crux of population health: health systems can no longer wait for people to get sick; instead, they must head off those behaviors and conditions that lead to heart attacks, strokes, accidents, falls, and other episodes that lead to multi-day hospital stays. Value-based payment models reward physicians and hospitals for keeping patients healthy, not for each test, procedure, or visit.
What is “waste”? In an earlier session, chaired by Atlantic Washington Editor at Large Steve Clemons, Shannon Brownlee, senior vice president of the Lown Institute and David Newman of the Health Care Cost Institute discussed the need for care to move into less-expensive community settings that don’t require the most high-tech solution possible. As other speakers agreed later, Brownlee said cutting “the waste” out of healthcare means not only reducing hospital charges but also taking on the socioeconomic issues that drive so much illness: Do people have jobs? Do they have good food? A good education?
“Those things are far more powerful than healthcare,” she said.
Too much of the wealth of healthcare is tied up in hospital assets and more should be distributed into community settings, where people could learn good diet and care habits, she said, and taxpayers should have a say in how this occurs. Later, Raymond Castro of New Jersey Policy Perspective, said that this was one of the challenges of OMNIA—legislators, including those on the health committee, felt the plan had been sprung on them without warning.
However, as Brownlee noted, this transfer of wealth will not make some hospital employees or officials happy. “One man’s waste is another man’s income stream,” she said.
Castro and Ostrowsky agreed that poverty and lifestyle issues drive healthcare costs; Ostrowsky said the “averages” that show New Jersey has good health overall mask the fact that for some, both access to care and health are quite poor. Still, he disagreed that the OMNIA plan—which has been criticized for excluding too many urban and Catholic hospitals—would be the reason hospitals might close.
“We have 300,000 people in Newark who need better health outcomes, and we have 3 hospitals,” he said. “We need more clinics. The question is, ‘How are we going to raise the health status of the people of New Jersey?’”
What’s in a name? Marino admitted a misstep in Horizon’s packaging of OMNIA: the use of “Tier 1” and “Tier 2” to designate the preferred network and those hospitals left out has been widely criticized for stigmatizing half the state’s hosptials. Legislators at the hearing said that because of Horizon’s size, the label would be known even to those in other health plans.
“This was never a statement about the quality,” of the other hospitals, Marino said. “Maybe we need to change the nomenclature.”
As attendees left, a few remained unconvinced. Some said Horizon still hadn’t answered an important question: how were hospitals in the preferred tier picked? “They want us to trust them,” said one woman. “I don’t.”