It’s no secret that healthcare costs are out of control for consumers. But what can get lost in the shuffle is how these costs affect employers, who want their employees to be covered with better healthcare.
Some could argue that healthcare cost-containment is one of the most important pillars of the healthcare equation, and that employers can be a key factor in bending this cost curve. Yet it’s worth noting that since 2013, premiums for employer-sponsored healthcare coverage for families have escalated more than 22%, to reach almost $20,000 per year on average.
This upward trend has renewed interest from employers in alternative payment models. The nonprofit Catalyst for Payment Reform (CPR), which provides guidance into the efforts of employers to drive increased healthcare value, is helping close that gap. And as some companies now opt to go directly to providers—bypassing health plans and cutting out the middleman—they certainly could benefit from an expert perspective.
In this edition of Episode Intelligence, we spoke with CPR Executive Director Suzanne Delbanco, who expanded on her organization’s work with Rob Capobianco, Change Healthcare VP of Value Based Payments.
In today’s show they discuss:
- How working to promote payment reform is a means of improving healthcare value (01:08)
- How payment reform progress is measured (04:41)
- What healthcare purchasers want from their health plans (11:40)
- The transition from fee-for-service and progress of bundled payments (15:05)
PATRICK MCGUIGAN: Welcome back to Episode Intelligence, the podcast that uncovers the value in value-based care. I’m Pat McGuigan, producer for Episode Intelligence. On today’s program our host, Rob Capobianco, interviews Suzanne Delbanco, executive director of Catalyst for Payment Reform, also known as CPR. CPR is an independent, nonprofit corporation working to catalyze employers, public purchasers, and others to implement strategies that produce higher value healthcare and improve the functioning of the healthcare marketplace. Cappy and Suzanne discuss the employer’s perspective on healthcare, and highlight some of the innovative approaches employers are taking to help them manage rising healthcare costs. And now, here’s Cappy.
ROB CAPOBIANCO: Suzanne Delbanco is the executive director at Catalyst for Payment Reform. For our listeners to get a better understanding of both the organization and your background Suzanne, can you tell us a little bit more about Catalyst for Payment Reform?
SUZANNE DELBANCO: I’d be happy of course to talk about Catalyst for Payment Reform, otherwise known as CPR. And you know if you can’t remember the long version of our name, just remember that the healthcare system needs CPR and that’s why we’re here.
So Catalyst for Payment Reform aims to provide thought leadership to, and coordination among, employers and other big healthcare purchasers who want to get better value for their healthcare spending. And as our name suggests, payment reform is at the center of our efforts. We want to change the way that we pay doctors and hospitals and others so that they have an incentive to improve quality and ideally, become more efficient in their resources and ultimately lead to healthcare that’s more affordable and overall a better value.
We help our members who are largely large private employers, but also a growing number of state Medicaid employee and retiree agencies, and other types of purchasers like union trust funds and universities, etc. We help them by working with them to create a shared agenda for change. We believe that you can change the healthcare system much better if the customers are on the same page, asking for the same thing at the same time. And once we create that shared agenda, we support them through creating tools that they can use in, for example, choosing a health plan or contracting with a health plan, or choosing another vendor that might meet a need like mental health services. And we help them hone in on what is going to produce the best value. We also help them by conducting research and analysis, producing scorecards, report cards that are very public and help the nation understand where we are in our progress on things like payment reform and what we still need to accomplish to get to a high-value healthcare system.
CAPPY: That’s a great explanation and a critical resource in the market today: The ability to focus in on the employer who is a primary purchaser of health insurance, and also probably represents a large majority of who are seeking services via their employees. This is the reason that we had Suzanne join, because this perspective is incredibly important because she represents the consumer of both the health plan insurance benefit line. What are they paying for? How are they building it? And who are they selling it to? But also increasingly into the providers that are providing services to their patients.
So a really interesting perspective and that’s why we wanted to bring Suzanne into the Episode Intelligence podcast, because we need to represent that side of the market and how they’re purchasing and what are they understanding and how are they getting on their own journey for value-based care. So with that, Suzanne, I wanted to branch into my next question because I think a lot of our listeners come from two sides of the market.
One, provider audience who are on this journey with us. And then secondarily, the health plans. And I wanted to focus in on the health plans a little bit because you represent a viewpoint into their direct customer, which is the self-insured employer market. So can you talk a little bit about when you’re engaging with the health plans how you help them or what kind of services or viewpoints consulting are provided to that community?
