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September 17, 2018

Healthcare Purchaser Alliance of Maine taking charge of changes

Photo / Tim Greenway Peter Hayes, CEO of Healthcare Purchaser Alliance of Maine, right, and Trevor Putnoky, the director of membership and communications, in Topsham

To get a handle on what the changes at the Healthcare Purchaser Alliance of Maine mean, it helps to look to hockey legend Wayne Gretzky.

Gretzky was always thinking four or five plays ahead, says Peter Hayes, CEO and president of the alliance.

“That's what we're doing,” Hayes says. “We're now looking three or five years down the road. Where are we going? What tools do we need?”

The puck dropped for the nonprofit that compiles information to guide businesses and organizations that purchase health care when its purchaser members asked that it find less expensive care without affecting quality.

Over the years, “We really made strides on the quality side,” Hayes says. Now the organization is looking at value for its members, whose employees make up one-quarter of the commercially insured workers in the state. “Are we getting the most for our dollar?”

The alliance changed its name from the Maine Health Management Coalition and elevated the role of purchasers, so they could better collaborate on their buying power, changing the board to purchaser-only.

The biggest result, though, is three new initiatives that begin Jan. 1 and stem from some of the biggest cost inefficiencies in health care — pharmaceutical expenses, variations in quality and the cost of outpatient hospital visits.

The idea, Hayes says, is to set up a system that can weather long-term changes in the rapidly evolving health care landscape.

Getting a handle on costs

Hayes was director of associate health and wellness at Hannaford 25 years ago when the Maine Health Care Coalition formed out of discussions he and others in similar roles had about collaborating on finding quality affordable health care for their employees. He's led the organization since last year.

While employee health care is a big expense, it's something many businesses don't have the resources to fully attend to, says Trevor Putnoky, director of membership and communications for the alliance.

The alliance has more than 50 members, including public and private employers, benefit trusts, hospitals, health plans, doctors and consumer groups, according to its website. The members work together to measure and report health care value, and the information is used by employers to buy health care.

When the changes were announced, Tom Ellis, the board chair at that time and chief human resources manager at the Jackson Laboratory, said that purchasers are key to fixing the health care system.

“Before the alliance underwent this transition, there was no organization in the state that was dedicated to advocating on our behalf and working to make sure our employees and their families receive the highest quality, affordable care,” he said in March.

Hayes says while affordability has always been part of the conversation, the rapid rise in expenses was a game-changer.

Putnoky adds, “A business can't be competitive in the state if it doesn't get a handle on health care costs.

At the end of the day, it's about employers wanting employees to get the best possible care [while keeping costs down].”

Group-buying pharmaceuticals

About 25% of a purchaser's health care spending is for pharmaceuticals, Putnoky says. If the trend continues, that could rise to 50% in coming years.

Some of that cost goes to pharmacy benefits managers, who generate revenues that are mostly hidden from purchaser and patients.

Hayes says the companies often keep significant rebate money and charge more for the drugs than they pay the pharmacies. “For instance a generic drug they pay the pharmacy $1 for, they may mark up several dollars and charge the purchaser,” he says.

The new plan offered by the alliance, partnering with “transparent PBM” Georgia-based ProCare RX, “follows every dollar,” Putnoky says. ProCare makes a fixed amount on each script and there are no hidden or mystery costs.

Putnoky says the change could save a middle-sized employer a million dollars a year.

Centers of excellence-based bundled care

Another major health care expense is that procedures have separate payments for different pieces There is also a wide variety in level of quality across providers, which can cost money when there are complications, infections and misdiagnoses.

“There are some things where it really does matter where you get it done,” Hayes says. “The outcomes are so very different.”

The initiative, in partnership with Carrum Health, offers a set price for the entire procedure, as well as a warranty. For instance, if an infection puts a hip replacement patient back in the hospital, there's no additional cost.

The program is expected to save businesses 20% to 40% in lower prices. Because the program focuses on making sure the procedure is needed, it's also expected to save 10% to 30% in avoided procedures.

