One of Kentucky's largest hospital systems and its health plan, Anthem Blue Cross and Blue Shield, have partnered to reduce charges for high-cost episodes of care.
St. Elizabeth's five hospitals are the first in Kentucky to participate in the voluntary agreement to reduce charges, known as shock claims, by as much as 45 percent, according to Anthem. This includes unexpected, exceptionally expensive health events and specialty medications that can cost as much as $1 million per course of treatment.
Charge reductions will vary based on case-by-case specifics, but Anthem and St. Elizabeth said the savings will be significant for consumers and employers.
St. Elizabeth is a member of the Mayo Clinic.
Anthem recently launched the initiative with the goal of getting all Kentucky hospitals to participate.
HOW IT WORKS
Employers can be wiped out by large medical bills that add up to millions, as around 2012, lifetime maximums went away, according to Bill Banks, vice president of managed care for St. Elizabeth, who was a lead negotiator with Anthem.
The agreement with Anthem stipulates that in extreme financial cases, the hospital and insurer agree to payment at cost. For a moderately-sized community hospital, these types of bills aren't even built into the budget because they're so rare, Banks said.
"Anthem put in the contract, they won't get more than cost," Banks said.
WHY THIS MATTERS
This partnership is focused on addressing the increasing frequency of $1 million-plus episodes of care. With genetic therapy and specialty medications becoming more common, so too have the frequency of care situations costing as much as $6 million dollars.
The result is having a financial impact on employers that are self-insured and who pay for individual claims directly, and an indirect impact on consumers and fully insured employers in the form of higher insurance premiums.
Anthem Blue Cross and Blue Shield is among the largest commercial health insurers in Kentucky. Acceptance of this approach has the potential to significantly impact costs for all Kentuckians and their employers, according to Anthem.
THE LARGER TREND
Shock claims, including those for care in neonatal intensive care units, cancer treatments, heart centers and immunotherapy treatments, have nearly doubled since 2014.
UnitedHealth Group, in a report released last week, said hospital prices are the driver of increases in cost for inpatient spending.
Hospital prices for inpatient services increased 19 percent, about 4.5 percent per year and physician prices for inpatient services increased 10 percent, about 2.5 percent per year, while utilization of inpatient services delivered by hospitals and physicians each declined by 5 percent, the report said.
ON THE RECORD
"We jumped at the chance to join this program because St. Elizabeth is committed to providing transparent and predictable pricing while helping Northern Kentucky employers offer affordable, high-quality health benefits to their employees," said Bill Banks, St. Elizabeth vice president of Managed Care. "In fact, with average annual price increases of less than 2%, our healthcare charges are among the lowest of Kentucky's large healthcare systems."
"St. Elizabeth immediately stepping up to work with us on addressing shock claims is a perfect example of how the healthcare system can lower costs through collaboration and creative thinking," said Kennan Wethington, commercial president of Anthem Blue Cross and Blue Shield in Kentucky.
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