Calpers Sacramento Town Hall - California health benefit exchange - August 9, 2012

>>Good afternoon everyone. It's a pleasure to see you all here. On behalf of the CalPERS Board of Administration, I want to welcome you to our town hall meeting here this afternoon. My name's Rob Feckner, I'm president of the CalPERS Board of Administration. We're pleased that you're able to join us today. Our town hall meeting is designed to promote a greater understanding of our health policy challenges and opportunities that are going to be affecting CalPERS members and employers, as well as the impact that these issues are gonna have on California and our nation. But more importantly, we hope to explore the opportunities that are available to create a competitive, cost efficient, and member engaged health program. Today we bringing some of our partners to the table to share their experiences and have an open and constructive dialogue around healthcare reform, the infrastructure of our healthcare system, health outcomes, as well as wellness. Before we begin the panel discussion, I'd like to take a moment to introduce the CalPERS Board members that are with us here today. My colleagues that are here in attendance. So we have J.J. Jelinsic who's elected representative of both the active and retired members. There's J.J. (clapping). We have representing the State Treasurer Bill Lockyer, we have Grant Boykin and Robbie Beagler. (clapping) Ralph Cobb, who's representing Julie Chapman, Director of California Department of Human Relations. (clapping). WE have a couple of more board members that will joining us, they're a little caught in traffic I believe. Our chair of the Health Committee, Priya Sara Mathur will be joining us, as well as Ruth Holton Hodson of the Controller's Office will be on a panel with Ralph a little later. So now that we've introduced the Board members that are here I'd like to introduce our host for this afternoon's activity, our panel discussions, Ann Boynton. She's our CalPERS Deputy Executive Officer of Benefit Program Policy and Planning. Ann provides executive leadership for health policy and planning, health policy research, health plan contracting and administration, retirement research and planning, and the CalPERS Center for Innovation. Thank you again for taking your time to be with us here this afternoon and enjoy this wonderful opportunity to ask questions and get some good insight from our panel members. With that, I'll turn it over to Ann. Thank you. >>Good afternoon. Thank you Rob. As Rob said, our goal today is to help you gain a better understanding of some of the policy issues CalPERS faces on the healthcare front. We provide health benefits as you know for more than 1.3 million members, retirees and their families. Last year we spent nearly 7 billion dollars on healthcare benefits. This is a challenging time in the world of healthcare delivery. But I'm optimistic that we are approaching a time of real change. Change that comes about when the right forces converge and align along similar goals. Those being quality and affordable care for all. It's CalPERS responsibility to ensure members get the best possible care for their healthcare dollar. And we've been successful in helping members receive improved care in a very competitive and frankly sometimes very expensive market place. Part of that success stems from working with our health plan partners and other stakeholders to find creative ways to address healthcare outcomes. We've been looking at solutions for example to enhance coordinated care, improve employee wellness, and reduce overall costs through innovative projects. Today, our three one-hour panels feature state and local experts who will address these areas. They bring a wealth of knowledge and experience to our discussions. The first panel is focused on the Health Benefit Exchange, which was established under the Federal Affordable Care Act to provide a market place where people can purchase health insurance at competitive prices. The panelists are Peter Lee, Executive Director of the Health Care Benefit Exchange, and Dr. Micah Weinberg, Senior Policy Advisor for the Bay Area Council. Panel 2, and I'll re-introduce them again before so you don't forget who they were. Panel 2 will focus on a 19 million dollar federal grant given to the Pacific Business Group on Health to implement an innovative program for intensive medical homes for Medicare populations in California. The panelists for this will be Diane Stewart, Senior Director of PBGH and Alan Antoven, Eccles Professor of Public and Private Management at the Knight Management Center at Stanford's Graduate School of Business and there will be a quiz on that. Our final panel will focus on the importance of creating a proper environment for successful work place wellness programs. Our panelists include, as Rob indicated, Ruth Holton Hodson, who sits on the CalPERS Board as a representative for the State Controller; Ralph Cobb, who is part of the Board as a representative for the California HR Department; Sara Zimmerman who is Deputy Chief of Staff for SEIU 1000; and Marie Monrad, Vice President of Strategy and Policy in the Office of Labor Management at Kaiser Permanente Health Plan. We will be taking questions after each panel. You have, if you have a question, we ask that you write it down on a card and there are staff in the room that have cards, and they're available at the back, and they're in your folder. And once, if you have a question, staff'll be circulating around but if you could pass them to the end, this side and this side, it'll be hard to get up on that side. Okay, the outsides. Then staff'll collect those and bring them up to the panelists as we go on. So thank you very much for attending. And Peter. >>Uh, Ann thank you very much. Uh. And thank you to the CalPERS Board for hosting this session. As some of you know, for ten years I was the Executive Director of the Pacific Business Group on Health and had the pleasure of working very closely with CalPERS over that period of time. And it's nice to be back in California running the Health Benefit Exchange with an opportunity to work with CalPERS and other purchasers more. I'm gonna, very briefly, in about 15 minutes, do three things then throw it to Micah at a, be a little bit of Oprah or Jerry Springer depending on how challenged he wants to be, and then try to get some of your questions. But what I'd like to do briefly is first provide a context for what the Exchange is. Second, tell you what the Exchange is doing. And third, talk very specifically about some of our proposals of how we as a large purchaser can address costs, which is the subject of today's forum. First, the context. And I think it's very important, people often, you know, looked at the Supreme Court case and said it's all about this mandate issue or this penalty for non coverage. I don't think folks have a handle on how big the transformation in healthcare under the Affordable Care Act is. And up until now, uh, healthcare has largely been a game for insurance companies of risk avoidance. It's not been about doing what Ann says CalPERS does, which you actively do, which is trying to promote quality and affordability. For insurance companies, the game is to avoid sick people, that's how they've generally made money. And I've worked very well with very good insurance companies but the model is if you get more sick people, it costs more money, you'll make less money. Come January 2014, the game has totally changed for healthcare and health insurance in America. And this will affect CalPERS, it will affect every Californian. So come January 2014, every Californian knows forever they will not be denied healthcare because of their health status. This is a game changer. This means people that have employer-based coverage today can say you know, I may want to start that business, I can do that and not be worried that my asthma is not going to be covered. Number two, though, health plans are gonna be required to spend the vast majority of their dollars, 85% in the case of large employers, on healthcare. Third, health plans are going to be required to move money around if one plan plays the old game, so to speak, and attracts a sicker bunch of people and another plan a healthier bunch. That health plan that collects healthier people needs to give money to the other plan. And the last element that is big and where the Exchange fits in is under the Affordable Care Act, we're going to dramatically expand coverage. One of the problems we have in the American healthcare system is we have a constant shell game of uninsured people in essence being paid for because they go to emergency rooms, get expensive care by you, by me, by the government. And with the Affordable Care Act, we are across the nation expanding coverage to close to 30 million people, that's about 5 million Californians, will be newly covered under the Affordable Care Act. Okay. You can't address costs without having everyone in the tent. You can't not have that shell game. So, per this agenda, how do we address cost drivers. One of the key things the Affordable Care Act does is get everyone in the tent. So the Exchange is part of the vehicle of getting healthcare coverage to those 5 million in California. We have one of the highest rates of uninsurance in the country. Those 5 million Californians, about 2 million will be eligible for Medi-cal, the state Medicaid program. About 3 million will be eligible to get a tax credit to buy the private plan of their choice through the California Health Benefit Exchange. And how this is going to work is those individuals will say here's my income, and if they make less than 400% of poverty, and let's be clear, this is not a small number. This means for a family of four, someone making $90,000 a year would be eligible for health, for buying their health insurance. They would get a check. That check wouldn't go to them, that check would go to the private health plan they pick through the Exchange to make it more affordable. And you all know, we know that you know, I'm an employee of the state, the state pays a big chunk of my health insurance premium. I contribute some. Would I be able to afford it even at what I make, if I had to pay all of it? It'd be tough. The Affordable Care Act says everyone needs a leg up to afford to buy healthcare. And it will improve the entire system if we get everyone in. So, the Exchange is a vehicle where it's gonna help individuals with a tax credit that is sent directly to the health plan to pick and spend on the health plan they choose through us. Okay. So what's the Exchange doing? First we're going to be picking health plans. And we have a process that in many ways is similar to what CalPERS does. The legislation that formed the Exchange and we're an independent body of the state, said we can be an active purchaser. We can pick plans. We have a lot to learn from what CalPERS has done as a good picky purchaser to push value, to push quality. We're right now in the process of our health plan selection process. So that's first, we'll select plans. Second, we'll be doing marketing. You may be shocked and surprised to know that there's a lot of misinformation and disinformation of what the Affordable Care Act is. People have no clue. They hear about Obamacare, they hear about this, they hear about that, they don't really know what it means, again in particular for the 