The Purchaser Business Group on Health executive signals how far employers are willing to go to tame out-of-control healthcare costs.
In 2008, America's financial institutions were deemed Too Big To Fail. In 2023, does healthcare have the opposite problem: Too Big To Succeed? Can a delivery system dominated by a small group of for-profit players deliver reform and customer value?
Many employers would say no, and Elizabeth Mitchell is a leader among them. As president and CEO of the Purchaser Business Group on Health, Mitchell helms a nonprofit coalition of nearly 40 private employers including those who self-insure to provide employee health benefits.
"United Healthcare, the big three PBMs—they are so large and so well resourced and so profitable that they have very little incentive to change course. And in many cases, they are larger than my even my largest member."
In an exclusive interview with HealthLeaders, Mitchell dispels multiple myths:
That mergers and acquisitions improve care
That payers listen to large employers
That employers want health plans to coordinate care
That employers will continue to accept the status quo without a fight
To this myth-busting, Mitchell adds PBGH's mission: "Our focus hasn't changed. It's quality, experience, affordability, and equity."
M&A is DOA
"We are seeing a growing access crisis, particularly for primary care and maternity care. I believe mergers and acquisitions are playing into that," says Mitchell.
"All of the evidence shows that M&A has had no positive impact on quality but a clear impact on prices because the larger entity then has more leverage in negotiations, which is typically the point. Mergers and acquisitions are not generating the results that our employers would like to see in the market."
Being a larger entity doesn't benefit everyone, including what Mitchell calls jumbo employers.
"There is this myth that these entities [payers, PBMs] are responsive to jumbo employers when in practice, they're just not. Employers are clear about what they would like to buy, and the suppliers just don't care," she says.
Elizabeth Mitchell, president and CEO, Purchaser Business Group on Health.
"It's increasingly challenging to shape the healthcare system in the way that purchasers want."
And what do they want?
"What we are seeing among my members is a growing trend to want to go direct, to not go through these entrenched middlemen, and to find other ways to buy the healthcare that they want to buy for their employees."
Mitchell is referring in part to direct contracting, where employers contract with providers and accountable care organizations to deliver employee healthcare versus contracting with health plans or third-party administrators (TPA).
But how prevalent—and successful—are these approaches?
Mitchell reports that "about 20%" of PBGH members direct contract, have done so for years, and with notable success.
"They all have data that shows that when they go direct, they are saving 10-20% of total cost—and in many cases, getting the quality and experience and access results that they're looking for."
The challenge is replicating those results more broadly.
"Going direct at scale is very challenging for jumbo employers with headcount all over the country. They tend to direct contract in regions where they have concentrated headcount [e.g., an ACO contract where they're headquartered]. But they may not have the volume to make it work in other regions where they have employees."
Mitchell adds: "It's just not feasible to negotiate hundreds of contracts with different providers, especially when you're a small benefits team that isn't resourced to do that. Taking that strategy to scale is what we're working on now."
"Employers are able to have a different type of relationship with their provider partners. And they both understand what the other is looking for," says Mitchell.
While employers may be telling providers "We heart you," the message to TPAs and health plans is very different message: "Stay in your lane."
"Our members don't want health plans to be doing any form of medical care. They want those resources to be with the providers, particularly primary care and maternal health," says Mitchell. "Let them do the care coordination and the social needs screening and all of the things that patients frankly want from their doctors, not from their health plan."
And what about health plans?
"They need to get the basics right: customer service, claims processing."
She has similar advice for TPAs, who may start out offering administrative services but often expand until they look like the very health plans that self-insured employers sought to avoid. And the more they resemble a health plan, the more likely they are to be acquired by one—another example of M&A's negative impact on healthcare.
"There is a significant gap in the market to enable the types of programs that jumbo employers want. When I say gap, I want to be clear that there are plenty of TPAs out there and even some that are still independent. What our members are looking for is a TPA that is not just fee-for-service based, but one that can pay prospective or alternative payment models. That is a very small subset."
May you live in interesting (fiduciary) times
If all of that wasn't intriguing enough, enter the Consolidated Appropriations Act (CAA) and new hospital pricing transparency regulations.
Employee benefits consultancy Bolton notes: "With the CAA now mandating access to the prices of health care services, employers have greater accessibility to carrier transparency. Additionally, CAA requires plan sponsors to demonstrate that their purchased health care services are cost effective, high quality, and meet mental health parity and pharmacy benefit requirements for their members."
Expect employers to use the data that TPAs, health plans, and PBMs have historically withheld.
"I would just underscore the fact that the CAA actually obligates jumbo employers to audit their vendors and partners, to test that there are no conflicts," says Mitchell. "That is going to require access that employers have not always had, like data that PBMs are loath to provide."
"Employers are obliged to ensure that they are paying a fair price, that they're getting the best quality. That is not necessarily something they can achieve with the current vendors and partners they have."
"I believe all of this is going to force some very different dynamics and make it a very interesting time," says Mitchell.
Or as her LinkedIn profile banner reads: "It's long past time we take action to foster meaningful, widespread change in health care to the benefit of those the system should be serving — American businesses and the workers."
Pat Wang doesn't do many interviews. She doesn’t even have a LinkedIn profile. The president and CEO of Healthfirst is a modest leader with plenty of reasons not to be. Wang has guided Healthfirst from its inception through its transformation into the largest not-for-profit health insurer in New York State.
This period spans 30 years: the 15 she has been president and CEO and the 15 that she spent shaping Healthfirst's unique model before she ever joined the company.
In 1993—as then-SVP of finance and managed care at the Greater New York Hospital Association—Wang helped create Healthfirst with a consortium of area hospitals. This made Healthfirst one of the nation's first payer-provider organizations—long before the industry recognized integration as a hallmark of value-based care.
Wang—who was recently appointed to the Board of Governors of the Federal Reserve Bank of New York—reflects on this history.
