Kolodgy addressed a mostly provider-side audience on how to transform the payer-provider relationship at a time of rapid—and expensive—change for the healthcare industry. He cited government predictions that about 25 million people will gain insurance coverage over the next three years, with a small majority coming through Medicaid expansion. A “wild card” will be the number of people who purchase insurance through exchanges.
“The affordability part isn't as clear,” he said. “We're committed to making it work. … We really want it to work as best we can.”
The Blues, whose 37 operating companies cover one out of every three Americans, is working with the U.S. Office of Personnel Management on participating in the federal fallback exchange. “We're really the only ones in the country with members in every ZIP code,” Kolodgy said.
But new entrants into insurance pools are expected to be sicker than individuals who currently have coverage. That will drive up costs. So too will the pent-up demand for healthcare services—with the benefit on the backend (preventing more expensive conditions down the road) unlikely to be seen for 10 to 15 years.
“The cost is real—the benefit is less real,” Kolodgy said.
He also highlighted a number of initiatives the Blues are undertaking to address cost and quality, such as the Blue Distinction Center program, a cost-comparison tool that identifies high-quality healthcare facilities. Those facilities that are also cost-effective are designated Blue Distinction Plus.
By directing patients to those centers, its health plans have saved 23% on knee and hip replacement procedures, he said.
Patient-centered medical homes have also yielded savings. A program in Michigan with 1 million members has achieved an estimated $155 million in cost savings, said Kolodgy, and seen results such as 9.3% fewer emergency room visits and 8.3% lower use of high-tech imaging.
Horizon Blue Cross and Blue Shield in New Jersey was similarly able to achieve 10% savings with results such as 25% fewer hospital readmissions and 21% fewer inpatient admissions.
“We're trying to get more data on cost and more data on quality,” Kolodgy said. “We need to design incentives to make folks want to understand those differences. And then we have to let people be accountable for their own choices.”
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