5 million Californians that will get help to buy healthcare, or for the 30 million Californians that are covered now but have new protections they never had before. We will be doing a very large marketing and outreach program to educate people in 2013. So effective January 1, 2014, we have as many as possible of those 5 million Californians enrolled either in Medi-cal or in the Exchange. And the third leg of what we do, as far as the Exchange's efforts, is to have effective enrollment systems. And so we've contracted with Accenture to build the IT system so I like to say to make, to make buying health insurance as easy as buying a book on Amazon. It won't be quite that easy. Health insurance is a little bit more complicated. But we need to make it really easy. Health insurance, as you know is complicated, but what's not complicated is the fact that people will have financial support, they can choose the plan that has their doctor in it, that they can understand the network and understand what they're choosing. And the Affordable Care Act does a lot of things not just in the Exchange to standardize what health plans are doing so it's clear. What you, many of you people who are in CalPERS have, is a clear description of what the benefits from one plan to the next. You know what you're shopping for. Outside of where large employers are doing that, or CalPERS is doing that, it is a forest of confusion for consumers. The Exchange will make it a lot easier, a lot clearer to make their purchasing. So finally, the third area I want to cover briefly is what specifically will the Exchange be doing to engage to address cost drivers. The first thing we're doing is expanding coverage. The, all purchasers pay a lot for the uninsured that go to emergency rooms, that are then cost shifted on to the rest of us. By getting more people in to insurance, we will be reducing costs across the board. So that's a core part of our mission. Beyond that though, there's a number of areas where our board, we have a five member board, has said central to the Exchange's mission, is to be a catalyst to promote delivery reform. To promote the changes in how care is actively delivered by doctors, nurses, medical groups and hospitals. And so we have a range of recommendations that our board is looking at right now. I won't go through all of them and leave it for some of the Q and A, but central to them are a couple of things. The first is alignment. It's one of the things that Ann mentioned. CalPERS is big, the Exchange is gonna be big. We're gonna grow to probably have two million lives. We aren't big enough alone to change the incentives to change the delivery system. So our board has said how do we partner with other purchasers, both here in California like CalPERS, private employers, but also with CMMS, the Center for Medi- care and Medicaid Services. I've worked for a while back in Washington for the Center for Medi-care and Medicaid Innovation which you'll be hearing from one of the grant recipients in a moment. And CMMS is big, Medi-care is big. Medi-care gets it that they're not big enough alone, that they need to work in alignment with others. So, the Exchange is gonna be looking actively for ways to partner with other purchasers. We're also going to be holding our plans to account for how they pay and deliver care. In the end, delivery is not done by health plan, it's done by a doctor, by a nurse, by a medical group. But plans can make a difference by who they choose to contract with, do they have a narrow or a network that is integrated and effective? Do they promote care coordination? Do they do effective wellness programs? We'll be holding our plans to account to do that. Finally, and I know this is one of the other panels you have, we've been looking a lot at wellness. And we've recommended to our board a whole range of initiatives to make sure that the individuals in the Exchange have the benefits of getting preventative services. But also, and again this is another issue of alignment, is that the Exchange is working in partnership with other purchasers and also with Public Health, because the issues around addressing obesity, addressing smoking, etc., even if you're as big as PERS or as big as the Exchange, are issues that go beyond our borders. And so we need to look at how do we engage actively in the broader issues around health wellness throughout the state of California, as we're focusing on expanding coverage to 5 million Californians. So with that, I think I was close to my 15 minutes, which I promised Micah I'd stay too. He was worried by remarks would go to 47 minutes and give him 2 minutes of questions. And with that, I'm happy to take questions from Micah first and then questions from you in the audience. >>Thank you so much Peter. And thank you to Ann and the rest of the folks at CalPERS for hosting this very important conversation. I think I might end up starting sounding a little bit more like Oprah than Jerry Springer when I say that, you know, as I think about Peter Lee, I don't know if I should describe him as the Hercules of healthcare reform or the Atlas of healthcare reform. He's the Hercules in the sense of, and this is not necessarily a good thing, that the folks at the Exchange have 10 or 12 nearly impossible tasks ahead of them that they have to complete in a fairly short period of time. I believe that they are only nearly impossible tasks and that they will in fact be successful, but whether it's the IT implementation or reforming the insurance market, or coordinating with public programs or what have you, these are not easy things to do. Or perhaps he is the Atlas of healthcare reform in a sense of healthcare reform is a state- based solution and the lynch men of healthcare reform are these health benefit exchanges. And California as we all know is the largest state. So on some days it seems like all of healthcare reform, the whole globe, is resting on this man's back. And you seem to be holding up fairly well, which is good. But don't get in any small planes. So, I thought that the right, really the right thing to do here uh, would be to start out our Q and A session with a little bit of shameless pandering. By asking you what is it that the Exchange can learn from the experience of CalPERS? What are some of the best things that CalPERS has done that can be adopted in the Exchange process? >>That's a great question and appropriate pandering. Across the nation, as Micah noted, there will be an exchange in every single state, okay. Some of those will be run by the federal government, some will be run by states. Some of those states have said we're gonna run an exchange and we're gonna be what I call an any willing plan state. We are gonna say if you're a plan you can be in our exchange. Other exchanges, like California, said we're gonna be an active purchaser. We're gonna select our plans, we're going to engage them actively, we're gonna look at what they do, we're gonna seek to improve what they do. That's exactly what CalPERS has done historically, is to say we serve, us being CalPERS, serve our members better by actively looking at what our plans do, helping shape what they do, hold them to account for what they do. That's exactly what the Exchange is gonna do. And so we're gonna be doing a solicitation process, an RFP process that we have a lot to learn from what CalPERS has done in saying if you want to play in the Exchange, tell us what you're doing on chronic disease management. Tell us what you're doing on wellness programs. So that's one example. Another example is we're specifically asking our plans to say the status quo isn't enough. What are you as a health plan doing to innovate? To create new ways that we can deliver care? And again you'll hear from the next panel an example of that, which is a effort to take innovations that can be proven and then spread. We want to make sure that we aren't just saying the old system is always going to work forever. How do we support those clinicians that want to change, that want to actually be rewarded for better coordination instead of rewarded for doing more? So we're gonna be looking at some of those lessons. The last thing I'd note that we've learned from CalPERS is again the thing I noted before, is the need to work in partnership with others. One of the recommendations before the board is that actually the Exchange join the Pacific Business Group on Health. CalPERS has been a longstanding member. I think has benefitted from the partnership, learning from the private sector, and helping shape the private sector. Just an example again of where I think we've learned a lot from CalPERS already and we'll learn more as we work together. >>As a follow up to that, you know, CalPERS has had this project which is the partnership between you know, Blue Shield of California, Dignity Health and Hill Physicians, which has really at least shown some very promising initial results. Is that the kind of product that could be offered within the Exchange? Or are there things about the ways in which CalPERS and the Exchange are different that would mean that that product would have to look different? >>It may look a little different but that is exactly the kind of product that we would be excited if it came to our doors. So we will be offering health plans, product choices throughout the state of California. The number one element that's important to us is affordability. So I noted the issues of people who get subsidies, and you know, again up to $90,000 a year, you can get help buying your health insurance. But if you make $20,000 a year, the federal government is going to pay for 80% of your premium. They're going to be given a check to that, so that said, affordability is still key. It's still a purchasing decision, it's still a decision of a low income person who's saying am I going to buy this health plan or am I gonna, you know, pay rent this month. Am I gonna buy food. And it's that kind of struggle, so affordability is job one. Given that, we're gonna be welcoming and looking for health plans that say how we're gonna address this is in this area we're gonna have an integrated delivery system. And that's what we want to compete on. So we would absolutely welcome those sorts of arrangements, and we've been encouraging that in our discussions with health plans, providers, delivery systems. >>Great. Well, you were one of the people that I was the most disappointed to lose to DC when you went and worked with the HHS Office of Health Reform and then with the Center for Medi-care and Medicaid Innovation. I was so excited when we stole you back. So if there are other good folks in DC we need to steal back, let's get on that. But I want to dig a little bit more. You mentioned the issue of alignment. You mentioned the issue of even Medicare not being big enough to do, to drive delivery system reform and value- based healthcare as much as we want. What exactly does that mean? How exactly do you partner with the state Medicare program, the national Medicare program and so on? And how do we make sure I guess is sort of a separate question, that the pilots created through the CMMI process actually take off? Because there's a sort of knock on that process that we don't actually build on what we have learned about what works. >>Okay. So one of the things I tried to learn in Washington is not speak in acronyms, so the Innovation Center, just to give people a thumbnail