Heathcare and Resource Intensity

Public purchasers are positioned to lead, having a hold on 33 percent of the insurance market

Diane Lund-Muzikant

The Lund Report

March 10, 2010 — As the largest purchaser of healthcare — next to Medicare – public purchasers are positioned to transform the delivery system under the leadership of Barney Speight.

Together, state employees, schoolteachers, Oregon Health Plan members and local government officials comprise 33 percent of the insured population in Oregon, according to a recent analysis.
“We can have a major footprint,” said Speight, director of healthcare purchasing for the Oregon Health Authority.
Initially, he intends to focus on the two largest purchasing pools in the state – the Public Employees’ Benefit Board, which has 126,437 members (state employees and their dependents) and the Oregon Educators Benefit Board with 142,966 members (school teachers and dependents) – by focusing on pay for performance, patient-centered medical homes, evidence-based care practices and new payment methodologies.
“Our goal is to impact the transformation of the delivery system, but not through any pool consolidation,” he said. “Consolidating pools is incredibly political and people worry about this. If local governments find these standards attractive and useful, then they can adopt them.” 
Transformation inevitably leads to bending the cost curve, and Speight is drawing on his expertise as a health insurance executive to engage the purchasing community. He intends to encourage hospitals, for example, to re-tailor their reimbursement system.
Instead of being paid for inpatient costs on a formula known as “discounts on billed charges,” he suggests that hospitals use a prospective payment system known as DRGs, which bundle charges. Such a payment system is widely used by Medicare and was once the mainstay by commercial insurers, particularly HMOs……….   
 ………………. Speight also wants to take a serious look at outpatient hospital costs, which have grown quickly with technology advances, giving providers the ability to treat people in a single day. Medicare has grouped such procedures by resource intensity and affixed a price, which could be used by public purchasers. “But not by paying at Medicare rates,” Speight insisted……………….

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