Jeff Roe, Premera president and CEO, addressed the state of the country’s health care system and its role in the economy at AEDC’s 2018 3-Year Outlook Luncheon. Below are his answers to questions submitted by luncheon guests:
Q: How important is it to produce a local Alaskan health workforce to control health care costs?
A: Very important. When people are sick they generally do not want to travel. They want to be treated in Alaska by Alaskans. For medically appropriate procedures, medical travel benefits are typically only used when the cost difference between receiving treatment in Alaska vs. the lower 48 is disproportionately large.
Q: You have identified how much more the cost of care is here. How much more (%) are your premiums over national average.
A: Our premiums are directly tied to the cost of care in Alaska, that’s a requirement of the Division of Insurance. Our premiums appropriately reflect the cost of care in Alaska and they need to be approved by the DOI for reasonability in order to be sold in Alaska.
Q: How is Premera investing in upstream intervention for the broader population in AK? Be specific!
A: Premera is investing in programs that introduce care coordination upstream. Specifically, Premera works closely with Alaska Innovative Medicine to give treating physicians the data they need to have a 360 degree view of the their patients. We also perform transportation assistance and insurance advocacy when needed.
Q: Workers compensation is one of the largest company expenses. Can you please expand on the effect of high healthcare costs on workers compensation insurance specifically and what can be done to lower these premiums.
A: Premera is not involved in the Alaska Workers Compensation program so we are not in a position to comment on efforts to reduce Workers Compensation premium levels.
Q: If the price for a procedure costs X amount for someone without insurance, why is the healthcare industry allowed to charge XXX amount for the same procedure to the people with insurance?
A: Premera negotiates fair and reasonable reimbursement rates for various medical procedures with providers that choose to contract with us. We are not involved with determining what providers bill their patients for either insured or uninsured patients.
Q: Do you have any insights on how to incentivize more doctors/providers to relocate to the state? Ie to increase supply and competition to help decrease cost?
A: One way is to make the system work better for providers than they could experience elsewhere. Premera is working to more tightly integrate with our contracted providers. We are constantly looking for ways to decrease administrative procedures and cost from the system to make it function more efficiently for our members and contracted providers.
Q: Healthcare providers often struggle to receive reimbursements from insurance providers. How do you see this fact influencing healthcare costs?
A: Premera takes pride in our provider servicing in terms of prompt payment and provider relations. Prompt provider payment is also required by Alaska regulation for all insurance providers.
Q: To what extent are behavioral health and nutrition services being covered as preventive services (ie pre-any diagnosis)?
A: Both behavioral health and nutrition services are generally covered services in Premera health policies. The coverage levels vary with the medical plan purchased.
Q: It seems that preventative care would more effectively impact health care. Does Premera back/pay for this type of care/and perspective, in conjunctive with medical solutions?
A: As required by the federal Affordable Care Act (ACA), Premera pays for preventative care at 100 percent, without requiring member cost sharing. We strongly believe in the benefits of our members regularly accessing their preventative care services.
Q: Does Premera put any emphasis on covering holistic or alternative treatments like acupuncture or massage?
A: Yes, Premera does generally cover alternative care services. The coverage levels vary with the medical plan purchased.
Q: You quote 7-year-old Milliman data. During that time, negotiated provider rates have declined significantly, premiums remain high in Alaska. Why?
A: The Milliman analysis referenced in the speech was completed in October 2016 using calendar year 2014 data. Premera’s individual premium rates decreased an average of 22.4 percent in 2018, while small group premium rates received no increase. Negotiated provider reimbursement rates have not decreased on average over the past 5 years.
Q: Many argue the fully insured carriers have an incentive to pay more on claims because it increases the amount you can make based on the MLR calculation. How do you respond to this?
A: The MLR calculation does not provide an incentive to pay more on claims. It is set up to ensure that 80-85% of total premium paid goes to pay claims, so claims paid above those ratios reduce the amount of premium available to cover non-claims expenses such as plan administration and taxes.
Q: Telemedicine has proven to improve access and reduce the cost of healthcare. Why won’t Premera reimburse for telemedicine services in Alaska? It does in other states. Other healthcare payers do reimburse for telemedicine in Alaska.
A: Premera does reimburse for telemedicine services.
Q: Is it time for a single payer system in US?
