Intel Launches Self-Insured Contract Following Success in New Mexico

Earlier the company tried to hold down escalating costs by offering onsite clinics and high deductible plans, according to Brian DeVore.

Fee-for-service is part of the unsustainable escalation in healthcare spending and new payment models both public and private show promise. That’s the message conveyed at “CCOs & Beyond: Health Care Payment Innovation” organized by Oregon Health & Science University’s Center for Health Systems Effectiveness on Tuesday.

“Fee-for-service is the enemy,” said John McConnell, the center’s director who moderated the conference. “Medicaid is America’s largest insurer,” he added, with 65 million enrolled in Medicaid and another 53 million under Medicare this year.

McConnell described Oregon’s $1.9 billion deal with Centers for Medicare & Medicaid Services requiring Oregon to reduce the rate for growth in healthcare spending from 5.4 percent to 3.4 percent by 2015 as “the largest attempt to hold a system accountable for healthcare spending.”

His research on Oregon’s CCOs focused on adults ages 18-64 excluding pregnant women and dual members of Medicaid and Medicare.  Oregon’s Medicaid population was growing before the CCOs were created -- from 440,000 in 2009 to 620,000 in 2013, he said.  But the pace of Medicaid expansion was faster than expected.  In June of 2013, 14 percent of Oregonians were uninsured.  By June of this year, that number had shrunk to 5.1 percent.  The 350,000 new enrollees made up “the largest percentage change in Medicaid enrollment in any state,” McConnell said.  

CCOs are doing smart things in small pilots, then stepping back to see what works and what doesn’t, according to McConnell who also sees promise in screening for addictions and mental health even though his co-presenter Deborah Cohen said a shortage of providers who know how to work on teams to deliver integrated behavioral health shows that “development from scratch takes time.”

There’s danger in what Cohen called a “herd mentality” when state officials tell CCOs to focus on certain metrics.  “They may not be thinking innovatively” and question clinical relevance of metrics or if process measures will lead to clinical outcomes,” said Cohen, an associate professor in the Department of Family Medicine at OHSU.

“The policy debate is less about health and more about taxes,” according to Michael Chernew, a professor of healthcare policy at Harvard University. “Quality measures are to make sure bad things aren’t happening.  The fundamental innovation is to improve our fiscal issues.”

Large employers such as Intel are also insisting on reform. Brian DeVore, director of healthcare ecosystem & strategy, said his company’s new purchasing model  in New Mexico “is not a silver bullet” but is successful enough that Intel plans to go live with a direct contract to self insure its 17,000 employees and 50,000 “covered lives” in Oregon on Jan. 1.  From here, he said Intel plans to implement something similar in Arizona next.  “Pilots actually work 70 percent of the time but never get scaled,” DeVore said.  

Intel had tried to hold down escalating healthcare costs with onsite clinics, high deductible plans and other efforts to encourage wellness -- “none of that worked,” he said.  “The chronic sick never go to wellness stuff.”

Instead, he added, Intel “cajoled, cheered, asked, pleaded” with insurers to get quality of care up and costs down.  Then Intel considered its own “lean methodology – get rid of what doesn’t create value.”

The Intel model is a mix of fee-for-service and bundling with key measurements which DeVore described as the Triple Aim plus “return to function back at life.”  He said all measures are weighted equally because a plan can easily drop costs but that methodology can inadvertently reduce member satisfaction too.

“It’s a really weird time in healthcare,” DeVore said with a “lot of experimentation going on.  I hope both CCOs and commercial efforts are successful, and we exchange ideas to make good decisions based on data.”

Jan can be reached at [email protected].

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