While political battles and a glitch-prone website have dominated media coverage of health care reform, the Affordable Care Act also has brought about a major change in the way medical service is being delivered.
“We’re in this dramatic transformation where health care providers, hospitals and physicians are coming together in an integrated model,” says Greg A. Adams, executive vice president, group president and regional president of Kaiser Permanente’s Northern California Region, considered a model for the future of health care.
Adams, speaking in November at the EY Strategic Growth Forum® in Palm Springs, Calif., says the health care system is emulating what Kaiser Permanente has been doing.
“They are shifting from a volume-driven, fee-for-service system,” he says. “The shift that’s occurring is a move to a system that’s oriented toward value.”
That means not only focusing on high quality care, but on understanding the value of the care and the outcome.
“We’re shifting from episodic care to really defining a population, understanding that population’s health needs, and keeping them healthy through prevention, through organized technology and systems managing their chronic disease,” Adams says.
With health care approaching 19 percent of the gross national product, it is no longer affordable, Adams says. The average health insurance premium for a family of four is $16,000 annually, and people are paying $4,500 in out-of-pocket costs as well.
“When you look at someone making $50,000 or $75,000 a year, that’s a problem,” he says.
But the solution — the ACA — has encountered very notable setbacks.
Covering more people
Because of the ACA, 30 million people who previously did not have coverage, often because of pre-existing conditions, are now insured. But that was lost in the furor over President Barack Obama’s campaign statement that if you like your plan, you can keep it.
Adams says that promise wasn’t necessarily broken — you can still keep your insurance carrier, even though specifics of the plan may change.
“If people want Kaiser, they can keep it,” he says. “The issue really is the benefits, and the fact is that benefits are changing and the law requires that certain people were notified that plans were being canceled because they are to shift to a new plan.”
Out of Kaiser Permanente’s 7.1 million members in California, about 120,000 received cancellation notices. But those policies were terminated with the intent that members would go to the exchange and choose a coverage plan from among Kaiser and other carriers.
Of course, the national exchange website had many problems that made it difficult for people to purchase coverage. But that should be kept in perspective, Adams says. Kaiser probably has the largest electronic medical records system in the country, and it took three launches to get its website functioning properly.
“Certainly there are state exchanges where websites are working well. Covered California’s website is working,” he says. “In a very short period of time, they essentially are creating this national infrastructure for a health plan, and that’s a huge undertaking.”
Addressing the long term
Although Adams sees many benefits arising from the ACA, he cautions that short-term fixes like allowing people to keep plans that don’t meet ACA coverage standards could undermine the entire effort.
“The problem with that is the model is based on a large group of people — high risk and low risk — participating in the exchange,” Adams says. Allowing people to keep current plans has limited the group to people with high risk and created problems for health plans, hospitals and providers that based rates for 2014 on a diverse risk pool that was blended.
The ACA might not be perfect, but has steered health care in the right direction, according to Adams.
“We are the most developed country on this globe. Our health care costs are the highest of any industrialized nation. And our outcomes are not there,” Adams says. “This is absolutely changing. You can see us starting to move health care to a place where people are getting great care across the nation; it’s evidence-based; we’re doing the right thing. It’s an opportunity for costs to come down.”
Changing the model
A 2009 Kaiser Foundation study showed a slowing of the increasing cost of health care — to a rate of less than 4 percent. Some of that was due to the recession, but 25 to 30 percent of the improvement was due to fundamental changes in health care systems, Adams says.
“We are shifting from the mindset from ‘do’ to ‘how do we understand a population?’” Adams says. That involves managing health and prevention, and practicing evidence-based medicine that is clear about treatment and enables more predictable outcomes.
Previously, care was provided on a fee-for-service basis and volume dictated payments. The shift is to reward outcomes instead.
Precision medicine, using genetic makeup and markers to predict diseases and outcomes, will become more integrated into the care of medicine, Adams says.
“That’s another reason we need to embrace where we’re going with health care reform, because independent physicians or independent hospitals can’t bring us that. Our clinicians have to be integrated into the systems that allow them access to the kind of information that they need in order to provide us with real time, concurrent treatment,” Adams says.
Technology will allow physicians to bring acute hospital care into the home, he says. “How do we bring teams out and integrate technology so people aren’t coming to the hospital? That’s the vision for how we will evolve health care and keep people healthy. And we’re starting to see that now.”
Adams credits the ACA with providing entrepreneurs with opportunities to create new venues of care that will help drive down costs. He says a massive transformation of the health care system is well underway.
