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January 02, 2016 12:00 AM

'We're in the 5th inning' of the ACA exchange ballgame

Modern Healthcare
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    David Holmberg

    Since May 2014, David Holmberg has been president and CEO of Highmark Health, a not-for-profit based in Pittsburgh with 2014 revenue of $16.9 billion and total income of $83 million. The system includes Highmark, a Blue Cross and Blue Shield insurer serving four states, and the seven-hospital Allegheny Health Network. Holmberg's organization has struggled to turn around the finances of Allegheny, which it acquired in 2013. Highmark has been involved in a series of clashes with the UPMC system, which has balked at serving Highmark plan members since Highmark acquired the competing hospital system. A court recently ruled that UPMC must continue to provide in-network services to Highmark's Medicare Advantage plan members. Modern Healthcare reporter Bob Herman recently spoke with Holmberg about the feud with UPMC, the future of the Affordable Care Act exchange business and the value of high-deductible health plans. This is an edited transcript.

    Modern Healthcare: How are things shaking out in the ongoing conflict between Highmark and UPMC, the University of Pittsburgh's health system?

    David Holmberg: I believe the future of healthcare may actually be decided in Pittsburgh. It's really as simple as you have a very strong insurance company that now has a provider system, and you have a hospital-based organization that got into the insurance business about 10 years ago. The two organizations are competing, and it's creating innovation and new ways of creating care delivery. The two organizations continue to separate or move farther apart. That was a decision made by UPMC wanting to go its own way.

    We're not focused on how many hospitals we own. We have the Allegheny Health Network, which is excelling at high-quality care. But we're balancing that with our insurance arm. We're very focused on building what we think is the model of the future, which is less about bricks and mortar, and more about care management and how you engage people where they live, and provide care in more consumer-friendly settings. We're trying to create more effective care, a better consumer experience, and at the same time, make care more affordable.

    MH: Do you foresee eventually working more harmoniously with UPMC?

    Holmberg: Healthcare depends on people embracing the fact that there's real change afoot. We've got to create a more effective care system which the consumer finds easier to navigate, and in which it becomes easier for them to take responsibility for their own health. That means having partnerships with people who have similar values, providers who are looking to do the right things for their patients and for their customers.

    As a payer-led provider system, we're not focused on how many heads are in beds in hospitals. We're focused on keeping people out of the hospital and keeping them healthy. We're willing to partner with anyone who shares that value and wants to create innovative solutions for care.

    Being a payer-led provider system, Highmark Health is very focused on creating that more effective care. We'll have a conversation with anyone who wants to do that. But they have to be willing to invest in the future. They have to be willing to walk away from their legacy past and focus on what people need as we go forward.

    Web Extra

    Watch the full video interview with David Holmberg

    MH: In the first half of 2015, Highmark lost $320 million on its ACA exchange business. What caused that? Will Highmark consider exiting the exchanges, as UnitedHealth Group has announced it will consider for 2017?

    Holmberg: I think United's announcement may be the canary in the coal mine. The jury is still out on how this is going to ultimately play out. We're seeing that among the people who have signed up, there's more chronic disease, there are more oncology claims, and there are more diabetes claims. That's requiring a different level of engagement versus a commercial customer, and we're working through that. Our decision to be a part of the ACA exchanges was based on our fundamental responsibility to be a social mission organization. As we go forward, there's got to be an evolution, and the government has got to play a role, as we shape the kinds of offerings that are on the exchanges. How do we make this work so that it's sustainable for the long term?

    MH: What are some of the things the government could do to stabilize the exchange market?

    Holmberg: If you think about this as a nine-inning ballgame, we're in the 5th inning. The 6th and 7th innings are about stabilizing the exchanges themselves, and the 8th and 9th innings are about creating more effective care. More people are covered today than have been covered in the past. In West Virginia, the number of uninsured people has dropped in half, which is great news. But now the real battle is ahead. How do you create more effective care with better quality and greater affordability? The government can find ways to improve the exchanges technically and administratively. But it needs to explore ways to encourage more younger people to sign up.

    MH: Do you think the stiffer tax penalties in 2016 will encourage more younger people to enroll?

    Holmberg: I suspect there's a certain portion of that population that will be influenced by the higher tax penalty. I'm always focused on how we make the product relevant for different individuals. What's relevant for somebody who is 50 is significantly different than for somebody who is 25. We've got to make sure there are benefit strategies that appeal to both. And that's where some of the flexibility has to come in, as we try to figure out how to make this work.

    MH: What is your perspective on the shift to high-deductible plans?

    Holmberg: We offer high-deductible plans. In fact, I'm a real believer. I don't ask our people to do anything I'm not willing to do. So I participate in a high-deductible plan, and what we offer our own employees is what we offer to the marketplace. We think the advantage of these plans is it makes people think about their health and the decisions they're making. That's a good thing. It's not for everybody. Some people it works better for, and some people it's less effective for, depending on their personal situation.

    MH: Highmark also has a healthcare provider arm. What are the challenges high-deductible plans present for providers?

    Holmberg: The challenge on the provider side is there are some folks who can't afford to pay. We still take care of them, but we try to work with them to figure out solutions, so that they can financially be standing when they're done with their care.

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