SUZANNE: Yeah. So our main focus as you know is the employer, other healthcare purchaser. So we don’t view the health plan as our customer per se, but we interact with them in significant ways and are dependent on their cooperation in many ways to achieve our goals. And so we interact with them at a variety of levels.
On a very macro level, we gather data from them, we aggregate it, sort of blind it, and help states and even the nation understand how much progress we’ve made on payment reform by gathering information from them about out of all the dollars they’re paying to doctors and hospitals, what proportion is flowing through different types of payment like bundled payment or shared savings, etc.
But on a more intimate level, we conduct what we call health plan user groups. So we’ve got 36 members. Most of them use one of the big national carriers, perhaps two. And some of them also use some regional players. So we’ve got user groups going on right now with four major health plans. And we meet with them three times a year. And we ask them twice a year to fill out a tracking document that actually measures quantitatively their progress against some of our goals. Some of that is just measuring how much payment reform there is.
But other goals include bringing payment reform to maternity care. So we ask what proportion of contracts with hospitals contain incentives to adhere to guidelines? Because we’re doing terribly as a nation in an area of care that everyone agrees we should be doing really well at, and is important to many, many people. And so we track their progress and then we also bring special topics to them that our members are very concerned about, and we want to hear how they’re thinking, how they’re doing, what their results are. We have a big emphasis also on pushing them to comprehensively and meaningfully evaluate the reforms that they’re putting into place so that employers, their customers, can learn whether their efforts are working and help work with them to steer things in the right direction.
CAPPY: That’s an incredible investment of time to be able to bring the carriers together and the employers together and really do that setting, testing, review, and education in an emerging market and space where things are changing and evolving and innovation is an incredible part of this market. To have a thought leader like you and your organization contribute that amount of time is an important thing for our listeners to understand. It’s those people out in the community that spend that investment time that are going to help us as a country move forward.
SUZANNE: Can I add one little thing which is just to clarify? We don’t meet with the health plans as a group. We meet with each of them, one at a time, because you can imagine they might feel a little uncomfortable sharing their progress with their competitors. The other thing I would say is that I appreciate the compliments, or the appreciation of what we’re doing. It’s a little bit of a delicate dance with the health plans because we ask a lot of them. And sometimes we get pushback. But I think the most gratifying measure perhaps of how we’ve done with them is that the vast majority of those we started working with seven years ago are still working with us. And they agree it’s a bit painful sometimes to hear from the customer about what the customer wants. It might not match with what they’re doing. But they stick with us because I think it helps them with their roadmap.
CAPPY: And change is hard. Sometimes hearing back from your direct customer, the self-insured employer about how you’re either doing well or maybe not so well, or what other things they’d like to get from you, is an on-road for that innovative change. Suzanne, there’s no thought leader that I’ve interviewed here or in the past that doesn’t have a personalized story of why are you in healthcare. Can you tell us a little bit about your personal story around healthcare? Why are you involved? What brought you here?
SUZANNE: Yeah. I mean it’s a pretty straightforward beginning, which is that my dad is a primary care physician, and was a professor of medicine at Harvard Medical School, but the first to become a full professor with a focus on primary care.
And he would come home from work each day, we were the last family on the block to eat dinner because he worked so hard and long, and we’d eat at 7:30 and he would tell us about his day and talk about how far the healthcare system had to go to really meet the needs of patients. And how underserved populations were being left behind.
And he was very, to this day is very passionate about his work. He just turned 79. He’s not seeing patients anymore but he’s still revolutionizing healthcare by working on a big national program to help patients see what their doctors write about them from their visits. And, those dinner-table conversations, really influenced me to want to fix the healthcare system. And I started out working on issues related to access to care for underserved populations. And I felt like it was a little bit of a losing battle and I wanted to try to figure out where the leverage in the system was to improve healthcare.
And so I was drawn to working with employers and other big purchasers because they are the customer. They don’t always take full advantage of the theoretical leverage that they have. So I want to help them do that. And that’s really what drew me to working with employers and focusing on the really important issues of quality and cost and transparency, etc.
CAPPY: I can kind of relate to that. I’m not a physician. I’ll never be one. But just seeing things in my own home and now having children and what have you, the way I can contribute is through IT. That’s what happened in my family. So it always helps to have that driving force at the very beginning of your life.