or background of what that is, it's the Medicare agency that's part of the Affordable Care Act was charged to set up the Center for Innovation. They were given 10 billion dollars okay. But more than 10 billing dollars, they were given the authority to test new things in Medicare and in Medicaid. Recognizing the innovation's important, but innovation isn't just about creating something new. It's about spreading what works. Some examples of what the Innovation Center is doing and has done that are about alignment that we will look for to partner with, is for instance, you note the example of the CalPERS initiative that's an accountable care organization like structure, where a organized delivery system that's integrated. There are 16 what are called pioneer accountable organizations in the state of California. More than any other state. These organizations, the Innovation Center has said you are doing the right thing of being organized to take care of a population. And what we're gonna do with you is we're actually gonna pay you to coordinate care not to do more care. We'll share the savings with you. The shared savings model which is similar to the model that CalPERS has done. The Innovation Center said one of the rules of the game to become a pioneer was to show how a significant portion of your business as a delivery system, is paying for value, not just paying for volume. Okay. So the selection of those 16 were because those delivery systems had contracts with CalPERS, or with purchasers that said we want to pay differently. The Exchange is going to look very actively at how we nudge, push, cajole or require, we haven't picked which option we're going to use, my board decides that, the health plan to pay differently. The central thing that's a problem in healthcare is historically we paid for volume. We paid doctors, nurses and hospitals for doing more, not for doing the right thing, not for coordinating better. So we will be looking at having common measures to align with what Medicare is doing, align with what other private purchasers are doing. We'll be looking at aligning in terms of payment types, and we'll be looking at aligning in terms of public health initiatives. So those are some examples. >>Great thank you. So the organization that I work with, the Bay Area Council, is an organization about 300 employers. Has been historically focused on other areas, transportation, land use and so on, but has gotten very involved in health care and is in some ways a sister organization to your former organization, the Pacific Business Group on Health. So I realize this is beginning to sound like Peter Lee this is your life, as we move backwards. So you were in Washington DC and guess who's here. >>Kindergarten, let's go to kindergarten. >>Yeah. Well I mean I've heard a little bit about your family history... >>No, don't go to kindergarten. >>This is actually a family business for you. But just not to go quite that far back, again let's dig, let's dig into this issue. So, you know, the Exchange joins the Pacific Business Group on Health. How does that work? What is the relationship between the Exchange and other large businesses, and how do they partner together? And maybe this is a little bit I guess of a curve ball, I mean, and there's been a concern right that the Exchange may end up being the home for some of the you know, folks who currently work for large businesses. And so I'd be interested in your perspective on that as well. >>Well the first part then the curve. Is one of the things that I've learned in quite a few years working in healthcare both as a consumer advocate representing business in government, and now with the Exchange, is there's no one place with all the right ideas. We have to be learning from each other. And so one of the things I think is important about the Exchange, we're gonna be pretty big. We will seek to be thoughtful, we'll have some good ideas. We will always have ways that we can learn from others, that we can learn from CalPERS, we can learn from private employers. I think it's very important that some of the things, there's no sort of front dog all the time. Learning from others is how innovation works, implementing it based on those lessons. So I think working with other organizations whose job is to buy healthcare to get value, is something the Exchange needs to do. I really can't say enough about Ann's note of the goal of CalPERS is our goal. Which is to make care more affordable, higher quality, and the third element that I'd add to that is to keep people well. And this is often called the third part aim. That three part aim of better care, better health and affordable care, the folks that really own that goal are individual consumers and those that represent them in purchasing. We found very willing and able partners in the provider community that have championed those triple aims. But it's us that are writing the checks. Us that are, you know, representing people that have chronic illness, that need to be carrying that all the time. And we need to learn from each other. So that's how the partnership I think with PBGH and private purchasers will play out as we'll learn from each other, based on the common aims that we have, and take different strategies that work, and adapt them for our specific populations. In terms of the curve question, the, just for folks as a background point, the Exchange when we open our doors, is mostly about the individual market. People that do not have insurance. If you have what's called qualified coverage some place else, you can't get coverage in the Exchange, okay. You can't get a subsidy. We will also have products for small business, businesses of two to 50 employees. The law in California says that 2018 we report to the legislature on the issues and potentials of expanding the Exchange to be available for other purchasers, larger purchasers. That is light years away. I mean it'll pass quickly but we have a lot to do to be up and running in 2014. The issue around large or small purchasers, I noted at the beginning one of the things that's changed about healthcare is getting everyone in the tent. Part of our job is to keep people in the tent where they are. Encouraging small businesses to buy when they haven't, or keep buying when they have, to encourage large businesses, the vast majority of which buy healthcare, a core part of our agenda is to say don't dump em on us. Keep in the game. We have a employer-based healthcare system which is how the vast majority of Californians get their health insurance. We want to be part of sort of keeping that a robust system. >>Great thanks. Just as a reminder, I see a couple of people scribbling but if you have cards with questions, please get them to the outside and we'll move on to them in a little bit. So one of the Herculean tasks that not only you but some of your other state partners in particular, have in front of you is the implementation of the IT system. And CalPERS and some other folks have had some challenges in implementing IT systems. They are absolutely not unique in that regard, in fact I'm not sure that anybody hasn't had challenges and had projects be maybe more difficult than they were anticipated to be. And of course the worry is because this isn't just an IT implementation where you're going to an IT vendor and saying please build us this snazzy system. It's an IT implementation where you have to interface with a lot of other systems that are currently existing. You have to bring a lot of other stakeholders on board. The concern is it'll end up looking like a Jerry Springer episode with people hitting each other over the head with chairs and so on. So what is the, talk to me about this IT implementation process, and the reasons why, and sort of the things we've learned and the reasons why we may be able to get this up and going when we need to. >>Yeah. It's a really good question. Because the, I noted there's three sort of foundations for the Exchange. Good health products, the plans that are gonna be affordable, marketing so you'll know we're there, and then enrollment. And that enrollment system is vital because when you think about, and I know folks in the CalPERS crowd are savvy folks but risk mix means a lot. We want to get those young healthy kids, as well as the older folks, into the Exchange. We want, and the more we have everyone in, the better we all are. Part of what that means is if we have a clunky enrollment system, you know, takes a long time to work its way through and it's complicated, that person who's not healthy is gonna spend the time to work through it. That young invincible gonna say God this is the fourth screen, I don't get it, I'll do it next week, I'll put it off. So having a very effective enrollment system is critical. It is a big build. It's going to be a fast build. The reason we're confident, it's actually, it's interesting, we looked very closely at the federal build, so the federal government is building a federal exchange that will be operating in somewhere between 30 and 40 states. They had started eight months before us, they're doing very very good work. But what we did right out of the gate is the design itself baked in issues of concern to constituents, consumer groups, health plans, doctors, the whole range. So the first thing I think we've done to be a platform for success is the design itself. We actually did what's very rare for something as big as what we're doing, and this is a very big build, hundreds of millions of dollars will be spent building this IT system. We actually shared in draft the RFP, the request for proposals, and before it went out to vendors, we posted it publicly. We had vendors say you got it wrong, we can't do it that way, are you crazy. We had consumer groups saying wait a second, are you doing this elements in 13 languages, because we need 13 languages when you think how diverse California is. So the first element was the build, the design for what we're doing. The second is the checkpoints. And we have checkpoints literally weekly to make sure we're hitting the toll gates, so we're gonna be ready and up and running. And they're both our toll gates and federal toll gates. To the designated state-based Exchange come this November, the federal government needs to give us a blessing. So in some ways back to the issue about failure not being an option, if we aren't ready then we rely on the federal system. The third element though, and this is where failure's not an option. We're gonna be offering coverage, and offering a way for people to enroll as of October 1, 2013. Okay. For enrollment that's effective in January 2014. The other thing we're building into all of our planning is we want to launch this system with every bell, every whistle, but we're gonna launch this system, and maybe we have two bells outstanding that we add the next year. So part of the planning is one that is we have to up and running, we will be up and running, but it may be with some of the bells coming in later years. >>So now I'm gonna be reading from some of your questions. We have a few more minutes. And I think this is a very pointed question but it's a very good one and I think this is something that is a question about healthcare reform generally but also a question specifically about the exchange. As a CalPERS member, we're asked why should I care about what the Exchange does when I'm already covered by CalPERS even