"If you had told me 15 years ago that this is where I'd be, and moreover that the plan would be what it has become, I would never have imagined it in a million years."
Scaling and rescaling
Throughout Wang's tenure, Healthfirst has changed constantly.
"Probably every three to five years, Healthfirst has felt like a different company. As you grow, you break a certain size scale. We're always entering new phases of discovery and achievement."
One of those phases was the pandemic, during which Healthfirst added 380,000 members—a near 27% increase.
"That is bigger than the plan was when I got here," says Wang. "I think I still have a little bit of an underdog mentality when it comes to Healthfirst. But I won’t say anymore that we're The Little Engine that Could."
Today, Healthfirst boasts 1.8 million members, making it New York state's largest not-for-profit health insurance company. Nearly 1.5 million of these are Medicaid members. Healthfirst's other lines of business include Medicare Advantage as well as dual eligible, long-term care, qualified health, essential, and individual and small group plans.
At the center of the epicenter: Healthfirst during the pandemic
New York City was at the global epicenter of COVID-19. A map from the Endangered Language Alliance shows the disproportionate impact of the coronavirus on the city's most multilingual neighborhoods.
"I've impressed on my team the incredible job they have done: absorbing and serving all of these members at such a difficult time, addressing everything that was revealed during the pandemic like health equity and access to care. I couldn't be prouder of them."
The Healthfirst response included new digital tools.
"I think the pandemic accelerated the digital revolution in healthcare," adds Wang. "People were stuck in their homes with COVID, with children who needed to apply for health insurance. In a matter of just a couple of weeks, we stood up digital offices and developed a completely text-based approach to helping people apply for insurance and transmit their documents in a way that was compliant."
"My team is extremely imaginative and innovative. We've created capabilities we didn't have three years ago."
She is quick to note that those capabilities are "always through the lens of the market we serve, in a value-based environment, where we view our role as helping to coordinate and connect all parts of the delivery system that touch our members' healthcare."
"We serve the world"
In Brooklyn's DUMBO district, where the borough holds it weekly flea market, there is another Endangered Language Alliance map. It plots—in colors and in words—650 of the 800 languages spoken in New York City's five boroughs.
This is just a portion of Healthfirst's service area, which includes all of NYC plus Long Island and the mid-Hudson Valley. Healthfirst members speak 76 languages and dialects.
"The entire world is here. We don't serve just one community or try to understand just one culture, language, or religious practice. We serve the world."
Wang adds: "Our enterprise analytics team displayed something in an internal meeting that just blew my mind. Our largest population center—The Bronx, Manhattan, Queens and Brooklyn, which represents just four of the counties we serve—is home to the same population as Philadelphia, LA proper, and Chicago combined."
"We are 2.6 times as dense in terms of population for geographic area ratio as those three cities. And it's the only geography where each of the four major racial and ethnic groups make up at least 10% of the population."
"Our local market is millions of people. That is a local market unlike any other."
A leader for New York City, the state and the nation
Wang's background informs her own hyperlocal approach and that of Healthfirst.
"We are born and bred in New York City, and I've lived here for decades now. I love the city and just think it's the most amazing place in the world."
In addition to being a long-time New Yorker, Wang is also one of the few CEOs—in any industry—who is female and Asian-American. In 2022, she was named on a Top Diversity Leaders List.
Said another way, Wang is simply a leader—among leaders, across the nation and New York state, and in multiple capacities.
She serves on the boards of directors of AHIP and the New York Health Plan Association, and chairs the state's Public Health Plan Coalition. Beyond healthcare, Wang was appointed to the Board of Governors of the Federal Reserve Bank of New York in January 2023.
There is more Wang wants to accomplish, including advancing the role of plans like Healthfirst.
"Regional not-for-profit plans are shrinking in number around the country. I really believe that healthcare is local, and that not-for-profit healthcare is a good thing."
And as for her own leadership bucket list?
"At the time that I stopped doing this job, I would really want to feel that Healthfirst has secured its place in the market and in the community. I would want Healthfirst to continue doing what it's doing while changing and adapting what we've have introduced: value-based care, collaboration across the delivery system, and trust from the community. It's so important that that will prevail."
Heather Dlugolenski is SVP of commercial strategy and solutions for Cigna Healthcare, one of two growth businesses within parent company The Cigna Group. In her role, she supports the company's employer-sponsored health insurance group and related services, which include nearly 15 million customers.
The SVP sat down with HealthLeaders for this exclusive Q&A.
HealthLeaders: What is your role and focus at Cigna Healthcare?
Heather Dlugolenski: My role is to create the strategy that defines what value we can provide to our stakeholders over time: where are we going to place our bets and what are the concepts and ideas we can bring to life. This is all to support the highly integrated services we go to market with to help members stay healthy and productive.
HL: Can you paint a picture of that strategy timeline? How do you narrow from a large number of solutions to what you execute?
Dlugolenski: First, we evaluate our strategy every year. We're looking forward five to 10 years and saying: What changes do we make from one year to the next, which gives us a new architecture to hang our innovation on. When we're doing that, we're looking at what opportunities the market suggests.
The companies we're doing business with are constantly trying to thread the needle around affordability: to their employees, their respective family members, and to themselves as an employer. That's number one.
Two is access, helping employers give their employees better access to care than they can get on their own (e.g., mental health, prescription drugs).
Number three is experience. Employers are constantly trying to extend experiences, services, and features to their employees that help them be the best people they can be—things that also connect to the mission, talent strategy, and culture of the company.
Some of these value levers are not as clear cut. They may take a longer timeframe to play out, and they may be more existential in nature.
It's a tightrope that a person in the employee benefits seat is walking. They want a trusted partner that has a solution for all of those value levers. Our strategy is constantly iterating across value lever dimensions and the real opportunity statements for employers.
Heather Dlugolenski, senior vice president of commercial strategy and solutions, Cigna Healthcare.
