Calculating the return on investment of expensive drugs and surgeries can mean good news for patients. A recent conversation among decision makers at big insurance companies also showed that payers aren’t the heartless bureaucrats they are often made out to be.
Leaders from UnitedHealth Group, Blue Cross Blue Shield Minnesota and Aetna explained how they decide what treatments to cover and calculate the ROI of preventive care at the recent Medtech Investing conference in Minneapolis. The panel included Dr. Richard Migliori, chief of medical affairs for UnitedHealth Group; Jim Epple, former chief operating officer of Blue Cross Blue Shield Minnesota; and Dr. Edmund Pezalla, the national medical director of pharmacy policy and strategy at Aetna,
Early in the discussion, Migliori said that payers have moved beyond the cost of the device. Now administrators consider a treatment’s cost impact on the entire episode of care. When UnitedHealthcare calculated the annual cost of care for patients who need Gleevec, this analysis convinced the insurer to cover the drug.
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“What we found out is that one pill a day is $36,000 per year, but we spend $110,000 per year on these people on treatment, so the total cost of care went down,” he said. “Now we have four nurses in Chicago who spend all their time calling patients to make sure they are taking this drug.”
Pezalla said Aetna tends to be more generous in covering treatment for stroke patients.
“We decided to cover new treatments even though they don’t have a big ROI because they improve quality of life,” he said.
Pezalla said Aetna only pays for certain surgeries in certain centers where they do lots of the particular procedures.
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“We are doing this with transplants and oncology groups, now using predetermined protocols so they don’t have to go through preapprovals,” he said.
The group also discussed the acceptable timeline for ROI on wellness programs or preventive care.
Migliori used the example of laparoscopic surgery for gastric bypass. UnitedHealthcare did a long-term study and found that the breakeven point was about 36 months out.
“When you start using laparospic methodology versus not doing laparo at all, people who did not have the surgery had higher claims later on,” he said.
Pezalla said Aetna covers screenings and the HPV vaccine because it’s the right thing to do. He also predicted that accountable care organizations will create a more stable population for insurance companies in the long-term.
Epple said one of the most encouraging industry trends is the evolution to longer-term contracts.
“Moving to three-, four-, five-year contracts gets people out of negotiation mentality and into investment mode,” he said. “Let’s get to the point where we’re willing to invest in the long-term health of a population.”
Eppel predicted that some health systems will disappear and that the key to survival is reengineering the process of providing care to get to high-quality and low-cost results.
“The key is taking an episode of care and picking it apart,” he said, adding that hospitals will have to start standing up to doctors.
“Hospitals hear a lot of, ‘If you don’t get me this and you don’t get me that, I’ll leave,'” he said. “The brave and the bold who will survive will say, ‘No, we can’t do that.'”