after my retirement? >>Yes it is a good question. And this is again healthcare costs are going up for all of us. Okay. Healthcare costs are the biggest reason we have a federal deficit. Healthcare costs are the biggest challenge to Medicare. If we collectively don't bring down healthcare costs, we're all sunk. I'll be very clear about this. The issues of health reform, the Affordable Care Act starts by saying we can't really get our arms as a nation around healthcare costs unless we get everyone in the tent. So you all should care about getting everyone insured so we aren't playing the shell game which means your costs for healthcare are baring the costs of uninsured who are not staying healthy, who are going to emergency rooms and being expensive. So, having everyone in is a core element. The second piece though is you know, CalPERS is you know, one of the most thoughtful purchasers in the nation. And if you look over the last 10- 15 years, your costs have been going up. You know. And you know what that experience is. CalPERS alone cannot change that. We have healthcare representing now 17% of the gross domestic product. That's dollars and it's going up right now at a rate of about 3 to 4% faster than inflation is. If that keeps happening, what does it mean? It means less money for retirement benefits, it means less money for education, less money for schools, less money for roads. It really is taking money out of all of us, and so without having a system that says we're going to make healthcare not take more out of all of our pockets, we're gonna have a system that's gonna cost all of us. And so the Exchange in partnership with CalPERS and others is part of an agenda that has to be saying we need to get our arms around the healthcare costs which this forum is trying to talk about. >>This next one is a couple of questions that I think are on everybody's minds, or on a lot of people's minds. You hear about them a lot on the radio and television constantly. And it's about access. You talked a lot about getting healthcare coverage for 5 million more Californians, and what a lot of people ask is are there enough doctors-and I think it's important that the question says doctors -to be able to give care to these folks. And then the second question, you know, if the Exchange ends up, and this is an assumption that I think it's important to challenge, if the Exchange ends up aligning with Medicaid in terms of its provider rates, how is that going to affect access when we know that there are a lot of doctors that are concerned about the level of reimbursement provided by Medicaid in this state. >>Yes. I'll answer those upside down. First, the Exchange, like CalPERS, doesn't set payment rates for doctors or hospitals. We negotiate with plans, the plans will negotiate those rates. We aren't a regulator, a price setter, like Medi-cal, Medicaid is. So we're gonna be having plans coming to us saying this is what the premiums will be, here's our network of providers, etc. We will be making sure that the networks are adequate to meet the needs of everyone enrolled. And this comes to the first part of the question, is there are some challenges around clinician supply. But what often gets forgotten, but I think work with CalPERS and others has highlighted, is that healthcare is not just a doctor business. Medical care is a team sport. It's a team sport delivered by nurses, by physical therapists, by psychologists, by nutritionists, by physicians. And one of the things we have right now is a system where people are getting care. Those 5 million people are not dying in the streets. They're going to emergency rooms. They're seeing doctors and nurses throughout California, but they aren't seeing the right mix of doctors, nurses and other professionals. So a core thing the Exchange is doing, is in contracting with our plans, saying what are you doing as a plan to do coordinated, integrative care that is team based. The supply issues are not single answer issues. And I really, I know a very little bit about what you're going to be hearing about from Diane and Alan in a moment. But I think it's a good part of that story, is that it's, care isn't just doctor based care. It's about having a team care. So we're gonna be looking at what do we do to support team care. The other thing that we'll be looking to do is the Exchange will not be either the cause of all the world's healthcare problems, or the solution to all the problems. And I want to be clear on that. So, one anecdote on this, I had, I was speaking to a group on rural health and a very articulate advocate got up and said "for the least 25 years I've been noting that there aren't enough doctors in rural communities and how is the Exchange gonna fix that tomorrow?" I was going, okay you've been doing this for 25 years and we aren't the problem or the solution. There are problems. The main problems really about clinician supply are not number, they're location. A lot of doctors, in particular, don't want to live in rural areas. So there's, in rural areas there's real challenges. This is where we need new initiatives that look at tele- health, supporting plans through different ways to deliver care. The issue's not gonna be more every time. The last thing I note on this is I'm actually a big believer in incentives. Paying makes a difference. Historically, we in the American healthcare system, have paid a lot of money to both hospitals and clinicians that do procedures. That's what we reward. You put in a stent in someone's heart you get a lot of money. We've not paid a lot for the time spent with a person with chronic illness to talk about their disease. We haven't spent and paid much for coordination. Which means that medical students look down the road and they say hmm, I think I'll be a dermatologist instead of a primary care doc. We need to be part, and this is back to the alignment issue, of changing payments so we reward care coordination. So medical students say you know I think that future in primary care looks pretty good. So that's a role the Exchange can play but never alone. We'd never be big enough to change the financial dynamics of doctors making choices unless we're doing that with PERS, with the Center for Medicare and Medicaid Innovation, and then with CMS itself. >>So let me give you a quick fairly easy question before we dive right back into the hard ones. Well I don't know how easy this one is. So, regarding the IT implementation, we know that some large percentage of Californians perhaps particularly in the group that will be involved in the Exchange, which for those of you who don't know, is a group that maybe a majority have English as a second language, majority Latino, you know, coming from the uninsured and therefore, you know, not a bunch of tech entrepreneurs in the Bay Area. With the IT implementation, how do we make sure that we can secure information from people that are not connected to the internet? >>That's a really good question. So that 3 million, I think it's important how you framed it Micah, I appreciate it. So eligible for acceptance into the Exchange, about 3 million Californians, about 50% are Latino or Hispanic. Of them, a majority of them are not proficient English speakers. Beyond that though, and this is really both exciting in the challenge and I feel a little bit of the Herculean nature of it, to give you a sense of the diversity, we have eligible for expanded coverage in California, about 700,000 Asian and Pacific Islanders. 700,000. But as you well know that doesn't mean one thing, it means there's 100,000 Mandarin speakers, there's Cantonese, there's Korean, there's Farsi. And we need to have a program that brings them all in. So we're gonna have a good IT system, but far more than that, we're gonna have one-on-one outreach in every community in the state. We're gonna be setting up a program called Navigators for Assisters, that will trained to help someone understand what does it mean to enroll in the Exchange, what are the benefits, speaking their language. And I mean that both linguistically and culturally. And these trained individuals, we will actually pay to help people enroll. They will be in every community around the state. So yeah, we're gonna have a great IT system, but we can't rely on that. To get everyone enrolled, we actually need to be reaching out in communities, in languages that are appropriate for the diversity of the state of California. And I will note that, I use that note around Asian Pacific Islanders, that 750,000 number, that's bigger than the entire population of the state of Vermont. Now the state of Vermont's a great state, you know, but you think about it, and this is just those that are eligible for expanded coverage who are Asian Pacific Islander. And it is one of the opportunities and challenge we have in California. We are a very big state. You know, the county of San Bernardino is about the same size population wise as the state of Utah. And you go through, again and again, which is part of the challenge but it's also part of the opportunity. It means that we can do the investments we need to make to actually have material translated into 13 languages. And Utah has people who speak Mandarin, they have people who speak Farsi. But will they make that investment, probably not. California will because we're big enough to make those investments. >>So this is in some ways a follow up on a question that I asked you, but I've gotten a few questions about this so it looks like the audience really wants us to dig into this a little bit further. Just, you know, how do we encourage to stay where they're at, and not leave their current healthcare coverage. And specifically employer- based healthcare coverage, and there's a question that we address this employer penalty issue. Is it true that it may be less expensive for companies to pay the penalty and just not offer healthcare coverage to their employees, and if so, is the Exchange itself going to be able to do anything to address it. You said you would prefer for folks to stay in their place, but does the Exchange itself have any policy levers to encourage that, within the context of the employer penalty? >>Yeah, um, so Micah may know the details much better than I and I probably should know them better but the Supreme Court case was about the penalty for individuals. Okay. Which is if you're an individual and you can afford coverage, that can afford coverage very important, you'll owe the penalty. You'll need to pay what the Supreme Court has called a tax. It's not much money. The bigger issue for expanding coverage for individuals is the subsidies, the tax credits to help people buy. For employers, if you're a large employer, and this doesn't relate to small business, small businesses do not have a mandate to provide health insurance coverage. For larger employers though there is a substantial penalty. But that penalty I think is $2,000. Is that right Micah? >>Yes. It's slightly more complicated than that but it's, it's you know, minus your first 30 employees....whatever. >>Yeah. So ballpark, $2,000 okay. Family coverage for a family of four could be north of $10,000. So on a pure cost benefit decision, might a large employer say $10,000 and I pay 80% so that's $8,000 or $2,000. Well the $2,000 sounds like a better deal. But these are employees. These are employees who have negotiated a deal that includes health insurance. So the issue of