Dlugolenski: Some 60% of adults are living with a chronic condition. The cost of care for people who have both a chronic and a mental health condition is two to three times higher than the average cost of those with a medical condition alone. In addition, the median cost of lost productivity for a single employee with depression is $3,200.
As an example of how the company delivers value across access, affordability and experience, Dlugolenski cites Cigna Pathwell Specialty. Pathwell "helps control specialty spend across the medical and pharmacy benefit, where specialty drugs are obtained, and by coordinating care and supporting customers."
Dlugolenski, continued: Pathwell Specialty helps patients get their specialty infusions in convenient infusion centers or even in their homes rather than in a hospital where it can be really expensive and sometimes hard for people to access.
I have a real-life example of a member who was diagnosed with a rare form of cancer. Their treatment plan called for a specialty medication injection every month at a local hospital. The member was having a hard time being adherent because it was difficult to get transportation back and forth from the facility. Through Pathwell, an employed nurse was able to administer the injection in the member's home and improve his medication adherence and overall experience. That reduced the cost of his treatment by almost $350,000.
HL: You speak with such clarity around these issues. Is that a part of your leadership style?
Dlugolenski: I am thankful for the opportunity to talk about influence and for the slightest possibility that my mother could see me talking about my father, who I have tremendous respect for and who I lost last year.
My dad [Robert Messina] worked at Cigna as a software engineer, and I followed him to this company right out of college. My dad was a math major so he was highly analytical, but he also loved music and watching things made and having those things made be beautiful. They call that golden brain, when both sides of your brain work equally.
There's a part of how my brain works that I 100% believe my father gave to me—either through DNA or demonstration. It allows me to play in this space in which both of those things [the analytic and creative] are important: building a strategy and the solutions that support it with a leadership and communication style that's relatable.
HL: You mentioned that it would be nice for this article to mention your father—in part for your mother. What did you acquire from her and how does that influence you as a leader?
Dlugolenski: In life, women make many decisions: childcare, aging parents, the household. My mother made a lot of decisions in front of me. She was great at acknowledging when it was decision time, knowing what was more right than wrong, and then evaluating afterward if there was something to pivot from. A lot of women have that tenacity in their lives. I apply that to my life too, including my professional career.
HL: What are Cigna Healthcare's priorities over the next two to five years?
Dlugolenski: To innovate across affordability, access, and experience and to do that through the lens of a member's physical, pharmaceutical, and behavioral care. We recently adjusted our mission statement to "To improve the health and vitality of those we serve." Vitality is a measure of someone's ability to be happy in their life and is the fundamental anchor point of what Cigna will execute in the future.
"We were definitely the template for how Pennsylvania set up what became the Children's Health Insurance Program," says Diana Kobus, Highmark CHIP program director.
It isn't often that you get to tell stories like this: how the scaling of a hyperlocal crisis response helped create a nationwide children's health safety net that two generations of women leaders at the same health plan have contributed to.
In an exclusive interview with HealthLeaders, Highmark's Diana Kobus provides an oral history of the central role that her plan—and her mother—played in establishing what would become the model for the federal Children's Health Insurance Program (CHIP).
"It was truly a labor of love to make this happen," says Kobus, Highmark's CHIP program director. "The community said, 'We see a need and we're going to fill it.'"
How it began
"[T]he CHIP program emerged from a grassroots, community-wide effort to provide care for kids following the collapse of the steel industry [in the early 1980s]."
That's the official history from the Highmark press release, which describes how the plan partnered with "more than 15,000 individuals, churches, unions, schools and other community organizations to raise funds and identify uninsured children." The result was The Caring Program for Children, a first-of-its-kind initiative to cover at-risk kids with no exclusions for pre-existing conditions.
Kobus adds texture to that history.
"The community approached us saying, 'We want to help and we've raised money. What can we do?' We're not really sure why they ended up focusing on healthcare, but we're really glad that they did."
The "we" was a local Presbyterian Church, Fox Chapel. Reverend John Galloway contacted Eugene Barone, president and CEO of what was then Blue Cross of Western Pennsylvania. Barone, in turn, worked with the plan's product team.
"The team found this huge gap in child primary care to create [The Caring Program for Children]." says Kobus. "My mother was part of the team that figured out what it could do and for what amount."
But Barone insisted they go further.
"Eugene said, 'It's got be cheaper,'" notes Kobus. "That's when we created the plan to match the donation dollar for dollar, and that's how it worked and for the first years of the program."
Everyone pitched in.
"We had community sponsors, like local submarine shops that would help five specific kids. They'd send their donation, we'd match it and there would be this whole team of people who would create invoices by hand to ensure we were applying the money to the correct children," says Kobus.
How it grew
"We took the learnings and successful model of The Caring Program and scaled it," noted Highmark Health Plan president Tom Doran in the CHIP press release.
That scaling would ultimately reach national proportions.
The Caring Program grew from a local Highmark effort to a coalition of more than 20 Blues plans. The effort allowed then-Pennsylvania legislator Allen Kukovich to advance State legislation that would eventually inspire the model for CHIP, signed into federal law in 1997. Today, CHIP covers more than seven million kids across the U.S. In Pennsylvania, the Highmark Healthy Kids CHIP covers more than 15,000 kids across 62 counties.
Kobus draws parallels between Pennsylvania's response to the children's healthcare crisis in the 1980s and the national COVID-19 response 40 years later.
"This is kind of like what we're seeing with the pandemic," she says. "There was already a health crisis and now these children had even more dire needs."
The current generation of CHIP leadership
Highmark CHIP continues to be collaborative and comprehensive. Highmark wants to keep it that way now that the end of the Public Health Emergency (PHE) has triggered a return to pre-pandemic operations.
"In mid-2022, when we were still unsure of when the PHE was ending, we created a cross-functional team for CHIP, ACA plans, and Medicaid—a kind of 'Who's on first' approach," says Kobus.
