September 2017

MEDICAL EPISODE SPENDING ALLOWANCES

A NEW CHOICE ARCHITECTURE FOR REFORMING MEDICALBENEFITS AND PURCHASING

François de Brantes | Center for Payment Innovation

September 2017

� Curated over the past three to four years

� Accelerated due to increased evidence of HDHP defects and impact of Value-Based Insurance Design (VBID)

� RWJF grant to create a blueprint§ Includes complete operational blueprint§ Overviews regulatory and legal considerations§ Demonstrates plan actuarial impact

BACKGROUND

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September 2017

THE PROBLEM

�HDHPs are too blunt for VBID, but have saved money – reducing actuarial value of plan

�Price sensitivity is at the wrong end – which reference pricing seems to solve

�OOP expenses are crippling families –especially for those who need care the most

�Conflicts between provider payment and plan member incentives are rising – as providers try to manage patient care and patients are reluctant to seek care/comply

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September 2017

MESA DEFINITION:REFERENCE BENEFIT� From indiscriminate deductible applied on

most services to pre-deductible episode of care benefit – the deductible sits on top of the episode of care benefit

� Each MESA budget is adjusted for patient severity and includes allowances for needed care – facilitates compliance with best practice care

� Selecting EOC-contracted providers eliminates all plan member financial exposure – to encourage move to higher value providers

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September 2017

WE’RE CHANGING HOW CONSUMERS PURCHASE HEALTH CARE

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Difficult to figure out how to save money here

Easier to shop for

September 2017

MESA IN ACTION: PROCEDURAL EOC

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September 2017

MESA IN ACTION: CHRONIC CARE

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September 2017

MESA WELLNESS PROGRAM REQUIRES CONTINUED ENGAGEMENT

Member Engagement Includes:� Care Support in collaboration

with Physicians� Treatment Plan to reduce

risks of complications� Wellness goals� Activities are rewarded by

significant incentives

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September 2017

MESA PLAN AT A GLANCE

�Base group health plan (can be high deductible)

�Nested MESA Benefits for those who need care

�Wellness plan to engage plan members and keep them engaged

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MESA Network & Benefits Structure

MESA Group Plan Network & Benefits

MESA Wellness Program

September 2017

�The Plan will (and should) attract those who need health care services the most – those with chronic conditions, on-going treatments, and scheduled for elective procedures

�Selecting providers that are contracted in the MESA Network can remove all out-of-pocket expenses

�There are strong incentives to select MESA Network providers and strong incentives to comply with the terms of the Wellness Program

KEY OBSERVATIONS

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September 2017 11

SAVINGS COME FROM REDUCING AVOIDABLE COMPLICATIONS

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Removing the outliers by shifting financial risk for complications to providers significantly reduces average episode costs

September 2017 12

MOVING MARKET SHARE TO THE BETTER PROVIDER SAVES $1K/PATIENT/YEAR

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$3K

$5K

$4K

$4K

$4K

*PAC = Potentially Avoidable Complications

*

September 2017

ACHIEVING ACTUARIAL EQUIVALENCE WITH A MESA PLAN

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Current HDHP Actuarial Value

Employee MESA Value

Bundled Payment Contract Price

Volume of Contracted Providers

A MESA Plan can be made actuarially equivalent to any current HDHP

September 2017

NEXT STEPS

September 2017

� Target three pilot sites across country

� Secure multi-year grant funding to support pilots

� Work through a myriad operational issues !!!

15

LAUNCH PILOTS

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September 2017A L T A R U M . O R G