employers exiting means changing their relationship dramatically with their employees. That's number one, so that's one reason I don't think there's going to be a flight of coverage. The other thing is if in Washington and in California, we saw a flight of coverage, I can bet you dollars for doughnuts that $2,000 would start increasing to $3,000, $4,000, etc. Is that you know, the goal of having everyone in the tent, everyone insured is a core thing that we need to get costs under control. >>Yeah and to add on to one of the technical policy details, speaking as somebody who works with employers, the penalty is actually the small piece of it. Employers also get a tax advantage status by contributing to their employees' healthcare and if they were to try to make their employees whole, which is to say you know not just, let them out on their own, but say oh here's some money to go purchase insurance through the Exchange. They'll pay the penalty, they'll lose the tax advantage status and they'll pay payroll taxes on the additional amount of money that they would otherwise spend on healthcare. So the numbers just don't add up. And you know, certainly if we end up seeing this there'll be policy solutions to that. But the important thing to understand is that all these changes that are occurring in employers are not occurring because of the Affordable Care Act. The real, one of the big healthcare reforms that is going on in the country right now, is that employers are making major changes to their benefit designs because of the economic environment they find themselves in. And in a lot of ways, the healthcare reform helps shore up those employers through a lot of the delivery system reforms it engages in that will make healthcare more affordable in a way that is likely to promote more employer coverage. And indeed that's what we've seen in Massachusetts. That rates of employer sponsored health insurance have actually gone up rather than down since they passed their own Romney care. All right. So two more minutes. Do we have any more questions from the crowd? If not, I've got, we have a little bit of time, do you have some closing thoughts you'd like to share, or do you want another question? >>I'd love another question. Throw out the curve... >>We addressed this a little bit already but let's pick up on it a little bit more. So, actually the Exchange from the perspective of its enrollees, is going to be nothing like CalPERS. Right. So not only is the demographics almost exactly opposite of CalPERS but also the amount of time that people spend in the system is the exact opposite. So CalPERS is very unique in that it has its folks for years and years, where as for the Exchange, I mean the average amount of time you might have these folks is a year or so, when they're between jobs or what have you. So, how does that impact the tools that you're able to use to bring down healthcare costs, and how is that gonna influence what you do in ways that might make it very different than what CalPERS does? >>Great question. You know, CalPERS makes investments in wellness for two reasons. It's the right thing to do. But also it pays off because the vast majority of CalPERS member's lives stay for a long time. So, if you invest in a smoking cessation program, that person doesn't have costs 10 years, 15 years down the line. It takes a long term view. And Micah's right that in the Exchange, you know, 30% of the people that enroll in the Exchange won't be there next year. Because they get a new job. Great. That's wonderful. But that would challenge us for making investments in wellness and prevention except for one thing. The change I noted in the entire health insurance system that takes effect in January 2014 is those individuals, right now insurance companies say I'm not going to invest in wellness because they're gonna leave, I don't care. Now we all need to care. We are all sharing the risks across all insurers and all payers. So in the individual market, that risk adjustment process I noted is something that sicker more costly populations, every plan will be paying for them. So the Exchange has the leverage in the individual market in particular, to say to all of our plans, we want you to do this wellness program, this prevention program, to partner with public health around prevention, because we may not see the benefit next year, but we will see it four years from now when that person actually goes to your plan, stays in a smoking cessation program, comes back to us because they've left their job. So, you know, we are looking at wellness investments both in self interest and in public interest. >>Great. I'd like to ask you to join me in thanking Peter and, for spending his time here. >>Thank you both very much. Please also a round of applause for Micah. Peter's not always easy to contain so we appreciate, appreciate them taking the time today to talk to us about the complex issue. We know there are lots and lots of questions about how the Exchange is going to unfold and we look forward to continuing to explore those with you. I did get one question, while we do our little change out here, I did get one question that is actually not able to be answered by one of our panels, so I will just go ahead and address that right now. The question was is CalPERS considering splitting pools between employees and retirees? My, right now as you know we provide benefits for active employees, what we consider early retirees, up until they get to Medicare and then when they become Medicare eligible they have a Medicare supplement plan that we offer, in addition to their Medicare coverage. The Board and staff are not considering any change to that sort of, essentially two party structure, so the coverage would stay the same. What we consider basic, all the way through to Medicare and to, and then from Medicare on. I don't know if that is the question that was being asked on that. If not, just let us know. If you need more cards, there's cards in the back, questions are fabulous. Peter talked about purchasers as not always being sort of one in front, but we sort of take turns. Then sort of thinking how a flock of geese flies and eventually that one in the front gets tired and moves on to the back and lets someone else take over in the front. And it really is that alignment of purpose and intent that is gonna start move major change in the marketplace for us here in California and nationally. Our second panel, Peter referenced them once or twice, is focusing on the 19 million dollar grant given to the Pacific Business Group on Health from the Centers for Medicaid and, Medicare and Medicaid Innovation, focusing on Medicare populations here in California. The panel is Diane Stewart, Senior Director of PBGH and Alan Antoven, Eccles Professor of Public and Private Management and the Knight Management Center at Stanford's Graduate School of Business. We look forward to hearing what they have to say, and with that I will turn it over to Diane. >>Great. Well it's always very difficult following Peter Lee both figuratively and literally. But I'm very pleased to be here and I'm very pleased to be here with Professor Alan Antoven. I, part of what I'll be talking about today I learned in his classroom 20 years ago. So this is, this is a real delight for me. Let me, okay, I'm gonna pick up on two themes that the first panel introduced. Whoever set up the order here did a great job. I'm gonna show an example of collective purchaser action to address the problem that was really well framed I think in your, in your handout there, which is how do we address, how do we provide additional support to patients living with multiple chronic illnesses, that account for a big proportion of the purchaser's dollars. And CalPERS has been leading that charge here in California. PBGH has played the role in brining additional purchasers to the party and, and representing the collective purchaser action here in California for new care delivery models, and then through the CMMI grant will be able to add Medicare beneficiaries into the new care models that are emerging here in California. So one theme is around collecting purchaser action. And beyond that, private and public purchaser action. I'll show you an actual example of how that works. And then the second theme is around quality and cost control being created in the delivery system. I think for a long time purchasers spent their energy on managing health plans which is still important but those of us who receive care really understand that how we feel the cost and how we feel the quality is is face-to-face with our doctors, with the nurses who are taking care of us. So the opportunities and the accountability for addressing cost drivers lies with the delivery system. So I'll show you an example about how we're fostering innovation in the delivery system with CalPERS leading the charge to address the cost drivers. First just a minute on Pacific Business Group on Health for those of you who don't know us. We drove up here from San Francisco where it's still foggy and really happy to enjoy your heat up here in Sacramento. We are a non-profit membership organization of large purchasers in California, healthcare purchasers in California. You can see we span the, span the public and private continuum with CalPERS. We're very proud they're a member of ours and then also folks like Cisco Systems and Wells Fargo and Wal-Mart. So we represent a wide variety of large purchasers of care. Sharing the same mission of creating a higher quality in the delivery system in California and at a affordable cost. This is just a visual representation of our members. You'll recognize a lot of these logos. We're about to add the Exchange on this slide so I'm really happy about that. Okay. So let's take a look at a care model that's a new way of delivering care for patients with multiple chronic conditions, that we've piloted with CalPERS up in rural Humboldt County in California. And show how it works first from the patient's viewpoint because that is always our starting place. How it works from a purchaser standpoint and then how we need to work collectively across public and private purchasers to make this sustainable for the physicians who are caring for these patients. So let's meet Tom, okay Tom. Tom is a patient that's enrolled in this intensive outpatient care program up in Humboldt County. The folks who are eligible for this program right now work for PG&E and CalPERS. And in fact some of the lumber companies and other local employers are sending their patients to these programs too but here's one example of Tom. And Tom as you can see, in the 18 months previous to enrolling in this program, you actually might be able to read the dollars than I can. Okay you can see the services that he required for 18 months previously to enrolling in the program adding up to almost $3,000 per month. Primarily driving from emergency department use, and hospital, hospital admission. And then I think also of note is the number of specialists he sought care from during that 18 month period. After enrollment in the program, you can see his pattern of care, no emergency department use, no hospital use. Seeing fewer number of specialists, still has a really strong relationship with his primary care doctor and depression scores should go down for those of you who are not clinicians. So depression score being lower is a good thing. It means that you're