CHIP "redeterminations" are particularly unique in Pennsylvania. The program's unwinding isn't about eligibility redeterminations but resuming the required premium payments that Highmark suspended during the PHE.
"CHIP in Pennsylvania is awesome because there's no income ceiling. You just have to pay the premium," says Kobus. "The question became, 'How do we turn back on payment? When does that start? How do we make families whole? How do we work through these issues with them?'"
To answer these questions, Highmark extended its internal collaboration to the state level and the Department of Human Services Office of CHIP.
"They're very thoughtful about how we're going to ensure no disruption to families. It's definitely a partnership with the State."
Highmark works closely with Pennsylvania DHS in emerging areas as well. Per Kobus, this includes eliminating access barriers, leaning into telehealth, and bringing care into communities to address appointment wait times. Highmark's dental bus program is an example.
"Tried and true"
No matter the partner, Kobus identifies a key throughline in Highmark's approach to collaboration.
"Listening is still paramount to what we need to do. We've been listening to our communities and community-based organizations all this time." That time spans both her leadership and her mother's.
Returning to CHIP, Kobus notes: "It's really exciting that we have this program that has been tried and true for 30 years, helping families build a bright healthy future."
"That's really the mission of Highmark and that's what we were doing back in 1984," she adds. "Freeing families to live their best lives."
As maternal death rates rise for women of color, the Elevance Health Public Policy Institute reports improved outcomes for the health plan's value-based Medicaid interventions.
An autopsy from earlier this month showed that track-and-field star Tori Bowie died from complications during childbirth. While Bowie and her baby died during an unplanned delivery at home, the U.S. Olympic gold medalist was reportedly scared of the care she would receive from the U.S. healthcare system.
"She didn't trust hospitals," said Bowie's agent, Kimberly Holland, in a CBS News report.
"She wanted to make sure that the baby was going to be okay with her being in control."
"Unfortunately, I hear this concern many, many times," said Dr. Nicole E Williams, founder of The Gynecological Institute of Chicago, in the same CBS segment. "All too often, when African-American women are in the hospital, our concerns are not validated."
Unvalidated health concerns can be fatal for all women but particularly Black women. This has been true for a very long time and is hard to ignore in light of disparate maternal health statistics.
More than double the disparity
"Between 2018 and 2021, the number of maternal deaths in the U.S. has almost doubled and the rate of maternal deaths (per 100,000 live births) has increased by 80 percent, with disparities among Black and Hispanic women sharply increasing." This from a May 2023 report from the Elevance Health Public Policy Institute (EHPPI), an internal think tank within Elevance Health that also collaborates with external groups, including academic partners.
Within the 80% are two maternal mortality rates that reflect two very different realities: 32.9 deaths per 100,000 for White women compared to 69.9 for Black women, according to the CDC.
An added factor is the role of Medicaid. The EHPPI report notes that Medicaid "finances over 40 percent of births, with a greater share of births among younger women, those with lower levels of educational attainment, those living in rural areas, and non-white women."
Elevance Health's value-based obstetric programs
To address this reality and help turn all maternal health outcomes around, Elevance Health launched two initiatives with its Medicaid plans: the Obstetrics Practice Consultant (OBPC) Program and Obstetric Quality Improvement Program (OBQIP).
"The idea was, how do we work with our obstetrics providers to improve maternal health outcomes and infant and maternal delivery outcomes in the Medicaid program?" says EHPPI VPJennifer Kowalski in an exclusive interview with HealthLeaders. "Women who are enrolled in Medicaid have a particularly greater risk of seeing adverse outcomes."
Collectively, OBPC and OBQIP have improved outcomes across four categories (delivery, infant health, access, and cost) and 14 metrics, and saved more than $10 million since 2015. Elevance has a Medicaid presence in 27 states, with OBPC and OBQIP operating in 22.
Different structures, better results
OBPC and OBQIP have two distinct program designs.
Per the EHPPI report OBPC includes Elevance-employed OB Practice Consultants who partner with OB providers to deliver timely and person-centered care (clinical and nonclinical), improve patient-provider experience, and improve affordability.
OBQIP "offers incentives to OB providers for increasing access and improving the quality of care and outcomes for Medicaid members during the pregnancy and postpartum period."
"Providers who participated in both programs tended to have better outcomes on things like primary C-section rates," notes Kowalski.
Some of the strongest collective outcomes (OBQIP + OBPC) included:
91% increase in postpartum visits
22% increase in vaginal births after C-section
14% decrease in NICU length of stay
5% decrease in overall birth costs
"Even providers who participated in just one program moved the needle forward in terms of improving maternal and infant outcomes," adds Kowalski.
Provider enablement and specialized support
As HealthLeaders highlighted in a recent Payer Week exclusive, the Elevance VBC approach includes provider enablement, specialized support, and incentives, particularly for providers willing to take on downside risk.
Provider enablement, per Kowalski, means that Elevance will be the easiest payer for providers to work with.
"The value-based care program is about not leaving providers to navigate on their own, but giving them real-time data exchange, actionable dashboards, and regular communication. Those are just a few examples," says Kowalski.
As for specialized support, the OPQIP dedicated clinical liaisons are another example.
"This isn't a 1-800 number approach," says the VP. "It's not just a focus on member eligibility and how claims get paid. The clinical liaisons help providers think through the latest evidence-based care, help them interpret and act on data, and support health equity issues that impact care delivery."
In 2023, for example, Elevance added a new health equity measure to OBQIP that focuses on hypertension in Black mothers—an important metric for maternal value-based care programs that must deliver value for not just one life, but two.
Encouraging trust between providers-payers
Provider enablement and specialized support are just two ways that Elevance seeks to strengthen provider relationships. If payers and providers don't trust one another, why should a patient trust either of them—especially when mistrust can be tied to disparate outcomes?
