MaineCare Redesign Task Force Results of Health Care Cost Workgroup: Savings Opportunities

www.getbettermaine.org & www.mehmc.org

MaineCare Redesign Task Force

Results of Health Care Cost Workgroup: Savings Opportunities

Sept 12th, 2012

Maine Health Management Coalition Foundation


Maine Health Management Coalition\Foundation

Foundation:• is a public charity • bring the purchaser, consumer and provider

communities together into a partnership• measure and report to the people of Maine on the

value of healthcare services• educate the public to use information on cost and

quality to make informed decisions.

19 Private Employers5 Public Purchasers

21 Hospitals14 Physician Groups

5 Health Plans

Purchasers

Health Plans

Providers

Collectively 35% of Comm. Market

Coalition:• purchaser-led partnership among multiple

stakeholders working collaboratively to • maximize improvement in the value of healthcare

services delivered to MHMC members’employees and dependents.


Cost Workgroup ProcessCost Workgroup identifies potential opportunities to reduce total per capita cost

Using data, assess opportunities. Describe variation, identify drivers of variation.

Approximate impacts of interventions, no precise estimates

Identify barriers, complexities, other considerations

Set targets for reducing costs


• Coalition members (commercial)• Adults 18-64 only

• No Medicare Supplement• Medical Claims for October 2009 – September 2010 • Verified with 2011-2012 data• Residents of Maine by County of Residence• Risk: retrospective based on age, gender, Dx, Tx• Cost: Allowed Amount $ PMPM• PMPM: per member per month

Data


Why Do Costs Vary?


Cumberland

Saga

dahoc

Androscogg

in

Oxford

KnoxYork

Linco

ln

Penobscot

Kennebec

Frankli

nWald

o

Somerse

t

Hanco

ck

Washingto

n

Aroostook

Piscata

quis$0

$100

$200

$300

$400

$500

$600Unadjusted PMPM by County

ProfessionalOP FacilityIP Facillity


Cumberland

Saga

dahoc

Androscogg

in

Oxford

KnoxYork

Linco

ln

Penobscot

Kennebec

Frankli

nWald

o

Somerse

t

Hanco

ck

Washingto

n

Aroostook

Piscata

quis$0

$100

$200

$300

$400

$500

$600Unadjusted PMPM by County

ProfessionalOP FacilityIP Facillity

-- 40% variation in PMPM-- Similar across plan sponsors


1.4 1.6 1.8 2$300

$350

$400

$450

$500

$550

Unadjusted PMPM vs Risk by County

Health Care Risk (Morbidity)

PMPM


1.4 1.6 1.8 2$300

$350

$400

$450

$500

$550

R² = 0.29952077371833

Unadjusted PMPM vs Risk by County

30% of variation in PMPM explained by morbidity

Health Care Risk (Morbidity)

PMPM


Knox

Saga

dahoc

Cumberlan

d

Androscogg

in

Linco

lnYo

rk

Kenneb

ec

Washingto

n

Penobsco

t

Waldo

Oxford

Somers

et

Aroostook

Frankli

n

Hanco

ck

Piscata

quis$0

$100

$200

$300

$400

$500

$600

Risk Adjusted Total $ PMPMProfessionalOP FacilityIP Facility

> 30% variation in PMPM

www.getbettermaine.org & www.mehmc.org 11

Issues identified by Cost Workgroup

Admissions and readmissions for people with chronic illnessVariation in prices for inpatient careVariation in price and utilization of outpatient servicesVariation in treatment for Preference Sensitive Conditions

Mental health careWellness and community healthConsumer education and benefit incentives

Cost shifting from public to private payersHealthcare infrastructure, capacity

Administrative costs


Inpatient


$11,000 $12,000 $13,000 $14,000 $15,000 $16,000 $45.00

$50.00

$55.00

$60.00

$65.00

$70.00

$75.00

$80.00

IP $ PMPM vs Case Mix Adjusted Price per Admission

Case Mix Adjusted Price per Admission

Risk Adjusted

IP $ PMPM


$11,000 $12,000 $13,000 $14,000 $15,000 $16,000 $45.00

$50.00

$55.00

$60.00

$65.00

$70.00

$75.00

$80.00

R² = 0.702966936742338

IP $ PMPM vs Case Mix Adjusted Price per Admission

Case Mix Adjusted Price per Admission

Risk Adjusted

IP $ PMPM

70% variation in IP PMPM is from prices

Reduce PMPM 1.6% ?


Outpatient


Cumberlan

d

Saga

dahoc

KnoxYo

rk

Androscogg

in

Linco

ln

Kenneb

ec

Frankli

n

Penobsco

t

Waldo

Washingto

nOxfo

rd

Somers

et

Piscata

quis

Aroostook

Hanco

ck$0

$20

$40

$60

$80

$100

$120

$140

$160

$180Risk Adjusted OP $ PMPM

> 80 % variation


Cumberlan

d

Saga

dahoc

Knox

Frankli

n

Androscogg

inYo

rk

Penobsco

t

Waldo

Linco

ln

Kenneb

ec

Washingto

nOxfo

rd

Somers

et

Piscata

quis

Hanco

ck

Aroostook

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50High Volume OP CPT Codes $ PMPM

ASSAY THYROID STIM HORMONE

UPPER GI EN-DOSCOPY BIOPSY

TISSUE EXAM BY PATHOLOGIST

LIPID/METABOLIC PANEL

CT PELVIS/ABDOMEN

EMERGENCY DEPT VISIT

-- 15% outpatient spend-- Prices: vary from 1.6x to 5.3x-- Utilization rate 2.7x to 7.5x-- Risk 0.87 – 1.18 low to high-- 1% PMPM reduction


Mental Health



Infrastructure


Impact to Health SystemsFor every $1 dollar that we take out of the revenue stream …

$1

A health system must take $1 out of its costs…

Revenue Cost

$.70Fixed

$.30Variable

Yet, only $.30 is variable, so the fixed costs remain. The hit to the bottom line is $.70.


Benchmark Comparisons

ServiceCategory Benchmark MHMC Benchmark MHMCInpat Fac 1.02 1.14 57 71OP Fac 1.02 1.14 67 131Prof 1.02 1.14 116 110Total 1.02 1.14 240 313

Age/GenderIndex Adj Allowed PMPM


Benchmark Comparisons

ServiceCategory Benchmark MHMC Benchmark MHMCInpat Fac 1.02 1.14 57 71OP Fac 1.02 1.14 67 131Prof 1.02 1.14 116 110Total 1.02 1.14 240 313

Age/GenderIndex Adj Allowed PMPM

ServiceCategory Benchmark MHMC Benchmark MHMCInpat Fac 11,063 15,439 61 49OP Fac 553 579 1,421 2,381Prof 79 76 17,334 15,198

Adj Allowed/Service Adj Serv/1000


Morbidity: Significant, but not major factor in regional population cost differences within the state

Inpatient: Price is a major driver of regional population cost differences

Outpatient: Price and utilization are major drivers, across regions and through time

Reductions in PMPM for most interventions range from at least 1 – 3%, some more. Feasibility …..

Within state major drivers confirmed by regional benchmarks

Conclusions

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MaineCare Redesign Task Force Results of Health Care Cost Workgroup: Savings Opportunities

Documents