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A Model for Value-Based Purchasing Of Health Benefits
An interview with Jerry Burgess, President and CEO, HealthCare 21 Business Coalition What is value-based health benefit purchasing? According to Jerry Burgess, it is an approach to controlling health care costs focused not on cost itself but on value, a crucial component of which is health risk management. Mr. Burgess, a former health benefits purchaser himself, is a member of the SOH Steering Committee. As President and CEO, HealthCare 21 Business Coalition, Burgess is truly an industry insider who is concerned about the state of the U.S. health care industry. Pointing out that Starbucks spends less on coffee and General Motors on steel than they do on their employees’ health care, he says, “The healthcare system has been a wreck for 30 years, and that will continue to be the case until buyers become sophisticated purchasers of health benefits.” He is committed to the development of a fairer and more effective approach to health care that starts with a partnership between health plan purchasers and suppliers to offer not “health insurance” but risk management. Ideally, he says, this would start with a health assessment to determine risk, then a way to take control over delivery with a high-performance network. Value-Based Purchasing: A Systematic Approach
“Value-based purchasing,” he says, involves “a range of activities in which public and private purchasers engage to influence the behavior of consumers, plans, and providers to achieve greater value, value that can only be added when these health benefits help you manage the risk of the total covered population.” This, he says, starts with an examination of a mix of chronic diseases and risk factors that are the drivers of 70% of the costs in the health system. "There are eight health risk factors we focus on: blood pressure, lipids, diabetes, smoking, obesity, pregnancy, depression, and asthma — particularly in children.” He describes a systematic approach he calls “my full blown health risk management model” to purchasing value-based benefits that goes beyond offering services tailored to these needs to offering a strategy to address what he calls “the hardest thing in the world” — changing human behavior. Health Risk Management
From the point of view of a benefits manager, Mr. Burgess says, managing risk and purchasing value-based benefits start with considering the health and health choices of the total population of covered lives. “The focus of wellness programs and other health supporting activities should not extend just to employees, but also to their dependents, who, on the average, account for half of the cost.” Among the steps he describes are the following: • Identify the total population — all the employees, plus their dependents. • Among the covered population determine: Those who have disease; those who have emerging disease (the at-risk population), those who don’t have a disease yet but have risk factors, e.g., for heart disease or diabetes. • Identify the interventions need. • Determine the interventions a vendor can provide and those the company could provide. • Devise incentives to encourage consumers to change targeted risky behaviors. • Coordinate vendors and elements. • Steer consumers to quality providers.
Dealing with Human Behavior
Mr. Burgess says, for better or for worse, the success of this model hinges on human behavior. “How do you change the behavior of the consumers to do what they should do and how do you change the behavior of doctors to do what they should do?”
The answer in both cases, he says, is providing incentives that at best “reward those who do the right thing and punish those who don’t.”
While we don’t expect to change a lot of human behavior, we can just set up a system that is fairer, like car insurance that rewards those with good driving records and compelling those with increased risk factors — e.g., DUIs and speeding tickets — to pay more.”
He is quick to add that this system is not designed to punish those with disease, just those whose behaviors increase their risk of developing disease or getting well. “You never charge people for having disease; you charge them for the behavior that led to the disease or the wrong behavior in treating the condition, as it pertains to adherence/compliance.”
What Buyers Can Do
Mr. Burgess urges buyers to partner with sellers to tailor plans to their covered populations that maximize value, but he says the onus is on the buyer to understand their own needs and demand that they be met. “Those in a position to demand bang for the buck need to do their part to enable the plan seller to provide the right things.”
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