feeling more confident about caring for yourself. And his charges per month. So what happened for Tom, you know, between the 18 months before and the 18 months after? Oh you also have a flyer in your packet that shows what Tom thinks of the program. So our focus here is on cost but, but there's still a point in healthcare design where reducing costs can also mean improving quality in patient satisfaction. It's a sad state but it is where we are. So, the change in the care delivery model is that Tom was matched with an R.N. care manager that worked very closely with his primary care physician and was in touch with him. First of all, sat down for an hour and a half initial visit to really try and understand what Tom's life was like, what his fears were, what his situation at home was, what he saw as barriers in terms of getting appropriate level of care, or managing his own disease. He had multiple chronic conditions. And to hear from him what he thought was getting in the way of his own care. And then this R.N. case manager working again with the physician, establish a care plan that had a lot to do with empowering him to take better care of himself, providing him additional access because a lot of the utilization was driven, he just didn't know who to ask. He didn't know if he should go or not, but he didn't have anyone to call to find out. Was he supposed to go to his, was he supposed to ask him pulmonologist, was he supposed to ask his primary care doc, what about his cardiologist? He just calls the R.N. care manager now. And she helps him make, make decisions about when and where to select care. In addition to helping him manage his multiple medications, to help him get on an exercise program that is helping relieve his depression. So these are the kinds of things that are, that are happening between Tom and his care manager over time. So that's, that's the crux of the intensive outpatient care program. It's in a sense a medical home for high risk patients. Those of you who are familiar with the medical home concept. We're not providing this service for all patients within a primary care practice, but for those who are most vulnerable, particularly those most likely to seek emergency department or hospital care. So we see how it works for Tom. So can this be scalable, it works for the patient, what about the purchaser? Is there evidence that this can be scaled for a larger number of patients and the CalPERS Board decided to innovate with this model in California based on experience with Boeing up in Seattle. And I'll briefly describe that for you too. So Boeing started this very similar model in 2006. And they noted that 15% of their employees were driving about 40% of their cost, and when they went in to take a look at their claims data to say what can we say that's common about this set of patients. They were patients a lot like Tom. They had multiple chronic conditions, they were, they were working, they were living at home, many of them had decent relationships with their doctors, but they were struggling on managing their ongoing illnesses on a day-to- day basis and needed some extra support and guidance on how to do that. These folks aren't gonna be cured so to speak, but they need additional support to help them manage their disease so it doesn't progress further and so it doesn't, you know result in unexpected emergency room visits, and that neither the patient nor the healthcare system really wants to encourage. So Boeing targeted the 10-20% of patients, some highest risk. Patients who are recruited into this, it's an opt-in model, through their primary care doctor. This is not a 1-800 disease management program. It's not the purchaser sending them a letter saying you ought to sign up. It is their primary care doctor saying here is some additional services that I can offer you. What do you think about giving it a try? If you want to do it, come to a visit in my office, let me introduce you to Jane or Joe, whoever the care manager is, and get you started on the right track with someone who can really help you on an ongoing basis. And, and then Boeing in this case, and CalPERS stepped up to the plate here, pays the delivery system a care management fee so they can hire the nurses to provide this service. Because under traditional insurance, this is not paid for. So what kind of results did Boeing see? You can, I won't go through it all but you can see it was a win- win situation. It was, you know, reduction in cost, it was improvement in patient satisfaction, it was more days at work, and metrics of quality went up as well. So we can see how it can work from the individual patient perspective. We can see how it worked from the employer perspective. And one of the things that we learned in working side-by-side with CalPERS and PG&E and Boeing in California to implement these models, is that to be sustainable, this is where the public-private partnership comes in. You can imagine talking to the primary care doctor up in Arcata and saying here's your list of CalPERS and PG&E patients who cold benefit from this model. And he or she will look at that list and say I can think of another 20 who could that why can't you help us with those too. And they're largely Medicare patients. And it's very hard, we know for doctors to treat patients under one insurance differently than another. So the purpose of PBGH going for the Medicare grant is to say can we scale this model now through California for Medicare patients and commercial patients that are eligible. There's no reason that we should be offering different services for patients with different insurance coverage. And so that's really the genesis of PBGH's effort to get the grant and we have, so we'll be working now with 17 delivery systems in California and another 3 in Arizona to help the delivery, to help these delivery systems. By delivery systems I mean like Brown and Tolan or Hills Physicians or St. Joseph's Healthcare System, Heritage Provider Network, many of those that I'm sure you're familiar with. Banner in Arizona. To set up these, to make the changes on the ground for Medicare patients and then make, and then help those delivery systems engage the commercial purchasers to add those patients in. So that's really what this is about. So let's return to Tom. So this is a win-win-win, it's been a win for the patient, it's been the win for the purchaser of care, it's been a win for the doctors. Because they're getting extra help with the patients that often, they can't take care of in a 10 minute office visit. So if this is a win-win-win, what's the problem? Why isn't everyone doing this? And it'll depend on who you ask. Of course in the healthcare system it depends who you ask what answer you get, but since I have the microphone, I think it's a couple things. I come from a delivery system. Before I joined PBGH I was at the Palo Alto Medical Foundation and in order to make these models work you definitely need an infrastructure to allow doctors and nurses and everyone to communicate with each other and share patient information. So the tremendous, you know, advances we've made in electronic health records and ways of communicating within a care delivery system have created the opportunity to really make these models work efficiently. But the other of course is how we pay for care. And as you can imagine, the R.N. at the delivery system level needs to be hired by a set of doctors, but the savings comes from hospital days and ED visits. So how do you set up a payment system where the invest, the people who are making the investments are also getting the gain. And that's really the, you know, the problem we're trying to solve with our purchasers at PBGH. How can we change the payment system to make the delivery system, reward the delivery systems who are going to be investing in these. And so what I'm about to share with you now is an approach, and there's lots of work being done in this, let me tell you, there's lots of work. But what I'm gonna share with you a little bit is a model that's used in Minnesota by the public purchasers there that we're just exploring in California to see if we can, if we can adapt for use in California. So what if delivery systems who did this well actually got rewarded? What would that look like? What would that look like? And so let me now, from the perspective of someone who signs up for health insurance, most of our PBGH companies are offering something that looks like this. Kaiser HMO and a PPO, could be offered by Cigna or Anthem or whoever. And so employees have a choice between, usually one now at this point, one HMO product and one PPO product. And these rates are example of, they are modeled on one of our PBGH member companies down in Silicon Valley. But we, but remember we said that cost and quality is created by the delivery system, not by a health plan. And when you take apart, let's take a look at the Cigna PPO. That rate is represents cost, that's an average of cost and quality of every delivery system, medical group and hospital that they contract with. That's an average. And when you get underneath that, for those of you who like numbers and graphs, you're really like this next slide. For those of you that don't, I'll walk you through it but I think it's really interesting. The Integrative Healthcare Association, many of you know has done really pioneer work, really great, we're lucky to have them here in California too, they've done some pioneering work on pay for performance programs nationally. And one of their most recent measures is total cost of care. So, let's take, I'm just gonna use San Francisco as an example. Let's take Hills Physicians, that contracts with one set of hospitals, Brown and Tolan contracts with a different set of hospitals. If you add up all of the care for each of those systems, how much does it cost per member per month? And that's what they've done in this graph. Each dot representing a care system. It could be Hill, let me see if I get this right, Hill and UCSF and Brown and Tolan and California Pacific down in the San Francisco area. They represent one of these dots in the Bay Area, which is furthest to the, they represent two of the dots in the, in the distribution furthest to the right. Along the Y axis is the dollars per member per month. Okay. Along the bottom are regions in California, starting with the Inland Empire, then Los Angeles, Orange County, etc. So there's a couple things you can pick out from this graph. For those of you who don't like numbers, you can see that the average for Inland Empire is the lowest. Total cost of care when you're adding everything up, drugs, hospital, doctor groups, is on average the lowest in the state. You can also see that right where we're sitting, is among the highest in the state on average. In Sacramento and the Bay Area. But more importantly look at the variation within the regions. In fact, if we know which dot was Hill Physicians and UCSF and which dot represented Brown and Tolan and California Pacific, wouldn't that be interesting. Okay. And wouldn't that be important to people who are choosing their healthcare coverage. I'm gonna skip that number slide, so, we can come back to it if you want. So let's take a look now in a new world where that same employee is making decisions about their healthcare coverage, we still have Kaiser Permanente there at the same rate, although you can image that they have variation