The price also includes travel to and from where the procedure is being done, and a concierge service that helps with the logistics.

Carrum Health, a center of excellence program provider, claims a 1.7% 30-day readmission rate (the average for center of excellence programs is 2.3%) and a 0.1% complication rate (the average is 2.7%).

The nonprofit is starting with hip, knee and spine procedures. Putnoky says they're the most common procedures, and also have a specific treatment period.

The program will likely expand to other types of care, he and Hayes say.

SmartShopper program

Hayes says this is the initiative he's the most excited about.

Patients will be paid a bonus if they go to a lower-cost treatment center instead of a hospital, where it can cost twice as much to get a procedure done.

An infusion of Remicade, which is used to treat illnesses like arthritis and Crohn's disease, costs on average of $5,160 at a doctor's office or infusion center, but $11,296 at the hospital. Yet, 57% of patients have it done at hospitals.

Putnoky says patients who have paid their deductible and out-of-pocket expenses go where they've gone for the initial treatment, or where they're more comfortable. The rebate is an incentive to opt for the cheaper location.

The initiative is also spurring providers to make changes.

“We're finding out what levers we can pull,” that can lead to changes in the overall system, Putnoky says.

Providers seeing results

The new focus has already paid off at Penobscot Community Health Care, one of the alliance's provider members.

Lori Dwyer, president and CEO, says the SmartShopper incentive prompted the Bangor-based health care system “to take the financial risk” to establish an outpatient infusion center. It opened July 23.

Penobscot Health had been looking for ways to improve quality while reducing cost for years, she says. “However, it is a significant challenge — probably the challenge of this era in health care — to invest resources in improved quality when the return is uncertain and we still live largely in a fee-for-service world.”

She says the partnership between the two organizations “is and will continue to be critical to PCHC's success.” She says it's an example that underscores how providers and payers are dependent on each other, and the importance of collaboration.

Dwyer believes it's the first infusion center of its kind at a Federally Qualified Health Center in the country.

“This is a terrific complement to primary care services, and a much more comfortable and affordable way for patients to receive infusion therapy,” she says.

At Central Maine Healthcare, another member of the alliance, the new focus “completely aligns with” the Lewiston-based provider's on quality, access, affordability and patient experience, says Ryan McKeown, vice president for strategy and managed care.

The health care system this summer opened a center in Topsham that provides imaging and other services.

McKeown says CMHC is “currently working to 'disrupt ourselves' by exploring ways to proactively create lower-cost options.”

Partnerships like the one with HPA “bring consumer-priced options for labs and imaging into the same facility” as the system's clinicians, but without the cost of the hospital, he says.

Emphasis on value over cost

Hayes says when the members first asked for change, it was thought it might take years, but the new initiatives will be in place Jan. 1.

Purchasers who take advantage will realize cost savings immediately, he says.

Purchasers in the alliance range in size from Bath Iron Works to Rising Tide Brewing Co.

Chris Lockman of the law firm Verrill Dana, a purchaser member, says the new mission at the purchaser alliance “aligns well with Verrill Dana's commitment to emphasize value over cost, and select health plans providing the greatest overall benefit to our employees.”

He says the firm's membership “assists us in ensuring that we can meet the health care needs of our employees and connects us with important issues challenging our clients,” says Lockman, who is the law firm's employee benefits and executive compensation attorney.

While the initiatives are of more benefit to self-insured members, those that are fully insured can also exchange information, take part in workshops, and benefit in less direct ways, Hayes says.

The alliance is talking to similar organizations in nearby states, like New Hampshire, about how they can collaborate.

Hayes says the collaboration can include working together on addiction, mental health issues and other common challenges. “It's all part of that evolution,” he says.

“Over the next five to eight years, there's going to be dynamic change” in health care, he says.

The alliance is hoping it's positioned to anticipate that change.

“The building blocks are there,” Hayes says.

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