HealthLeaders asked Kowalski about this: providers having the comfort and confidence to engage with a health-plan employed practice partner and holding the belief that everyone is working toward the same goal.
"Over time, we have seen providers raising their hand and wanting to do more value-based care programs, wanting to have that partnership," she says, noting the questions the plan asks to maintain those partnerships.
"How can we help ease the handoffs and referrals between providers—the things that the provider might have to navigate independently or that their staff would have to figure out without our value-based programs?"
Prioritizing maternal health beyond Medicaid
Kowalski notes that the Elevance Medicaid outcomes "offer insights for commercially insured populations as well."
"Regardless of a member's plan, [our VBC approach] demonstrates lessons learned for others: to promote the ongoing review of quality measures, apply continuous quality improvement to program design, support provider enablement, and encourage provider use of digital tools for bi-directional communications."
These are timely interventions, particularly for Black mothers and their babies.
And while the EHPPI report stresses that "improving maternal health, and the existing disparities especially among people enrolled in Medicaid, should be a priority in the U.S.," one OB-GYN notes that race trumps all other demographic factors.
"There is a misconception that these disparities are only limited to poor Black people or Black people without resources," says Dr. Veronica Gillespie-Bell—an obstetrician with the Louisiana Department of Health. She is featured in The 1619 Project, Hulu's adaptation of Nikole Hannah-Jones's Pulitzer-Prize-winning project for The New York Times Magazine.
"It doesn't matter if you are socioeconomically advantaged, socioeconomically disadvantaged, you're educated, not educated. The single tying string is being a Black woman."
How Elevance Health offers added support for leading providers who take on downside risk.
In 2022, HealthLeaders published an exclusive view into a specialized Elevance Health value-based care (VBC) strategy: steering members toward top providers who have taken on downside risk and supporting them with tailored resources.
“We'll use benefit design, marketing, referral steerage—multiple tactics for these providers,” noted Chris Day, president of Value-Based Solutions at Elevance.
For Payer Week, we explored this strategy further and its four key steps:
Assume downside risk
Perform and keep performing
Receive specialized support
Link to innovative benefit design
Step 1: Assume downside risk
Taking on downside risk isn’t for all providers. But as Day noted, Elevance offers a "multi-year glidepath" based on achievable targets that help providers take increased accountability for managing population health over time. If providers are not making progress, next steps range from corrective action plans to "turning it off" and sending members to higher performers.
A willingness to take on downside risk is where performance-based provider segmentation begins but not where it ends.
Step 2: Perform and keep performing
In the 2022 article, Day notes that it doesn't take long to identify who the high-performing providers are. A focus on cost savings and lower-hanging quality targets (e.g., more primary care, fewer ER visits) provide the fastest indicators. Performance incentives, or financial losses, follow.
At Elevance, VBC consistently outperforms non-VBC models. Among MA plans in 2022, for example, all-cause readmissions were 0.6% lower in VBC models and 1.2% lower in models that included downside risk. This from the Elevance Impact Report 2022, published last month and featuring additional better outcomes from VBC.
Step 3: Receive specialized support
Describing how Elevance contracts for outcomes, president of Health Solutions Bryony Winn writes: “Ours is a capital-light, flexible approach rooted in achieving mutual success. We invest in empowering practices, paying differently for outcomes, and working more deeply with the highest-performing care providers.”
These deeper partnerships include:
Provider enablement;
Specialized support and resources; and
Quality improvement incentives.
Provider enablement, per Elevance Health Public Policy Institute (EHPPI) VP Jennifer Kowalski, means that Elevance will be the easiest payer for providers to work with.
Examples of specialized provider support, per Kowalski, include dedicated clinical liaisons who convey the newest evidence-based interventions, assist with equity-related care delivery obstacles, and help physicians interpret and act on program data.
While these examples are related to the plan’s Obstetric Quality Incentive Program (OBQIP) for Medicaid members, they're likely applicable to other Elevance VBC programs.
OBQIP—one of two VBC maternal health programs highlighted in a May 2023 EHPPI report—has generated more than $5 million in savings. A companion program, Obstetrics Practice Consultant, generated the same for a total savings of more than $10 million across these two initiatives.
"These outcomes offer insights for commercially insured populations as well,” says Kowalski. “Regardless of a member's plan, [our VBC approach] demonstrates lessons learned for others including: promote the ongoing review of quality measures, apply continuous quality improvement to program design, support provider enablement, and promote provider use of digital tools for bi-directional communications."
Step 4: Link to innovative benefit design
A final Elevance strategy to support VBC and downside risk uptake is to steer members toward plans associated with top-performing providers and even richer benefits.
“Within our provider search platform, a provider performance sorting option based on quality and efficiency criteria is available to help members make more informed choices about their medical care,” says Day, adding to his comments from 2022.
“Provider performance can vary widely in relation to efficiency, and member experience. Our goal as a health plan is to make sure our valued members receive the highest quality of care.”
Dr. Omar Latif, Medicare CMO at Elevance, adds that the company’s VBC provider support “is coupled with benefit designs that enable patients, and their care providers, to address whole health. For example, simplified supplemental benefits to help those who have a Medicare plan get over-the-counter meds and even groceries.”
Future features and wrapping up Payer Week
Next week, HealthLeaders will take a deeper dive into Elevance’s VBC maternal health programs, including more from our interview with Kowalski.
In the meantime, view all our coverage for Payer Week—five days of in-depth coverage spotlighting the significant roles and contributions of health insurers. Click below to link to all the coverage.
A CareFirst pharmacy exec talks Inflation Reduction Act ripple effects with HealthLeaders.
"It's like a balloon. When a squeeze inflates drug costs in one place, you have to reign them in somewhere else."
This analogy from Mandi Poplawski, VP of Pharmacy Management for CareFirst BlueCross BlueShield, sums up the pressurized landscape of prescription drug cost management in the U.S. The latest squeeze? The Inflation Reduction Act (IRA). Poplawski believes that the IRA represents "the largest changes to the Medicare Part D program since its inception in 2006."
