SIIA Conference: Is direct contracting ready for takeoff?
WASHINGTON – Conferences, generally speaking, are not a lively experience during educational sessions. It is with that mentality audience applause during a panel discussion on employer direct contracting warrants consideration. At the Self-Insurance Institute of America’s 35th Annual National Educational Conference and Expo, Cheryl Demars, CEO of employer-owned and -directed healthcare purchasing cooperative The Alliance, shared her thoughts on health insurance cost transparency and direct contracting.
“In Wisconsin [The Alliance’s homestate]…the state began to negotiate contracts with fully-insured plans and the cost shift in our market was seismic and sudden,” she said. “So we formed a network to help employers deal with that…But that’s part of the problem because it precludes transparency...If we had our way, we would say to physicians and hospitals ‘Charge everyone the same amount’…I recognize our organization would have to figure out a different way to exist but I think that’s part of the problem: The inability to see price differences and to not be able to compare apples to apples.”
To this, the audience openly began applauding.
Moderated by Laura Carabello, editor and publisher, Medical Travel Today and U.S. Domestic Medical Travel, the panel convened to discuss medical travel and direct contracting. “Healthcare usually follows other industries,” noted Carabello. In a recent Healthcare Consumerism Outlook Magazine article, Carabello described the concept of direct contracting is “often characterized as ‘U.S. domestic travel,’ the practice of traveling out of one’s hometown or home state to a care provider or [center of excellence] located in another part of the country.”
The concept allows opportunities for employers and insurers alike to contain costs. One such opportunity are bundled services for procedures such as knee, hip and cardiac bypass surgeries. Demars noted these services for The Alliance are “high costs, high stakes and schedulable and also ‘bundle-able.’”
Looking towards high tech imaging, oncology and colorectal cancer screening procedures, Demars noted, “We want to focus on things where there are quality gaps, where there are also questions about appropriateness of care and where there’s cost variations…and schedulable. It has to be something where consumers have a choice.” David LaMarche, MBA, administrative director of finance and contracting at Virginia Mason Medical Center in Seattle, added bariatric surgery procedures as well as diabetic service bundles may be areas that gain traction down the line.
Carabello stated large employers are seen as driving this market but panelists noted that small to mid-sized employers should not be discounted. Demars stated that out of the 240 employers that own and direct The Alliance, the average size of the employers is 200 employees. LaMarche said, “The doors are open [for us]. The challenge is how do you help a small employer find the infrastructure and plug in to be able to utilize the program. I think that’s the next big step for us.”
Ruth Coleman, CEO of Health Design Plus, noted for third party administrators for small employers that this is an unusual time in the industry and there will be opportunities if companies are willing to step outside their traditional roles to work locally with providers. Even though individuals are flying all over the world for care, “I think there’s much better opportunity on the local and regional level. But it’s going to take some folks that are creative” and figure out how to manage contracts and communication with employers, Coleman said.
Carabello noted one of the problems with the travel for treatment industry is coordination and consistency of care. Going off the prompt LaMarche noted communication is key and advocated a team to discuss a patient’s care plan. The team would be able to ensure the medical records are disseminating properly and the provider is ready when the patient arrives.
Discussing bundles, LaMarche stated his company views a bundle as a three phase approach:
- Preoperative evaluation component;
- Surgical component with a postoperative follow-up period; and
“I don’t think I have any contracts that are the same,” LaMarche said. Trisha M. Frick-Hall, MS, RN, assistant director of managed care at the Contracting Office of Managed Care at Johns Hopkins Healthcare, echoed she doesn’t have any duplicative contracts as well. LaMarche said while it can be burdensome, it’s done to keep the doors wide open. “We’re excited about the Medicare bundle. We’ll see how that plays out.”
“The bundles are baby steps,” Frick-Hall responded when Carabello posed the final question “Can we redesign payment and not just focus on more bundles?” LaMarche said, “We are, with trepidation, racing towards global cap as fast as we can.” Frick-Hall added, “We’re starting slowly…and the bundles are one way we’re learning how to get there.”
Follow Jeff Byers on Twitter