SUZANNE: I just have to give one factoid which I think will be interesting to your listeners, which is that he basically came up with the idea of patient-experience-of-care measures. So when you’re a doctor and you think about things through the patient’s eyes, it was a rarity that way back then and the fact that we now take as a given that the quality of care can’t really, fully be measured unless we hear from the patient is quite an advancement compared to where we were when I was a kid.
CAPPY: I’m going to plug a little work there and say for all of the listeners who are also patients: When you get that survey, let’s please fill it out. Your view is helpful there. Okay. So let’s jump in a layer deeper there, Suzanne. What are the top three things employers are looking for from the health plans that they work with? Or maybe aspiring to change to a new health plan? What are those top three things on their minds currently?
SUZANNE: Well, I’m going to answer with maybe a narrow perspective because I would guess if you ask the average employer in the country they might say something different from what I’m going to say. They might focus on, “Just please take care of provider contracting, please administer the benefits and handle the claims.” But that is not what the employers and purchasers I work with are, I mean that’s sort of bare minimum.
What they’re focused on is, they want really full transparency from the health plan. They want to know what’s happening with their money. What’s happening with the members of their population. How are they faring? How are the new strategies that the health plan is putting into place working? They want transparency at every level.
They also, of course, want the health plan to represent their interests in negotiation with providers. And this is a really tough space today, because there’s been so much consolidation among healthcare providers. Providers have market power for other reasons including reputation. And increasingly in many markets, health plans are having a challenging time really representing the needs of their customers because they’re up against some pretty strong negotiating strength on the part of the provider.
So they want the health plan to keep the employer’s interest in mind and not to enter into contract clauses that are really favorable to the provider. And then I think at the end of the day, I would be remiss if I didn’t say they want the health plan to help create a future where the healthcare system produces better value. And the only way that’s going to happen is by changing the way we pay for care and by really emphasizing quality.
CAPPY: Okay. So just to summarize for the listeners: transparency really top down in how the money’s being spent and how are they producing programs. What’s the data behind it? Helpful to inform the view around what are they paying for. Secondarily, the ability to drive negotiation between the payer and the provider, which is beneficial to the employers and keep them in mind. Incredibly complicated, I agree, as consolidation continues in the market. And then third, is really advancing from what is the traditional fee-for-service system to transition into care-for-value.
I’d like to pick up on the first notion you had around “It’s not every employer, but it’s some of the most advanced.” And I think that emphasizes this emerging space. And those that are coming with you are the leaders, are the trendsetters, and represent a group to watch and learn from because it takes a lot of, let’s call it “intestinal fortitude” to really think about those dynamics and want to change and drive different kind of relationships here in markets.
Can you expand a little bit more on how consolidation drives power within the provider community and how that affects the ability around cost and quality? I’m familiar with it, Suzanne, because you and I live this every day. Day in, day out but as the consumer becomes more the focus in healthcare, can you represent just some of that difficulty consolidation really lends itself to the market?
SUZANNE: Yeah. I mean the public story we hear from healthcare providers who want to merge with each other, or acquire another health system or hospital or physician practice, is that this is all in the interest of the patient. That it will create economies of scale. It will lead to better coordination of care, better continuity of care. You know your medical records will be seamless. You won’t have to fill out your history every time you go to the healthcare provider because they’re all under one roof. It sounds really lovely.
Unfortunately, for those who make those arguments the evidence to the contrary is about a mile high. There’s been a lot of research on consolidation that shows the first thing that happens is that prices go up. There has been less research on the impact on quality. But what research there is either suggests very little impact, meaning it doesn’t get better or adverse impact. Quality actually suffers as you bring together disparate providers under a roof and try to get them to work together when they don’t necessarily have the same protocols or cultures, etc.
So we hear every day those same arguments made about how beneficial this would be and yet none of the research bears it out. And so unfortunately for the purchaser at the employer level and for the individual consumer, this means that in the majority of markets across the U.S. today the hospital marketplace is highly concentrated, which means there are very few players and fewer and fewer. We see health systems going across state lines and buying up systems in other markets.
And what this means is then when the negotiation occurs between the health insurance company and whoever this provider is, now that’s gotten much larger. There’s all kinds of stuff that goes on in this negotiation that didn’t used to happen, such as if you want to have my flagship hospital in your network in X market, then you must agree to have a lesser hospital in some other market also in your network.
