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 Process

Cost 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

Why Do Costs Vary?

www.getbettermaine.org & www.mehmc.orgHealth Care Risk (Morbidity)

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

Reduce PMPM 1.6% ?

Outpatient

> 80 % variation

Mental Health

Infrastructure

Impact to Health Systems

For every $1 dollar that we take out of the revenue stream …

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

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

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