too, we know they do. And we give them a quality rating because we got some decent information now about that. But instead of just Cigna PPO, what if it was Cigna Brown and Tolan and Cigna Hill? Okay. And you got to see the price difference between Hill and between Brown and Tolan, and you got to choose, as an employee signing up for your healthcare coverage, you got some information about quality, and you got to choose based on price. Wouldn't that create a different incentive for Brown and Tolan or Hill Physicians to implement some of these models. So that's I think one way we can create some, you know, some market competition among delivery systems for quicker, a quicker adoption of some of the care delivery changes which are hard, they're really hard. But, but to create the rewards for them to make the investment in changing how we deliver care for better quality and lower cost. So, and this is what I learned from Dr. Antoven. So I'm gonna pause, I think I'll stop my presentation now and invite, I hope some Oprah-like questions, Oprah-like questions. >>Thank you very much Diane. That was really interesting and of course I love the ending because that's a picture of what we do at Stanford University. For 20 years now we have said to our employees we are gonna offer you a range of choices, Kaiser Permanente at one end, open ended fee for service at the other end, and some variations in the middle. And the University pays in full the price of Kaiser Permanente which is chronically our lowest priced plan, arguably lowest cost because best coordinated. And if you want something more, probably less coordinated, then that's fine, that's your God-given American right and we don't want to stop you, but we're not gonna pay for that for you. You have to pay the difference yourself. And so over the years, the Kaiser market share has grown, and the fee for service, uncoordinated fee for service has shrunk. So we're pretty happy with that except we would like to see some more integrated accountable care organization in there competing, and I think to get that we've got to get more employers interested in making that happen. So Diane, this isn't a rhetorical question, although I've used it as a rhetorical question, but I've been speaking on, around the country about health insurance and healthcare ought to be organized for years and holding up CalPERS as the model. This is the way it ought to be, sometimes I've said you know if you want a national solution, what should it be, well it would be everybody in CalPERS. So my question is, and I realize the answer to this is not simple, it's complex but it might be good to explore a little bit, is why can't PBGH be more like CalPERS? >>We're trying. We're trying. I think what we offer is a, is a learning network of sorts among purchasers. I think as Ann pointed out. If you remember all those logos up on the screen, they have very different environments. You know, we have high tech companies that'll pay whatever it takes on benefits. We have Boeing is very union driven. We have some companies where most of their people are in some other country and very few in California. And as Ann, as Ann I think pointed out, some, it's that flock of geese. Some people have experimented in this way, others have experimented in this way and we see PBGH's role as providing a way for those to learn from each other. I think very similar to what we've done in the intensive outpatient care program, for instance where CalPERS learned about it from Arnie Millstein and Boeing, and others of our purchasers have learned about joint replacement reference pricing from CalPERS. So I think we've, we've sort of, I hope provided that learning network. >>Let me just ask a little bit also about the new program, the intensive outpatient care, which of course is really a great idea. We're doing that at Stanford, the evangelist who brought it to us who is Arnie Millstein. How, what's the uptake among the medical groups? Do you have a lot of doctors who think gee that's what we ought been doing a long time ago, or yeah we'd like to do it but there's no market for it? Or what, how is all that playing out? >>I think that's a great question. I think we can take a look at it from the medical group perspective, from the health plan perspective and the purchaser perspective. And, we're finding great interest from the doctor groups, from the medical groups, like Hill Physicians and Brown and Tolan, were the two examples that I used. They see that this is where they need to go. What they're struggling with is how are they rewarded for it. Even on the HMO product where you'd think dah, makes sense, most of the time the, the medical group that has to invest in these care managers, is not responsible for the hospital cost. That's what we called shared risk. Where we seeing the most uptake is for physician groups, I'll used Heritage Provider Network in Southern California as an example, that are full risk. They contract with the health plans to say you pay us to manage the hospital and the outpatient side. So, it's really about around the payment model. The health plans are, are not as pushed to innovate around this and for them to administer CalPERS payment, it took a long time to get the health plan sort of on board and through their administrative systems to make this work. So the key has been the emergency of the purchaser, in this case, CalPERS, Boeing, PG&E, to make it work so if the purchasers are willing to make it work I think we'll find willing delivery systems to work with them. >>Thank you. That's really good. I do think it's important for everybody to understand, as Peter was saying earlier, incentives really do matter. And in our predominant health insurance scheme in this state now, it's what we often call the delegated model, where a health plan contracts with a medical group on a per capita basis for the medical services. But the health plan carries the risk for the hospital costs and the pharmacy costs. The whole HMO idea originally was doctors working harder to keep people out of the hospital, or keep them just as this project illustrates. And so I think in this California delegated model, it just kind of got off the tracks. Really we should've had a way that the doctors are paid, at least paid the costs for them to do this extra work to keep people out of the hospital. And so I'm hoping consciousness will rise across the employer community now that we really need to go to a new model in which those doctors who do the better work to keep the people from needing hospital, at least have their costs paid if not rewarded. You, Laura are you gonna bring questions? >>Yes, if I can just build on that Alan if you don't mind. I think the, the energy around ACOs which provide the opportunity to offer coordinated care even among the PPO, PPO product line, I think will help the advancement of these models because we're beginning to see energy around providing coordinated care, even outside the HMO product line. >>Okay. Let me just share some of the questions that have come from the audience. Using Tom as the example, are there different strategies to improve care and reduce costs after the initial intervention, 1, 2 or 3 years, for the 5 or 10 years later? >>Really good question. First of all we image care managers working with Tom for a very long time until he really needs a different kind of care. So these, these models, I mean they will have some graduation rates, but that's not, that's not the intent. It's, it's really to help people throughout their entre lives and we've seen, actually another on the CMMI grant, innovation award grants went to Sutter System because they have a really great program for end of life care. So, depending on what, where patients are in their lives, what kind of health services they need, I think we need to develop different care models to help them at each of the stages of life. So this model would certainly I think, I think help Tom for a long time. But not necessarily the rest of his life, or my life either. >>You know it reminds me, a term that's achieved a lot of popularity among health policy people and also among primary care physicians, is the idea of the medical home, which I always thought made a lot of sense. People need to have a place to go to get most of their medical care and that which they don't get there coordinated and organized for them. When some people then decided to do some focus groups and test marketing, how did, how did consumers like the term medical home. And it was viewed very negatively. They said well what it sounds like is we have medical home, then we go to nursing home, and then we go to the funeral home. So I guess we're not using medical home as much because of that. But I would've thought Tom with his chronic conditions is gonna need pretty much that adapted for the variations in his condition for the rest of his life. >>Yep. >>And we hope this will keep him alive and happy and functioning longer. Another question. How do you truly measure quality of care by doctors, by hospitals, by medical group, etc? That's a really good question requiring a thoughtful answer. >>That's a great one. And I would start by saying for what purpose. So what you'd want to know, is a patient choosing a provider for the first time, might be different than what a health plan should be measuring to know what to pay that provider. Might be different than what let's say Brown and Tolan will want to know to know whether their intensive outpatient program is working well. So I think you have to start with what do you, you know, what's the purpose, what's the purpose of measurement. I think there's some common themes though across the purposes. One it has to be patient centered. The patient, patient reported outcomes, if it's let's say knee replacement, what, if that patient is functional within a reasonable amount of time should be part of the measure set on quality and PBGH is trying to do that on joint replacements. In the intensive outpatient care program, we're gonna be doing a patient survey to see if, if their satisfaction with their care overall, not just with their nurse, because that's too narrow. We want to know are you feeling better about your care overall, and did this program give you more confidence in managing your own care, and more satisfied with your health care? So I think that's an example I think of how one measure can differ depending on the use. But we're all used to going to say Amazon, we got all those stars on Amazon, I know which books to buy by how many stars. I know Yelp, I know I choose my restaurants on Yelp. And we've, Consumer Reports, I never do anything without Consumer Reports. I never spend more than $500 without checking Consumer Reports. So, we're gonna have to develop that kind of publicly available information for healthcare which is I spend certainly more on that than I do on books or dishwashers. >>Right. You know, 20 years or so ago people said how, meaning a rhetorical question, how do you measure the quality of care. Like it's impossible, nobody knows how to do that because there's so many different facets. But in this country and to some extent around the world, we have made remarkable progress in the last 20 years. And if you look at let's say for examples the measures of quality that we have in the Integrated Healthcare Association, there are many now, and we try to aggregate them into fewer categories like at first