SUMMARY REPORT: MEETING ON TRANSPARENCY IN HEALTHCARE COSTS AND QUALITY CONVENED BY THE HEALTH SERVICE SYSTEM OF THE CITY AND COUNTY OF SAN FRANCISCO OCTOBER 1, 2015 Background The Board of Supervisors Resolution 271-14 (file number 140788) recommended that the Health Service System (HSS) work towards the achievement of a more transparent health system. One of the specific recommendations of this resolution was that the HSS convene a transparency advisory group to outline a framework for a transparent healthcare system in San Francisco and potentially across the Bay Area. In response to the Board of Supervisors’ recommendations, the HSS convened a meeting of experts on healthcare transparency on October 1, 2015. In preparation for the meeting, the HSS distributed a set of background materials concerning transparency in general, and the specific features of the HSS’s context in order to provide a common frame of reference (all of these documents are included as appendices to this report). “Transparency” in healthcare has multiple dimensions, or components. Thus, one of the objectives of the meeting was to establish definitions of transparency in healthcare costs and quality. The HSS also proposed several possible courses of action for the achievement of greater transparency at the local level and at the state level, and sought panelists’ input on these strategies. Going into the meeting, the HSS had the following potential courses of action in mind (as articulated in the Background and Meeting Objectives document): 1. Introduce legislation similar to California government code § 22854.5 which allows CalPERS to obtain data on cost, utilization, actual claim payments, and contract allowance amounts from the plans they contract with, and deems this data confidential trade secret information, exempt from the California Public Records Act, and protected by HIPAA and CMIA. 2. Keep moving forward with the HSS all-payer claims database (APCD). 3. Continue to put pressure on Sutter Health to be transparent in their contracting until state laws which compel them to do so are passed. The discussion of these options, along with related matters and possibilities, will be summarized in this report. Meeting participants and attendees Meeting participants included Andy Bindman of UCSF; Andréa Caballero of Catalyst for Payment Reform; Marina Coleridge of HSS; Catherine Dodd of HSS; Mark Farrell of the San Francisco Board of Supervisors; Jaime King of UC Hastings; Chris Miles of Aon Hewitt; Marie Murphy of HSS; Erik Rapoport of the CCSF Attorney’s Office; Paige Sipes-Metzler of Aon Hewitt; Kristof Stremikis of the Pacific Business Group on Health. Attendees included Larry Bradshaw of SEIU 1021; Rebecca Rhine of the Municipal Executives Association; Bob Muscat of Local 21; Michael Seville of Local 21; Pamela Levin of HSS; Amara Malik of 1 HSS; Amy Willis of SEIU Local 1021; Randy Scott of the Health Service Board; Wilfredo Lim of the Health Service Board; Karen Breslin of the Health Service Board; Catherine Stefani of Supervisor Mark Farrell’s office. Structure of meeting After welcoming and introductory remarks from HSS Director Catherine Dodd and Supervisor Mark Farrell, Andréa Caballero gave an overview presentation of price transparency (see Appendix B). Then Chris Miles presented examples of price and quality transparency and what it takes to get there, along with hurdles to transparency in California and possible approaches to those hurdles (see Appendix C). Marina Coleridge then reported on the status of the HSS APCD (see Appendix D), and Catherine Dodd summarized the HSS key relationships (see Appendix F). Following these presentations, the general discussion among participants commenced. The meeting lasted three hours. Preface: making sense out of “transparency,” and other general points Theoretically, the concept of transparency in healthcare costs and quality is straightforward. Within a “transparent” healthcare environment, data on the costs of healthcare services and the quality of healthcare services (measured in terms of outcomes, such as readmission rates, average length of hospital stays, patient experience metrics, etc.) are readily available, and purchasers of health insurance and individual consumers of health insurance can make informed decisions based on this information. In practice, data on healthcare costs and quality are difficult to obtain for a host of reasons, making the achievement of transparency in healthcare very challenging. This is problematic because in the absence of transparency, it is difficult to contain the cost of healthcare, which threatens the ability of the HSS to offer comprehensive employee benefits – and thus, threatens the ability of the City and County of San Francisco to attract and retain high caliber employees. Several points about the relationship between transparency and cost containment are important. First, although transparency and cost containment are sometimes closely related, and/or have a reciprocal relationship, they are distinct and may not always occur together. In some instances, cost containment may be possible in the absence of greater transparency, and thus may be very worthy of pursuit in the short term even if greater transparency is not achieved at the same pace. On the other hand, it may also be important to pursue measures that promote heightened transparency, even if they do not provide an immediate payoff in terms of cost containment. In addition to demonstrating the complexity inherent to these issues, the meeting made clear that carefully considering the broader causes and consequences of strategies designed to promote or achieve transparency is essential. Some strategies that might seem like attractive options may hold the potential for unintended consequences to arise later on – including, for example, obtaining trade secret protection for health plans’ data in a manner similar to CalPERS (this particular point will be discussed in greater detail later in the report). Summary of content of discussion After the opening presentations, the discussion did not follow a strictly prescribed course, and the conversation covered an array of topics and sub-topics which were addressed iteratively. The following summary distills the key points from these discussions without attempting to situate them within a cohesive, overarching narrative arc. 2 The HSS APCD The HSS APCD was created as part of HSS’s overall effort to contain costs and keep our healthcare system sustainable. Hosted by Truven Health Analytics, the APCD went live in October 2015. The HSS APCD will help HSS compare cost and utilization across its health plans and will inform the wellness program’s strategies. HSS hopes its wellness program initiatives can be truly preventative, by preventing costly conditions from developing in the first place, or from becoming as costly as they might otherwise. One of the challenges associated with the HSS APCD is obtaining the data that is needed to populate it. (This is of course symptomatic of transparency challenges everywhere. Legislation does not compel health plans to share their data, and if providers have substantial market power, there is little incentive for them to share price information.) It has been difficult for HSS to obtain the data that it has from the plans, and some of what HSS has is incomplete or not populated. HSS only get summary claim announcements from Sutter; it receives a total dollar amount per quarter and then a separate statement of utilization data. Thus HSS is not able to draw links between particular services and particular costs. Sutter is the worst of the HSS plans in terms of detail, but the data received from our other plans also leaves much to be desired. Proxy pricing is a possible workaround for these data availability challenges, but developing a system of proxy pricing would require additional funding. Although Truven provides the advantage of a market scan database which allows for benchmarking price data, it does not offer a Northern California-specific benchmark. This is important because the healthcare market in Northern California is relatively unique; comparing HSS data to Northern California data is far more meaningful than comparing it to other benchmarks, such as the Southern California market (which Truven does offer). Although developing a Northern California-specific benchmark is not impossible, it would require additional funding. It is also important to keep in mind that while these sorts of benchmarks could help HSS identify dollar thresholds to inform reference pricing strategies, price information alone may not necessarily enable HSS to negotiate better prices with its health plans. During the meeting, participants made a number of recommendations concerning the HSS APCD. Defining the objectives of the APCD and basing short-term strategies for the use of the APCD on a well- thought-out vision of the APCD’s long-term purposes and impact was considered important. The HSS was urged to understand the angles of the various stakeholders, and to make clear to stakeholders what’s in it for them to engage with (e.g., submit data to) the APCD. Knowing the data really well and ensuring that it is both correct and used appropriately was also emphasized. This includes packaging the data appropriately for distinct groups of stakeholders, and ensuring anti-trust oversight as there are legitimate concerns to be had about the availability of price information leading to collusion among providers. To this effect, it was also suggested