Other industry insiders agree. Their drug cost views and Poplawski's form HealthLeaders' "What to Watch" list as part of Payer Week—five days of in-depth coverage spotlighting the significant roles and contributions of health insurers. Our week-long theme is Medicare Advantage in the Hot Seat: Challenges and Opportunities.
Drug costs: Today's top 3
Poplawski identifies three current issues that strain the delivery system for Medicare and beyond:
The high cost of prescription drugs for all stakeholders;
The MA donut hole for Medicare beneficiaries; and
CMS's new ability to negotiate Medicare drug prices.
"The high cost of drugs is not specific to Medicare, but it hits beneficiaries harder," stresses Poplawski. "Seniors are often on fixed incomes. This can affect treatment access and nonadherence."
An added pressure is the MA "donut hole." Also called the coverage gap, the donut hole sits between annual member spending limits and the lower cost shares of the catastrophic coverage phase. In 2023, the donut hole applies to spending between $4,660 and $7,400.
"The donut hole is still a factor. The ACA and actions by the Biden Administration are closing the gap but those costs are still a significant concern."
To these factors, Poplawski adds a key IRA provision: CMS authority to negotiate Medicare drug costs with manufacturers.
CMS plays PBM
With negotiation ability, Poplawski notes that "CMS is stepping into a PBM role": setting a maximum fair price for select drugs in the Medicare program (original, MA, and Part D). This "all-in price," says Poplawski, will "trickle down across the whole supply chain"—the squeeze of the balloon she referred to previously.
The pressure starts with lower prices for select drugs:
10 Part D drugs, effective Jan. 1, 2026;
Another 15 in 2027 (Part D) and 2028 (Part D or Part B); and
20 Part B or D drugs annually thereafter.
Per its initial guidance, CMS will announce the first 10 drugs on Sept. 1, 2023.
Impacts on cost, utilization, and utilization management
Poplawski believes that lower drug costs under the IRA will drive higher costs elsewhere and identified three impact areas:
Increased utilization, Part D costs, and utilization management for select drugs;
Whether CMS drug price negotiations will affect other lines of business; and
How manufacturers will react.
The IRA will shift drug costs liability from the government and beneficiaries to health plans. As a result, says Poplawski, "costs will go up significantly for the small subset of members that drives more liability."
This in turn will increase utilization management for prescription drugs (e.g., prior authorization, step therapy, quantity limits).
Dr. Adam Fein from Drug Channels notes that—under the IRA—Part D plans will no longer have an incentive to steer members toward higher list price drugs, which speeds entry into the catastrophic coverage phase where plans have no liability.
Impacts on multiple lines of business
Poplawski wonders how CMS Medicare price controls could apply to other lines of business.
HealthLeaders notes that this "other" still includes Part D plans because they will be impacted differently by the new cost negotiations than MA plans with embedded prescription drug coverage (MA-PD).
Here, we see bigger predictions from Drug Channels' Fein. Noting that standalone drug plans can't capture the added medical-side savings from better medication adherence, Fein predicts that payers will steer members toward MA-PD versus Part D plans.
"We expect Medicare Advantage plans to keep utilization management levels below PDPs as a strategy to attract more seniors to select MA-PD plans," writes Fein.
Impacts on other stakeholders
Poplawski does not go as far as Fein on Part D market impacts. She does site three possibilities, however, for the IRA's impact beyond health plans:
Manufacturers could consider new ways to make up for lost revenue (e.g., raise the price of drugs not included in CMS negotiations).
They could align cost control strategies with the IRA (e.g., become a category leader for negotiated drugs).
PBMs may need to shift strategies too (e.g., redefine their value proposition now that CMS can negotiate prices).
Poplawski named other trends to watch: the end of manufacturer rebate caps in Medicaid, the impact of site-neutrality of Part B drug costs, and the white hot biosimilars market.
Watch for a follow-up exclusive with the CareFirst VP in the months to come.
Editor's note: This story was updated on 6/9/23 with the correct name for the writer of Drug Channels, Dr. Adam Fein. HealthLeaders regrets this error.
Yes and no, but keep an eye on CMS' growing Value-Based Insurance Design model.
VBID-X sounds like a medication. Should you ask your doctor if VBID-X right for you?
Probably—but you'll need your insurer's help too.
VBID-X (Value-Based Insurance Design) is a model plan that designates healthcare services as either high or low value based on clinical evidence. VBID-X proposes low-to-no cost sharing for high-value services and higher cost sharing for low-value ones.
While VBID-X plans don't technically exist, VBID's footprint is in more places than you might think. And it got a strong start with CMS' VBID innovation model.
This exploration of VBID in Medicare Advantage (MA, and other plan types) is part of HealthLeaders' Payer Week—five days of in-depth coverage spotlighting the significant roles and contributions of health insurers.
VBID: What, when and where
Only a few of CMS' value-based care (VBC) models have included MA plans and VBID is one of them. The other three are the Part D Senior Savings Model, Oncology Care Model (OCM, replaced by the Enhanced Oncology Model), and ACO REACH.
Seven states to 50, the District of Columbia, and all U.S. territories;
Seven disease states to any chronic condition; and
Chronic conditions only to social drivers of health (SDOH), reward and incentive programs, telehealth, wellness and healthcare planning, and hospice benefits.
For CY2023, CMS added a voluntary Health Equity Incubation Program.
The pioneers, newbies, early outs, and nationals
Since 2017, VBID has grown from nine to 50-plus MA Organizations (MAOs), with these callouts:
The pioneers: Among national MA plans, only Aetna—now a CVS Health company—has participated since 2017. Other early adopters include Highmark Health and BlueCross BlueShield of Michigan; the latter left in 2023.
Newbies: While new entry is not surprising for startups like Bright Health Group, it is for nationals like Centene, which only joined VBID in 2023.