And you have to pay them the same price as you’re paying this one in this expensive urban area. So all kinds of things go on when a provider system gets big. They know for network adequacy reasons or other reputational reasons that the health plan must include at least part of their system and then it becomes this leverage for just high prices overall and then all kinds of other agreements including things like, “You won’t share price or quality information about us transparently. Or you’re not allowed to steer people to get an MRI at a freestanding imaging center that might be cheaper.” So all kinds of things go on that unfortunately are really not in the interest of those who have to pay for healthcare or use it.
CAPPY: Can you talk a little bit about the stage employers are in, in terms of their VBC programs? Are they advocates? Or are they sort of still sitting on the sideline?
SUZANNE: Sure. And again, when we say the word employer, it’s a very diverse pool. The vast majority of Americans are employed by small businesses, small employers, and I don’t think many of them are very focused on value-based purchasing. They think of healthcare as a benefit that they need to offer in order to attract the labor they need and to retain them, but they’re not super activist around it.
My membership, on the other hand, is sort of at the bleeding edge. And so I’ll speak from their experience and what they’re focused on, because they are leading the pack and what they do does trickle and have an impact, I think, on health insurance offerings and what will ultimately impact the smaller, fully-insured employers out there.
So in terms of what the employers in my group are focused on and the purchasers, you know they are number one, being as aggressive as they can individually and as part of CPR in pushing health plans to do the kind of things we discussed earlier. So they’re pushing them to implement payment forms and to evaluate them so that we can continue to figure out what new approaches to payment will get us better value. And so that’s something that is continuing.
To the degree that there is some dissatisfaction with the value that health plans are bringing to them, we are seeing an increased amount of activity by employers in direct contracting, creating relationships directly with healthcare providers, whether it’s through a centers-of-excellence kind of approach for high-cost or high-risk procedures where there might be an arrangement to do bundled payments, and a benefit design that encourages members of the population to seek their care there.
Or they might have a direct relationship with an accountable care organization and offer that accountable care organization as an insurance offering alongside perhaps a PPO or some other kind of health plan. And then typically with that accountable care organization, they will enter into some kind of shared risk arrangement where there’s a target budget set for spending on the members of the employers’ population seeking care there, who’ve chosen that insurance option. And depending on whether they meet the target budget, beat it, or exceed it, they might get to share in savings or ultimately eat some of their overspending. So those are some of the direct ways that employers are getting involved. Again, through their health plan, through centers of excellence programs, or through ACO’s. Those are the three most common ways among those cutting-edge employers I work with.
CAPPY: Great. I would be remiss to not bring up AWS, Berkshire Hathaway movement. Any thoughts, opinions you want to provide so far on the news around that group? The objective of that group? Do you have an opinion you’d like to share there?
SUZANNE: I wish I could form an opinion, but it’s really been hard to discern what’s happening there. I do know that they’ve hired some lovely people who are healthcare experts in a variety of ways. But I still really don’t have any insight into what they’re planning. I think it’s a sign when employers feel like they have to take things this seriously in healthcare. But I can’t comment on any specific strategy as of yet. It’s always good when the employer speaks up and says something’s wrong with this healthcare system, we’ve to do more to fix it.
CAPPY: So I want to get to something that’s well documented on CPR’s website. I know that CPR is a supporter of bundled payment programs. Do you believe that these are growing too slowly? Can there be more to be done? And then specifically, what is your program around bundled payments doing to help embrace that with the people that you help and serve?
SUZANNE: I want to be really clear, which is that CPR has never endorsed a particular method of payment, because the details always matter. We can’t say oh, bundled payment works but shared savings doesn’t, or vice versa. It comes down to how well it’s designed. How well it’s implemented and operationalized. So we do believe that bundled payments should be part of our arsenal and that we need to learn more and more about how to implement it and how to do it right so that it does lead to better quality and more affordability.
The one thing I’ll point out, you know everyone loves to talk about how payment reform is about moving away from fee-for-service and moving away from the volume incentives. Bundled payment comes with its own volume incentive. Providers, the more bundles they do the more money they get. So there’s a lot to be cautious of around bundled payment. But the evidence that’s come out especially from the federal government with its programs and some from the private sector suggests that it could be very helpful at improving quality. It could be helpful at helping providers focus in on more careful use of resources. So I think that there’s a lot that we can be hopeful about and that we should continue to work with and learn from.
