Before the pandemic, North Carolina State Health Plan, administered by Blue Cross Blue Shield North Carolina, grabbed headlines when it shifted from a commercial-based payment model to a reference-based government pricing model that reimburses providers based on a percentage above what Medicare pays.
Matthew Rish, senior director of finance, planning and analytics for NC State Health Plan, joined the "Becker's Healthcare Podcast" to discuss the strategic shift, bending the healthcare cost curve and what investments the payer is prioritizing over the next two years.
Note: Responses were lightly edited for length and clarity.
Question: What issues are you spending most of your time on today?
Matthew Rish: There's two main fronts where I spend most of my time: funding strategy and alternative payment models/cost containment for the payment of medical and pharmacy services.
On the funding strategy side, anybody that's paying attention knows that healthcare costs have risen for years, and as a publicly-funded plan, the funding levels that our health plan receives is not always on par with rising costs. Over the last six years or so, our plan saw an average funding increase of approximately 4 percent a year from the North Carolina General Assembly. However, blended trends for medical and pharmacy have been in the region of 7 percent, so obviously the math doesn't really work within those parameters and projections are showing significant and mounting operating losses over the next five years if not addressed.
On the alternative payment models/cost-containment front, prior to COVID, the plan embarked on a journey to lower costs. As a publicly-funded plan, state treasurer Dale Folwell believed it was imperative that the plan be treated as a publicly-funded plan and not as a commercial payer. We created a reference-based pricing plan with Medicare as the reference to attempt to lower costs and the cost curve going forward. This received a lot of attention both locally and nationally, and the hospital community largely boycotted that effort. The intention was to combat the impacts of hospital pricing that is largely driven by the vast consolidation that's occurring in our state. We desired at the same time to also positively impact rural healthcare independent providers and hospitals and behavioral health. To that end, we did accomplish that goal. We now have a North Carolina state health plan network that is reimbursed on a Medicare reference-based pricing model.
There's more than 27,000 providers and a few hospitals in that network. Like I said, the large systems pretty much stayed away and they continue to see our members under the commercial network. As a result of all that, we're now in a position where we're trying to find alternative payment models that achieve the goals of reduced healthcare spend in order to protect the long-term solvency of the plan. It's a pretty important goal in addition to improving quality and outcomes for our members.
Q: What investments are you making to hit those goals and really turn those ideas into action?
MR: We're investing in provider and facility reimbursement models that are cost conscious and incentivize the right behaviors from both our members and the provider community. We're working through a pilot with a large multispecialty provider on a full risk or capitation model. This is exciting because it's a way to evaluate a model that is not a fee for service model? I think we all know that those fee-for-service models don't always align with providing care in the "right way" because it incentivizes volume over quality. I'd say we're in about the seventh inning of rolling that out, but I am very excited about what's coming with this pilot and certainly with this provider partner.
Q: How are you thinking about growth and investment over the next two years or so?
MR: It's really investing in models that will work long term. We've been investing in our data warehouse, which is a key component of my role. I oversee our data analytics program. Over the last several years, we've been working on this data warehouse, which is supported by a team of business intelligence developers. We're at an exciting point in that evolution where we're using that really powerful tool for the types of things that I've been talking about here today — the pilot program evaluating costs, evaluating funding and modeling results.
Our data analytics team is working alongside our financial and actuarial resources in a way that they hadn't before. Prior to the data warehouse, these activities would've been happening between vendors outside of our walls. Now, this is largely happening within our space. We are able to monitor vendor activity and involvement in a different way. Overall, it gives us more direct insight and ownership and is [another way] we're investing in those alternative payment models.
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