Early outs: Some regional plans that could join VBID in 2017 left the model after only two years, including BCBS-MA and Independence Blue Cross.
The nationals: Humana and UnitedHealth Group have participated in VBID since at least 2020. Cigna and Elevance Health joined in 2022.
Healthfirst Spotlight
CMS VBID participant Healthfirst highlights its model differentiators and lessons learned in an exclusive interview for HealthLeaders Payer Week.
VBID results so far
In December 2022, Duke University Press summarized a few CMS VBID results (2017-2019):
Utilization: More member use of high-value services (e.g., primary and specialty care visits, medication adherence)
Savings: While VBID did not generate savings in its first three years, the program proved cost neutral to Medicare.
Increased Customization: More members are receiving more diverse, customized benefits—a projected 3.7 million in 2022 and a 300%-plus increase since 2020 (767,124).
How should these results be evaluated? Broadly and longitudinally.
VBID did not generate savings through 2019, but even cost neutrality is a positive for Medicare. VBID's low-but-growing enrollment is also a positive. Better to start small when the delivery system's future is at stake.
But perhaps the most important way to evaluate VBID is its ripple effect.
From demonstration to national benefit design model?
CMS demonstrations can help codify national changes. CMS' Part D Senior Savings model piloted the $35 per month insulin cost-sharing cap that will extend to all Medicare beneficiaries thanks to the Inflation Reduction Act.
CMS' VBID model has had a similar effect. Duke University Press notes it has influenced standardized VBID benefit design—the previously mentioned VBID-X—among state-run Exchanges, other CMS pilots targeting nonmedical supplemental benefits, and certain allowable Health Saving Account payments.
The Center for VBID at the University of Michigan believes that health equity may provide the next push that VBID-X needs. The Center laid much of the groundwork for VBID-X. And its director, Dr. Mark Fendrick, has encouraged hesitant payers to realize they've already embraced VBID as part of ACA requirements—and to go further.
"I'm not suggesting this is going to save the US health care system, but if you're interested in walking the walk, about changing your benefit design to improve individual and population health and especially with a motivation to enhance equity, these are the things I would suggest you do," Fendrick said.
CMS has extended VBID through 2030. This means that the model you've probably heard less about than MSSP or ACO REACH may drive the next generation of payer-led MA value-based benefits.
The payer is one of only two Medicare Advantage plans focused solely on social drivers of health in its CMS model.
As other stakeholders search for a business case to invest in social drivers of health, Healthfirst has gone all in.
Healthfirst is one of New York's largest not-for-profit health insurance companies, serving more than 1.8 million members. In an exclusive interview, SVP of Medicare Jen Cohen-Smith describes Healthfirst's VBID choices. This coverage is part of Payer Week—five days of in-depth coverage spotlighting the significant roles and contributions of health insurers.
Three business model differentiators
Cohen-Smith identifies three factors that made choosing social drivers easy:
A hyperlocal approach;
Already strong chronic disease management programs; and
High member retention.
Healthfirst hires people who live, work, and play in the communities it serves (New York City, Long Island, and Westchester, Rockland, Sullivan, and Orange counties). Cohen-Smith reports that the plan also has the largest field sales team in the area.
These tight relationships include providers and members.
Healthfirst is sponsored by downstate New York's leading hospital systems and, the plan reports, has been a pioneer of the value-based care model for nearly 30 years. Its close hospital relationships have generated strong outcomes—making it possible for the plan to choose SDOH over chronic disease for its VBID model focus. (For VBID program details, see HealthLeaders' companion article)
Member retention is another Healthfirst advantage. Healthfirst has members in Medicaid, Medicare Advantage (MA), Long-Term Care, Qualified Health, Essential, and individual and small group plans. It also has a large dual-eligible population.
"Our Healthfirst members tend to stay with us for a very long time," says Cohen-Smith. "This gives us exceptional insight into what people of New York need. This not only fits with our mission but helps members see the value of our benefits over time and how to access them. We take good care of them."
Partnering, listening, pivoting
These differentiators connect to Healthfirst's most significant VBID learnings so far:
Having the right partners (providers, vendors, operational structures) to deliver an innovative program that is easy for members to understand.
Listening to members—before, during, and after VBID model launch.
The right partners ties back to Healthfirst's hyperlocal approach.
And while many stakeholders stress member feedback, you can hear its importance in Cohen-Smith's voice: the value and impact of three years of VBID process improvement.
"Having our ear to the ground has been critical," she says, stressing again how a hyperlocal approach allowed Healthfirst to adjust communications and education about VBID benefits.
Expansion and leverage: The benefits of being nimble
Healthfirst's initial VBID focus was an OTC Plus Card. Eligible members can use the card at neighborhood pharmacies, grocers and other businesses to pay for everyday expenses like healthy foods and over-the-counter items.
"The heathy foods program is especially challenging in New York City because most grocery stores don't belong to large chains; they're the small local bodegas on the corner."
The ability to be nimble helped Healthfirst expand OTC Plus to help with utilities and now internet access.
Healthfirst added the latter by keeping its ear to the ground more broadly. After New York introduced a program that made internet more affordable statewide, Healthfirst added the benefit to its OTC Plus Card.
"It was a great time to lean into digital access, given the growth of telehealth, and increased loneliness during and after the pandemic," says Cohen-Smith. "Because we're a regional plan, we could act quickly. Healthfirst was the first plan in the state to offer the benefit and others have followed."
Healthfirst is one of only two MA plans that have chosen SDOH as their focus for the CMS VBID model. Cohen-Smith acknowledges that demonstrating outcomes remains challenging, even with Healthfirst's advantages.
"Two and a half years into VBID, it's still hard to show that the value we thought we'd get is in fact happening. SDOH results just take longer."
The answer is both as payers benefit unevenly from CMS' fine turning.
