In Round Table

Lawmakers, providers and patients have come to the same diagnosis: The nation’s health care system is in an unsustainable condition. Improving it will require changing the Affordable Care Act, deploying technology and emphasizing wellness across the board. Business North Carolina magazine and Lynchburg, Va.-based James A. Scott & Son Inc.’s Scott Benefit Services recently assembled a panel of experts to discuss the status of health care in North Carolina and changes that would make it better.

The discussion was moderated by Ben Kinney, Business North Carolina publisher. Support was provided by Blue Cross and Blue Shield of North Carolina, East Carolina University, Morganton-based Carolinas HealthCare System Blue Ridge, and Scott Benefit Services, which hosted the round table at its Greensboro office. The transcript was edited for brevity and clarity.


The recently proposed Affordable Care Act replacement was scuttled before its vote. What challenges has the ACA created, and how could it be improved?

WILLOUGHBY-RAY: We’re in Round 2 of health care reform, and my clients know the drill — wait and see. While they have less anxiety and trepidation this time around, they’re still dealing with uncertainty and instability. That slows risk taking and entrepreneurship. I recently visited a client who is a large furniture manufacturer. Its human-resources department spent two weeks preparing Internal Revenue Service health-insurance reports, which were necessitated by ACA. That’s a lot of lost productivity, and it would cost more to have a third-party vendor handle them. Situations that include risk and reward produce better outcomes. Health care costs are dramatically different in Texas, for example, than in North Carolina. So it makes sense to give states the opportunity to innovate on a local level. My clients are frustrated that coverage receives the most attention. There are many livelihoods tied to the health care industry, so misinformation is preventing an honest conversation about actual solutions. No matter what happens to ACA down the pike, North Carolina will continue to have great health care. Its great minds and vibrant and diversified industry will hit a double or triple off whatever curveball Washington throws. I’d rather be living here than anywhere.

DELIA: Businesses — including providers, health systems and doctors — want certainty so they can plan and invest. But the health care industry is in the middle of large changes, some driven by the ACA and others by the industry’s evolution. They’re told to hold off and plan while the world marches forward. Their businesses are being affected by decisions not of their making.

EDWARDS: Coverage is the challenge. Waiting to see what’s going to happen could become a disadvantage for a health system or clinician. Some people won’t invest time to learn a new physician payment model, for example, because they claim ACA will be repealed. That’s wrong: Not everything is tied to ACA. We’re encouraging members to move forward with value-based approaches. We need new ways of paying for health care. Hospitals are concerned, particularly in relation to Medicare, about leaving the waiver approach and giving states free reign. Medicaid is used by about 18% of North Carolina’s population. [Washington, D.C.-based] American Hospital Association President and CEO Rick Pollack says 25% of U.S. hospitals are operating at a deficit. And when you add expectations, such as the federal government not paying for it or not expanding Medicaid, then providers pay for all of it. That is unsustainable.

PERRY: ACA has brought positive changes such as more access. North Carolina had the fourth-highest ACA enrollment in the country — 545,158 — as of Jan. 31. Florida had the most, almost 1.8 million. ACA also has brought challenges, such as cost increases. Blue Cross is North Carolina’s ACA provider. There are [only] one or two in 70% of counties nationwide. We’re creating a class of uninsured, those more than four times the federal poverty line that don’t qualify for financial assistance under ACA and can’t afford private insurance. We worked with the old administration, trying to make it better. We’ll continue to be at the table, advocating for customers, addressing costs and creating sustainability. We’ve done a decent job explaining so that our leaders understand that market disruption can’t limit care. The proposed ACA replacement wasn’t perfect, but it pointed health care in the right direction. It provided some transitional funding for high-risk individuals. We should continue some type of premium credit with a subsidy for out-of-pocket costs. The tax credit needs an income and premium adjustment factor, not only an age adjustment factor.

What will be the effects of changing Medicaid and Medicare?

DELIA: The proposed replacement called for cutting about $880 billion from Medicaid in the next 10 years. North Carolina is about 2% of the federal budget, so that would have been more than $17 billion less for the state’s Medicaid. That’s huge and encourages providers to rank patients as government or privately insured. [Rochester, Minn.-based] Mayo Clinic recently gave priority to privately insured patients. If that approach becomes more popular, a three-tier health system will emerge. First, there will be the folks without any, or very poor, insurance. They are the most expensive to treat, because they’ll wait until they’re acutely ill to use the emergency department, where care costs the most. Then there will be the government-insured patients and, lastly, the privately insured folks. We need to guard against that to ensure access is widespread and costs are controlled.

EDWARDS: About 10,000 beneficiaries are added to the Medicare rolls daily. I do many presentations related to delivery system reform, the Medicare Access and Children’s Health Insurance Program Reauthorization Act, and quality payment programs, all of which have been important issues recently. I talk with physicians and clinicians about how their reimbursements are being changed and how they’re being replaced in the value-based model. Inevitably, at the end of those presentations, at least five clinicians tell me that’s why they’re not going to participate in Medicare. Some may be able to do that, but not those in the South, where more people are retiring.

WILLOUGHBY-RAY: Commercial payers pay as much as 250% of the amount Medicare reimburses. Hospitals use them to subsidize Medicare underpayments. We have a coverage issue because it’s so expensive. The problem is simple to define, but the solution is difficult. There are great ideas and resources in front of us, but political agendas and uninformed decision-makers are getting in the way. How do insurance companies survive, pricing risk eight or 10 months before the risks are known? It’s shoot, ready, aim. It’s frustrating.