“It is a market-based, competitive model that is shifting the competition from episodic, individual, volume-driven care, which drives up costs, to entities coming together and focusing on population management and health management,” Adams says. “If entities are competing to provide evidence-based care, it brings down the cost of health care. That’s something I, and Kaiser Permanente, would advocate for.” ●
Learn more about Kaiser Permanente at:
How to reach: Kaiser Permanente Northern California Region, (800) 464-4000 or www.kaiserpermanente.org
Although health care reform has caused a lot of tumult, employers are still dealing with many of the same issues, especially escalating health care costs. For years, the only feasible option to try to contain health care spending was to adjust benefits and shift costs to employees through higher copays and deductibles.
“These days, people need to look beyond rates and benefits,” says T.C. Williams, the manager of channel strategy for Kaiser Permanente. “People need to concentrate on return on investment. They need to have a measurable return on their health care dollar and they need to find a health care plan that is going to provide that.”
Williams advises employers to partner with a health plan that focuses on total health and productivity — in other words, keeping employees at work and productive.
Smart Business spoke with Williams about how to ensure your health plan is maximizing the productivity of your work force.
What is total health and productivity, and how can it be achieved?
It is what it says: the total health of the employee base, the importance of that health, and the tools and resources an employer can expect from a health plan. The focus is on employee productivity. To achieve it, you must identify, analyze and understand some of the key drivers that have adverse effects on employee productivity.
How can employers control health care costs?
There are direct and indirect health care costs. Direct costs are actual medical and pharmaceutical costs based on utilization. Indirect costs are made up of short-term and long-term disability, absenteeism and presenteeism. Absenteeism is when you’re out of the office and therefore not productive. Presenteeism is when you’re at work, but you’re dealing with something, like a medical condition or a chronic disease, or when you’re coordinating care for a family member. You’re there but just not able to be as productive as you could be.
Studies have shown that health-related productivity costs are up to three times greater than direct medical and pharmacy costs alone. People have no idea that the most significant drivers of total health care expenditure come from indirect health care costs.
There are two schools of thought: one is that we can’t really control costs. On one hand that’s true. For example, we can’t control getting older, and as we get older the demand for health care increases.
On the other hand, there are some costs we absolutely can influence. We can have an impact on both direct and indirect costs with an emphasis on prevention, chronic condition management and work force health programs. Using these strategies not only addresses the largest source of employers’ health care costs — lost productivity — it also helps employees lead healthier lives.
What can be done to control presenteeism?
Employers have to accept that presenteeism is, and always will be, a major driver to expenditures. But, if employers have the right resources, they can do a lot to combat it.
Find a health plan that promotes health advocacy, gives employees and their families useful tools, and also drives better health outcomes with the use of health information technology, specifically by enabling individuals to be active participants in their health care through a personal health record.
Ask your health plan what tools they have. What’s in the arsenal of wellness programs? Do they offer on-site programs, like smoking cessation, behavior change classes and/or health risk assessments? The information that can be extracted from the completion and compilation of health risk assessments on your employee base is useful because it reports back to the employer: ‘Here’s what you’re dealing with. You have a high population of people dealing with morbid obesity. Here are the downstream effects of morbid obesity: diabetes and heart disease. Here’s what you can do now so you aren’t dealing with those costs down the line.’
What are the keys to implementing successful wellness initiatives?
Having wellness programs and incentive-based programs that an employer can implement at the worksite is a good start, but not enough by itself. There must be total buy-in at the executive and employer level. Owners and executives must embrace and promote the programs for them to be successful. Wellness programs are just one piece of total health and productivity. Also, ask your health plan what is done as far as prevention and the actual health care delivery system.
For instance, does the health plan have an integrated delivery system? Do patients and physicians both get reminders about needed screenings or immunizations? Do they enable secure online communications between the members and their physicians? That capability is extremely important in controlling presenteeism, because time away from work adds up with each visit to the doctor’s office.
What other controllable areas impact health care costs?
Chronic disease management is a huge factor. It’s a case of 10 percent of patients with chronic conditions using 80 percent of the total health care resources. The lack of coordination prevalent in American health care results in poor outcomes and higher costs across the board. You might want to ask if the health plan has electronic medical records, so that all caregivers — physicians, pharmacists, lab techs — can access a member’s record, helping avoid drug interactions and redundant tests. Does the system enable online sharing of best practices among providers so that the latest treatment protocols are readily accessible and available to implement in weeks or months, not years?
Partnering with your health plan can help identify some of the health-related conditions and situations that drive up costs, and give you strategies to put your work force on the path to improved health and productivity.
T.C. Williams is the manager of channel strategy for Kaiser Permanente. Reach him at (216) 479-5230 or firstname.lastname@example.org.