A: We believe the private health care financing and care system we have in the United States holds the best promise for excellent care at sustainable costs. However, we must continue to work on innovative approaches to cost and quality that will help lead us there. There is much to be done. But we are not alone in these struggles. Several single payer systems around the world are struggling with their own cost structure as their population ages and the cost of care increases.
Q: What are the obstacles to multi-state pooling for health care?
A: Multi-state pooling of health care certainly has its appeal in concept: larger pools can be more stable. However, the particular challenge that Alaska faces is in finding other states that would be willing to pool their costs with the most expensive state in the nation. Doing so would only increase their overall costs.
Q: What healthcare system does the #1 country on the health index you referenced? Single payer; government provided; health insurance?
A: France’s universal health care, largely government financed, is ranked the number one health system by the World Health Organization.
Q: What role do you think insurer market power plays in high insurance premiums?
A: Since becoming the sole remaining carrier in Alaska offering health insurance plans under the Affordable Care Act, we have lowered monthly premiums for customers purchasing insurance on the individual market by 22.4 percent. We believe that this “market power” has contributed to the stability of the individual market, because we can more accurately predict risk. In addition, increasing our network of doctors and hospitals allows us to negotiate lower fees that we then can pass along to our members.
Q: It seems like the business model for health care insurers is to deny first and let the patient fight for reimbursement. Why is that?
A: About 85 to 90 cents of every dollar we earn goes toward paying medical claims. We say yes far more often than we say no.
Q: In the last two years, Premera reimbursement rates to physicians have decreased up to 30% in some subspecialties. Have Premera Blue Cross Blue Shield premiums reduced in kind? If no, why not?
A: Health care is expensive in Alaska for many of the same reasons everything is more expensive. But that doesn’t tell the whole story. Put simply, health care is more expensive in Alaska because prices for medical procedures and drugs are significantly higher than in the lower 48 and rising much faster than prices for other goods and services. While the consumer price index is about 6 percent higher in Alaska than in the lower 48, payments to doctors and hospitals in Alaska are 76 percent higher than nationwide averages; and, after accounting for cost of living, the payments are increasing twice as fast as inflation.
Q: Why does Premera continue to tout grants issued to the community when it received a windfall under the tax reform act and is required to do so as a non profit?
A: We recently announced a $1 million grant to Covenant House Alaska to provide housing and behavioral health services for homeless youth. The funding was part of a one-time only refund Premera received earlier this year due to changes in the U.S. corporate tax system. We were free to spend this money as we wished. We are choosing to invest the bulk of our refund into efforts to stabilize the individual market, increase access to health care in rural areas and address behavioral health issues particularly as they relate to homelessness. We see homelessness as a health care issue. Putting a roof over someone’s head increases their life expectancy dramatically, while lowering the total cost of care in the community.
Q: What is being done to make health care more efficient and affordable?
A: There are a number of ways both big and small we are working to make health care more efficient and affordable. These include launching digital tools to make finding a doctor and scheduling appointments easier, our support of the Alaska health information network to give doctors a more holistic view into a patient’s health and our work to help doctors and their patients find lower-cost medications. We also are working diligently to reduce our own administrative costs. Finally, we are working closely with the recently created coalition called ‘Alaskans for Sustainable Healthcare Costs. This is a group of employers working to help find solutions to rising costs, which in turn, affect both employee benefits expenses and individual premiums.
Q: What is Premera’s financial motivation to reduce healthcare cost in Alaska?
A: By reducing health care costs in Alaska, more Alaskans could afford health insurance, which, in turn, would increase our membership.
Q: Is Premera open to new tech that empowers its customers? Ex, fitmood is an application developed to educate and assess trends in a patient’s declining health. This data can help to identify (on a full spectrum) issues that directly impact their physical and mental health needs
A: Yes, we are always open to new technology that empowers customers to help them make better health care decisions for themselves and their families. For example, earlier this year, we launched a new digital platform called Premera Pulse that enables us to easily curate networks of high-value providers, simplifying our members’ search and selection. Premera Pulse also sends personalized text messages notifying our members at important moments in their health care journey.
Q: Can/should we impose controls on doctor/hospital fees in AK?
A: As a health payer, we work with all stakeholders on behalf of our customers and members to help relieve the burden of the high cost of care. While we are not in a position to impose cost controls on Alaska providers, as a long-standing leader in the Alaska healthcare community, we will continue to help lead the development and implementation of solutions that make healthcare more affordable for our customers and the community at large.