PERRY: About 55% of our revenue comes from the government. That drives how we think about value and reimbursement. We help providers improve quality and lower costs. All of our hospital contracts include quality metrics. It’s tough to affect cost if it doesn’t come back to a financial metric. Bundle payments for procedures, such as hip and knee replacements, have been successful. There’s more to do. We’re not past the second inning.

What are some workforce needs?

DELIA: Care and DNA affect about 20% of an individual’s health. The balance is determined by the person’s ZIP code. Urban challenges are different than those in my neck of the woods — rural eastern North Carolina — where the closest doctor might be a 40-minute drive away. [Washington, D.C.-based] Association of American Medical Colleges says the U.S. will be short as many as 94,700 physicians over the next decade. We have to grow the health care workforce, but not with any type of physician. Primary-care physicians are needed most, especially in rural regions. A large part of that is due to money. If you want to be where there’s a better quality of life, you are likely to live in an urban region.

EDWARDS: Physician burnout needs to be addressed. If we can get off of the traditional reimbursement model and give them time to sit and talk with their patients for more than 15 minutes, clinician satisfaction will improve.

How can technology help?

DELIA: Technology provides access to patients who don’t have it. Thousands of companies are trying to define the full potential. We’re already seeing benefits, and there are more to come. North Carolina can take advantage of that technology because much of the state has the required high-speed internet.

PERRY: There are about 40 million unpaid caregivers, such as family members, across the nation, and that number will only grow. They need help. Technology brings some, including online marketplaces that support care coordination, activities and transportation. Some technologies aim to better manage pain medication for chronic conditions. They ensure those drugs are appropriately and effectively used. Millennials have high expectations for other parts of their consumer life, such as online banking and retail. They’re increasingly demanding that we know them. Why are you asking me to fill out a form every time
I visit, or why can’t I do it the way basically everyone else I deal with does? Ultimately our industry will have to be so seamless and holistic that the consumer won’t know the difference between insurer and provider. The process will have to wrap around their entire health care experience, not sending them one place to pay a premium and then others to file a claim or visit their doctor.

EDWARDS: Without data that can be translated into useful information about their patients, providers will struggle with agreeing to take on risk in exchange for value. It’s more of a challenge at the state level, but the more usable data on the provider side the better. That’s particularly true if hospitals want to form clinically integrated networks, work across a continuum or take responsibility for what happens outside their walls. It’s a challenge when you don’t know how well post-acute care is doing or if a skilled nursing facility is discharging your patients after 21 days because it’s not getting paid.

WILLOUGHBY-RAY: The biggest factor for lowering cost is consumerism, and that’s a broad statement. Providers are doing a better job of giving information to consumers. Our clients always are preaching consumerism. There are treatment estimators, and there’s cost of quality information from carriers such as Blue Cross. So they have tools to make better decisions. When you empower a patient to go to a provider that is known to have lower costs and better outcomes, then everything suddenly shifts. It’s no longer just Blue Cross negotiating with ECU. Creating transparency is tough. More technology will help, particularly with millennials, who are greatly influenced by social media. I’m excited about some of the characteristics of millennials, because they are going to force providers and carriers to respond.

How can employers lower health care costs?

WILLOUGHBY-RAY: Employers are joining carriers to make changes. They need to make sure their employees understand that health is a competitive advantage. Our best clients are inspiring, encouraging and acknowledging their workforce’s efforts to obtain it. Communities and employers have to understand that the health of their employees is as important as their safety. We have to alter the demand for health care, too. Americans don’t like to be told what to do. We want to go where we want, and we want it to cost almost nothing. Don’t tell us what to eat or that health issues can be controlled with lifestyle changes.

PERRY: Employer groups statewide look to us for advice on wellness. We have a responsibility to walk the talk. Our cafeteria serves healthy options and incentives to participate. We also have ways to monitor health, walking trails and fitness classes. It’s tough to gauge its short-term return on investment. We feel it will decrease costs over the long term. Our workforce has become more active, engaged and proud, and that has to be good for our customers. I’ve been in companies where safety was the focus. You can’t only have a safety program of the week. It has to be part of the culture. It’s the same with health and wellness. We’re seeing traction because it’s part of our culture. Technology is helping here, too. Fitbit, the wearable activity tracker, is an excellent example. It gets people excited about participating in their own health, and health is wealth.

DELIA: N.C. Department of Transportation is the state’s biggest health care investor. Does it include health care when deciding about sidewalks, walking trails, greenways and so forth? It doesn’t, because the Department of Health and Human Services receives the return on those investments. Health in all policies is a popular movement. We need to move in that direction because the beneficial effect of health goes back to reducing costs and improving morale.

How do pharmaceuticals affect health care costs?

WILLOUGHBY-RAY: About 20% of our clients’ spending is for pharmacy. That could jump to 50% in the next five years because of accelerated use of specialty medicines. The FDA could and should follow Europe’s lead, creating fast tracks for finding options for specialty drugs. There are medications that are being used in Europe for the last 25 years because its governments have created biosimilars — chemically equivalent alternatives for specialty drugs. It’s a complicated process.

PERRY: We saw specialty pharmacy rise 30% last year. The question ultimately for the industry and for us is if that continues at that rate, are there other benefits that are going to reduce the costs? So far, we’re not seeing it. That would be the expectation over the long term.

Recommended Posts
Contact Us

Questions or feedback? Drop us a message!

Start typing and press Enter to search

Life Sciences Round Table