If you want a front-row seat to the Medicare Advantage (MA) Star Ratings controversy, grab your popcorn and consider the ongoing war of words between healthcare industry veterans.
In one corner, those who defend the program: “MA has an extensive, well-structured, and strongly administered five-star system.”
In the other, those who believe the Emperor Has No Clothes: “[T]he Five-Star program, while well intended, primarily creates a ‘performing to the test’ result rather than solid and important quality improvements in outcomes.”
With 2023 plan results lower than they’ve been in years, HealthLeaders’ timely examination of Stars includes our exclusive interview with Healthmine Senior Advisor and Stars program expert Cherié Shortridge. This feature is part of Payer Week—five days of in-depth coverage spotlighting the significant roles and contributions of health insurers.
CMS fiddles, plans burn
Just how challenging was 2023? HealthLeadersreported that 51% of MA plans with prescription drug coverage (MA-PDP) had an overall rating of four stars or higher. There was also a 30% decline in the number of five-star plans (from 74 to 57).
Seeking Alpha reports that “only four publicly traded managed care providers . . . achieved a score of four stars or higher for their largest MA contracts”—Alignment Health, Elevance Health, Humana, and UnitedHealthGroup.
Among privately held payers, Kaiser Permanente maintained its consistently high Star Ratings in 2023. All Kaiser’s plans received at least a four-star rating. Its California, Colorado, Georgia, Hawaii, and Mid-Atlantic plans received five stars, most for more than a decade.
In contrast, Seeking Alpha continues, only 21% of Aetna plans received a four-star rating or higher. This near-total reversal from 2022—when 87% of its plans were so rated—will result in a projected $800M–$1B net income loss for 2024 by Aetna’s parent company, CVS Health.
Past performance is no guarantee of future results
Could the poor outcomes have been prevented? Yes, no, and maybe.
The 2023 ratings year included multiple CMS methodology changes:
Guardrails (upper and lower limits) that define a plan’s measure-specific Star Ratings;
Elimination of “better of” provisions, which allowed plans to choose current or past data for most 2022 measures; and
Removal of performance outliers in select ratings calculations
“The codified and proposed changes over these next few years are more than we’ve seen since the beginning of the Stars program,” says Shortridge.
And while some may argue that 2023 Star Ratings were not truly performance related due to these changes, that’s not entirely accurate. Shortridge agrees.
"Even before the public health emergency (PHE), Stars ratings had been stable for three-four years. Throughout the PHE, plans benefitted from the ‘better of’ scoring methodology for most measures,” says Shortridge. She adds: "Stars is now measuring real rates again."
While the “better of” change gave plans a Get Out of Jail Free card, the choice was still based on performance, still impacted by COVID-19.
The outlier provision means that "poorly performing plans will no longer bolster the ratings of other plans."
The answer? Every MA plan benefits from an enterprise-wise Stars strategy. Most plans also struggle with significant methodological changes, including scoring interdependencies that impact performance regardless of a payer’s tactics.
Shortridge adds: “CMS provides forewarning of upcoming changes, but it was still hard to prioritize with so many other competing priorities.”
Everything is relative
The outlier provision reflects the relativity aspect of Stars: ratings components that depend on other factors. While leading plans have lost the outlier bump, they still earn a “reward factor” (as high as 0.4 stars) for consistently high performance over time. The reward factor makes it more likely that 5-star plans will stay that way—a kind of compound of interest effect.
Something else that’s relative? The annual average Star Rating.
Before 2023, Star Ratings had climbed steadily over time. Just as the Dow Jones has shattered one unthinkable milestone after another, the average rating reached 4.37 Stars in 2022—“an all-time high in the program’s 12-year history” per McKinsey.
This was also the first year that CMS applied new quadruple-weighted customer experience scoring to Stars (sourced Consumer Assessment of Healthcare Providers and Systems [CAHPS] data).
“There is a heavy weight on CAHPS, but look at the questions: Did you get the appointment you needed? Did your doctor have your medical records at your visit? Did he or she help coordinate your care?” says Shortridge. “This isn’t about health plan management. It’s about the relationship between the member and their provider and access to care.”
MedPAC still isn’t happy
Just as likely as a new Stars “best” is a consistent Stars “worst”: the program’s ongoing flaws.
Between 2016-2018, the same sentence appeared in MedPAC’s annual Medicare report to Congress: “[T]he Commission has been increasingly concerned that Medicare’s approach to quality measurement is flawed because it relies on too many clinical process measures.”
MedPAC has repeated a version of this statement since at least 2015, including 2023: “Over the years, the Commission has determined that the QBP [Quality Bonus Program] is flawed and does not provide a reliable basis for evaluating quality across MA plans in meaningful ways; plans have also received unwarranted bonus payments under the QBP system.”
Star Ratings serve two gods
Can Stars overcome these copy-paste critiques? The answer is uncertain and may be rooted in the program’s dual purpose: consumer marketing and plan payment.
So notes a 2015 brief by the National Health Policy Forum Issue Brief, which adds: “This dual function means that CMS must be responsive both to beneficiaries who want transparent results relevant to their purchasing decisions and to health plans that have concerns related to differences in populations and their ability to influence the performance being measured.”
Stars has two other functions: support Medicare financial stability and quality.
“CMS projects the new and proposed changes will result in billions of dollars in Medicare cost savings,” says Shortridge. “The right care at the right place at the right time is just good business.”
Callout: Bonus Content: 8 expert tips for top Stars performance
Don’t treat Stars as an event; maintain an ongoing enterprise-wide strategy.
Maximize existing, internal data, such as complaints, grievances, and appeals
Deploy key operational teams, including care management, disease management, call centers, and other customer-facing departments.
Use supplemental benefits to improve performance across multiple measures.
Make patient experience a core differentiation strategy.
Identify and diagnose at-risk measures.
Deploy metric-specific initiatives.
Create and increase programmatic quality investments, such as call campaigns