diabetes care was control blood sugar, etc. Now there's a use of IT, now there's kind of a consolidated score for diabetes care. And so I think a lot of progress has been made and this is a work in progress. So I don't think that raising the question meaning how can you measure the quality of care, suggesting it's not really possible, I don't think that's tenable anymore. That is, we've really come so far on measuring quality of care, we can certainly measure now things like do doctors please their patients or not, in lots of different dimensions like is the doctor a good listener, etc. Does the doctor take into account my particular circumstances. So we're getting better and better at that and at the primary care doctor's performance on a lot of important indicators. Did the ladies in the relevant age range have their mammogram or not. Why is it in some groups they have 90% and other groups they have 40%, etc. And that's a quality indicator. And as you were saying with respect to outcomes, people with join replacement you can ask them 1, 2, 3, 4 years later are you able to walk around, are you able to go up and down stairs, etc., and get a pretty good idea of...so that's definitely a work in progress. Then the next question following up on that, thank you whoever sent this, is are these measures really fair? Do total cost of care and risk adjustment mechanisms fully take into account existing infrastructure, cost for provision of specialty care, etc.? So what do you think? >>It has to. We don't have another measure besides total cost of care, to, you know, that, you know from a purchaser view, I think you take a look at what it costs for our country to provide care on average, compared to any other country. We look at the variation that we just saw on that graph and the graph I didn't show was the correlation between total cost of care and quality. There was virtually none. Virtually no correlation and it is imperfect. It is not perfect. But we know that it's where we have to start from. And that we also know that there's a number of doctor groups in this case talking about total cost of care, that have very effective strategies to reduce it. Either to reduce hospital days, use different specialists, augment primary care. Those are all strategies that those near the bottom are using. So, there's a lot to be learned by looking at our imperfect data, I guess would be a summary point. >>The question makes me think of something that happened in my much younger days. I was serving in the administration of John F. Kennedy and apropos of something like calling up some of the National Guard to send them to Europe to deter the Russians, somebody said well isn't that unfair. And Kennedy replied "life is unfair." You know, you can obsess over fairness to the point that you're not able to move forward. Well, I think with total cost of care, for one thing, total cost of care is way too high. We've just got to get it down. And so I don't care what your excuse is, I'm not interested in your excuse, I'm interested in less costly care that keeps the patients healthier and more satisfied, and so forth. >>You know I could add to that. Again it gets back to the use of the measures. I come from the delivery system as well, and what you use for public reporting, what you use for bonus payments, versus what you use to learn on what best practices are I think can be different. And you want to be sensitive to the statistical validity, risk adjustments of the measures and use them appropriately but we have to use them. >>Right, yeah. And also there's a question of with whom do you share the information. You want to be careful not to motivate inappropriate action by. >>Yeah good point. >>By people wanting, going to all kinds of tricky measures to manipulate the data. >>Good point. >>Okay, another one. The HMOs appear to be providing care in highly populated areas. How will you improve care and lower cost in the low population areas. That's a good question. >>Yeah. Well Tom lives in Arcata, Humboldt County. And so I, I'm heartened by the example of how we can reach rural populations. The community clinics up there, and I went to visit and the use of tele-health in the community clinic systems begat to some very remote areas up near the Oregon border, it was just so impressive to me. So, there are models. The trick is spreading them I think. Because it takes, it takes, some very innovative leadership within local communities who are committed to a, you know, who can work together well as they have in Humboldt County. But I think they've shown it's possible. >>Yeah, there are models. I remember years ago being asked to be on the board of an organization that was trying to improve primary care access in the Rocky Mountain west. And the big problem was how do we get doctors to be willing to go to some of these. And I think what we were finding is there are, there are solutions. I mean doctors want to live where there are good schools for their children, where there are cultural advantages to themselves, and one thing, not only tele-health but just the internet in general, you'll soon not care whether there's a movie theater in your town or not because you'll be able to get it on Netflix or what have you. And I don't know, schooling it might be that we're gonna have more, gonna move more in the direction of online learning and taking advantage of it. So I think as Diane said, there are models out there. I remember early in my time, studying health organization and policy, I was visiting Kaiser Permanente in Hawaii. And one of the things they really wanted me to do was to visit their outpost in Kahuku. I gather Kahuku is less unpopulated now than it was then, but it was a very unpopulated area. And so we went to their clinic in Kahuku which was very unpopulated. And there was kind of a barefoot bearded doctor that looked a lot like the people he was taking care of. And so I said well how is it for you out here? I mean, do you feel professional isolation, lack of support, and so forth? He said well no actually, if a patient comes in and I'm really scared, I don't know quite what it is I can, this is in the days of telephones now, I can dial up my brother and sister doctors down in the big medical center in Honolulu and they'll talk me through the episode. You know, I get professional support. Then once a month they send out for a few days a relief doctor who takes over while I go back into the big city and get professionally refreshed and updated working in the big medical center. And so I think as well as the internet and all that, there are opportunities for just better medical organization, if regulations would make it possible. I think now it's hard to start a, you know, for the big HMOs to go up into the unpopulated areas because the regulations that require them to bring the whole army, you've got to have a hospital, you've got to have this, that and the other thing. And, so it's, in part it's something that the regulators could look at is to make it easier for some of our big systems to set up outposts in low populated areas. But then as Diane pointed out at the beginning, a lot of this innovation started up in Humboldt County within the context of an IPA up there, and a forward thinking doctor who now I'm happy to say is on the Stanford faculty. >>So what are you doing for world care Alan? do better care of the people we have working for us. But I think, I think there are, there are potential answers to that question. Not easy but possible. That covers my list of questions. Are there any other, oh here. Thank you. Thank you Laura. So, wow. I see this person was not satisfied with how things started. So, let's see. It seems this Exchange has high healthcare standards that will cost more than what the costs are to us presently, for the taxpayers. What is in place to indicate enough counseling has been provided in this high cost care? This care seems more higher healthcare than offered to us already in the healthcare system. Hard to believe it costs less to us taxpayers than currently. >>Is that the Exchange? Is that regarding the Exchange? >>Well, I think also, no it's regarding the, the kind of high touched connoisseurs care that you are providing and doesn't that cost a lot of money and I guess it does cost a lot of money but not doing it costs even a whole lot more money. >>Yeah, yeah. >>It's like somebody, somebody said once education is awfully expensive. To which the answer is if you think that's expensive, try ignorance, which can be an awful lot more expensive. >>Yeah, yeah, I think you can see the, you know part of what makes these, you know, intensive touch, high touch models financially sustainable really is that they have to save more money than they cost, and that's what CMS is asking us to prove in the grant. And if a care manager we're finding on the commercial side can handle about 150 to 200 patients. On the Medicare, for Medicare patients, more like 80 to 100. And those of you who could understand that graph and were comfortable with numbers can do the math from here too. That pays for a couple nurses really, the kind of cost savings. So, but you have to find the right patients. That's part of what makes these models effective and what we, and the learning we hope to share through the innovation grant so that all delivery systems can take advantage of what we're learning. >>I suppose in a better more developed chart, we would also have a line at the bottom which is kind of care management costs. >>Yes, yeah. Yeah so the, we keep track of net savings and early results here in Humboldt County, really after six months, is we're showing some net savings. That's net of the care manager's salary. There's also some additional mental health services provided because this set of patients often has anxiety and depression issues. About a third. So, a net of all of those investments, there was still savings, if we're able to provide a high quality program. >>And if we measure all the costs to society, including lost work and suffering and everything else, bring those into the balance, then this, the net benefit here is even great. >>Yeah, yeah. That's what Boeing is. >>At Stanford, I think like a lot of employers, we started thinking in terms of what can we do to bring down the medical costs, but then we pretty soon widened our aperture to say wow, you know, we really want these people to be at work, and not on sick leave. You know you want them to be healthy and productive at work, and so there's a question here of the cost accounting. Did we have here, note, well didn't one of the things about Tom talk about the days of work he missed? >>Uh, that was the Boeing, the Boeing program. Yes. Yeah, which, which shows. >>So, if you properly cost account it, optimum medical care can be pretty economical. >>Yeah I think what we're learning for those of you who are purchasers yourselves, if an average yearly cost per employee is about $12,000 or 13,000 or so, probably less, up around 30,000 per year, cost of 30,000 per year in investment of a care manager, if it's chronic condition's that are driving the costs, that's what we're learning. That's the sort of level which this kind of investment makes sense. >>Okay. Thank you very much. >>Thank you very much. We appreciate your insight to a very exciting program, one step in the continuing journey to improving care coordination for and driving down costs for all of Californians.