And that sort of leads into the answer to your other part of the question; there’s a need for a lot more experimentation. We have been tracking how much bundled payment there is since going back to 2012 data and we really haven’t exceeded the 2% mark. So out of all the money we’re spending on healthcare services, less than 2% of it is flowing through some kind of bundled payment. So we do expect that to grow a little bit faster this year primarily because we’ve been hearing from some health plans that they’re finally making headway here. I think it’s been growing slowly primarily because the health plans don’t know how to automate it. It’s a manual process to take the usual fee-for-service claims, package them together against some kind of budget and reconcile things later, and that’s how most of them have been running these bundles. And so that’s not scalable. They have to figure out how to automate it or they have to start paying prospective bundles where you don’t have to do all that kind of reconciliation.
So I think that’s part of it. Everyone points fingers. The health plans will say providers aren’t ready to take bundled payment. Providers sometimes argue with each other about who should get to receive the bundled payment and how it should be distributed. So there’s all kinds of difficulties. I think there’s also no standard definition of episodes of care. So if you’re going to pay a bundle, what care is covered from the moment someone’s diagnosed to 90 days post-surgery. There’s—for every kind of episode whether it’s procedural or care for someone with a chronic condition—there can be debate about what the episode of care is. So I could go on and on about some of the challenges with bundled payment making progress, but I think those are some of the key ones.
And in terms of what we are doing at Catalyst for Payment Reform, because we’ve been so frustrated that there’s been so little growth in this area we have actually just started a collaborative for employers. We do these regularly on really tough topics that are keeping employers up at night where they want to try to problem-solve together. So we have a small group of employers and other purchasers that are coming together of this next year to get really deeply educated on bundled payment and to put together specifications for the kind of bundled payment program they’re looking for, to bring to their population.
And whether it’s a health plan that’s going to fill that need, or some of the independent vendors that are cropping up out there, our goal is to help employers articulate exactly what they’re looking for. And then to help them evaluate the offerings in the marketplace so they can identify how to make progress even if the big major health insurance carriers are moving slowly.
CAPPY: Is that going to be something publishable? Will you be doing things out there for the listeners to be able to come gather from you with a plan to socialize if there is one?
SUZANNE: Yeah. I mean CPR, as an independent nonprofit 501C3 organization, our mission is to educate and to help advance things in the healthcare system. So we always put up some kind of public component to what we do. If we end up doing evaluations of specific players, that won’t necessarily be public but the specs that we use for those evaluations will.
CAPPY: I want to echo your comments especially because it’s one of the ones I can contribute to: Doing one or two or three episodes is not the scale the market needs at this point in time. And I understand it’s doing something, but I agree with you, Suzanne, and it’s the reason that we got into market was to look at the automation around that, the ability to scale something out so that it is driving meaningful adoption to get us into different ways to create relationships around how care is provided, how do you pay for it, and go from there?
But you bring an interesting point. To do it at a small scale is one thing. You need to find partners both in thought and technology and policy and all the other things that go into it to really take it to its intended value of deliveries. So, couldn’t agree with you more. Have those conversations all the time. Any final words for our listeners?
SUZANNE: You know the simplest thing which is that the healthcare industry is booming and it’s huge and people make untold amounts of money. Try to remember that it’s all about the patient. That’s why we’re here and that’s what our focus should be.
CAPPY: Love it. For folks that are looking for more information on your organization, can you tell them where to go?
SUZANNE; Yeah. It’s quite simple. Catalyze.org. So, C-A-T-A-L-Y-Z-E dot O-R-G. And please feel free to get in touch with me. My contact information is right on there.
CAPPY: Fantastic. I encourage our listeners to reach out to Suzanne and her organization and learn more. I’ll just say “Wow” around what Suzanne is doing and her perspective. You just got a load of information that I hope you find valuable from someone who’s doing this every day.
SUZANNE: Thank you so much. It’s been fun.
PAT: You’ve been listening to Episode Intelligence, the podcast that helps you unlock the value in value-based care. Subscribe now to stay tuned to future episodes at changehealthcare.libsyn.com. If you have suggestions for future guests, please write to me at firstname.lastname@example.org.
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