if you sit across from a hospital ceo, i know what mien margins have to be -- i think there are is the risk of that happening. i don't know that we have any evident of it actually happening and how the insurers, once they have a little more experience with reference pricing and see how charnls, if they have their payment tied to charges, we'll have more evidence of whether there is that kind of cost shifting within a facilities procedures. i think it's while it can "happy-go-luck "happy-go-lucky "happy-go-luckhappe limit, it should not on the front end. >> yes, david. >> we get the same question. well, for the hips and knees, kind of looping back around.

as you saw in our numbers, we didn't actually see an increase in volume over the time and then in the're three procedures, i think we've seen a little bit of increase in colin os ko pi, but that isn't necessarily a bad thing. for a screening like that, it's probably a good thing. >> yes, ma'am. >> my name is lisa summers. i'm with century health care institute. my question is -- given cpr's work on maternity care payment reform. certainly, o b care is not entirely elective once you're pregnant, you have to deliver, but women certainly have months to shop for prenatal care and delivery services and we know there's huge variation in cost and quality and it's a very high frequency in occurrence. 4 million births per year. and if you have thoughts about

whether or not the lessons we've learned from the global payment in maternity care informs this discussion at all. >> we work with some very progressive employers. they sort of self-select to be that way. i don't know that maternity care will be maternity care services will be at that is probably down the road in terms of reference pricing. i think maternity care is much better suited for payment methodology because you have so many parts of the, you do have time to look around and shop, but you also have many providers in that system and then once you're in the facility delivering, there are other variables that could come into play, so i'm not sure we'll see

maternity care be a reference priceable. it may be, but i think it's more prominent for different kinds of payment reform like bundled or blended payment. >> the one comment i would make is that you're right, there is wide variation. we haven't looked at bundled or pricing, c section rates in hospitals, which in california, 22 to 50%, and the appearance or the fact that there is now a decreasing -- a fair number of women who were induced in the 37th week or just shortly after, between 37 and 39 weeks, which is now looked at as a non actually a contraindication

if there were no other indications. 39 plus. and the rate of these nonmedicate -- and enormously because a large number of those infants end up in the neo natal intensive care unit. reducing c sections and with reducing premature induction of labor where it's not indicated and admissions to the icu, so it can have a big impact on total cost. >> this is actually an area the private can learn because we have several state medicaids and we just did a, just ran a case study on south carolina's outcome birth initiatives where it's not a reference pricing

program, baugh nonplace of employment policy. commercial private sector could learn a lot to reduce those c-section rates and the early elective inductions, which are a major cost driver. >> international academy of social insurance. so, in addition to consumer education, are there a new set of challenges for implementing reference pricing for orthopedic and other health care services versus implementing it for pharmaceuticals and then quickly, my second question -- or in bringing down the quality. >> i think reference pricing is still so new it's hard to say it hasn't worked right. we're all kind of in that

version one kind of initiative where we're just trying certain things. we're trying different things and what other employers are doing. i think it's a little early still to tell where it's not working. in kroger's results, we've seen poisetive results on the cost side. the things on the pharmacy side or medical side where it's not working yet. but we're certainly watching things like interest rates on the pharmacy side because like you said before, we don't want people to forgo medication when they need it. butting right now, we haven't seen anything that's not working yet. >> at home or abroad, i think at home, it is abroad where reference pricing on drugs has

been quite common. i haven't read anything that would indicate there was a decrease in or that it didn't decrease costs and that it also decreased quality, which we want to improve quality. >> i don't know if anyone on the panel -- can answer that question. >> there are different challenges for implementing different types of reference pricing programs so it's obl when you're implementing a program for hip and knee replacement, which is far more complex than lab tests or imaging, there are lots of variables in there. the consumer education piece has to be tailored. i think a lot of it, it's around medical literacy and being able to articulate something in an

easy to understand why. whether it is your lab or a knee, hip replacement, but it's highly dependent on the type of service. >> i think the other thing, it's easier to know or ask about the cost of a prescription drug than to know about a cost of a medical service, so when you're going to the counter in a pharmacy, you can ask for different costs at level -- to even know where to go to get -- so the people can make better choices. >> couple of times in the last few minutes, we've talked about an elective versus nonelective health expenditures and we have a specific question asking if we have some sense of what share of health care spending is elective

as oppose d to trying to negotiate while you're in the ambulance on the way to the emergency room. >> i don't know the proportion of spending. >> i don't either. >> for such a large increase of spending, particularly in medicare, does that count as -- if you're taking a preventive drug or going through some sort of service to keep you from worsening in your diabetes that that would not necessarily -- could you apply that reference pricing to those kinds of things as well?

>> it's any script in that those four categories of drugs. the medical side with the high-tech imaging, we don't do target pricing for children although we're finding what's happening with our associates and their family members who are over the age of 18, they're starting to ask questions when their children need an imaging service, so that's good. we don't really call it elective. it's not an emergency -- >> david, do you have something to add on to that? several people are interested in reimbursement domestic tourism. medical tourism, yes.

let me read them off. if somebody had to travel to a distant hospital, expenses paid before travel, what kind of expensions are covered? such as wages for extra time off, child care, post procedure follow up visits. expenses for traveling companion. i think we may have heard a little bit about that. that's all on one -- care for follow up care for family after procedures preferred provider who's located far away from the patient's home. and finally, reimborsment for traveling expenses is good, but what about for conditions where travel is difficult and painful. where people who don't have a companion to travel with them. what are the conditions under which you're requiring people to pay for travel impacting the able thety and ability to get to the high quality care?

would you like to expand on your descriptions. >> sure. and to use one of the facilities and they don't have one in their community. we have a group of professionals, that's what they do. they help to coordinate the flights, the hotels, the meals, the companion traveling with them. all of that is taken care of so it's not taken out of the pocket of the associate. so it's billed as a claim. so all of that is taken care of for them. if someone can't travel, we have

accommodations for that. so, it isn't intended to be such a stiff penalty just because they can't travel, so we try that first and if they're willing to do that and if they can do that, trying to get them to another centers of excellence, a tooer two. i would say one of the challenges we -- was the post operative care, so moving someone back from the centers of excellence facility and getting them back into their local provider. for that care, so it's taken a lot of coordinate between the -- the surgeon and local provider

community. i think we got it all figured out, that's really where the challenge is. it's not getting them to the facility. the challenge is getting them back into the local provider community, but it's working and it seems to be something that -- >> david. >> anthem has a concierge service which provides all the travel arrangements, the -- if they have a condition that doesn't allow them, they would get a medical exception, which wouldn't force them to use the facility, so they could use something in the community if it was too far. and in california luckily, we have enough facilities that only happens in a very small number of facilities in northern california where we have this kind of issue.

>> this question goes in the other direction, in the examples provides today, we see large insurers pushing for procedures -- do you have any thoug thoughts on how this might work with just one or two providers and a small insurer network. is that what you find yourself addressing when you have somebody in eureka? >> right. so i mean that's the challenge, right, of having enough regi regionally located facilities and then having to have that travel companion. so, in terms of -- if there's only one facility, meeting or

not meeting. difficult to look at variation in a region like that. >> if you have only one or two providers, you can provide a procedure in a geographic area. really only one or two providers. this type of pricing doesn't necessarily have the same impact for those providers, and it won't have the same kind. if you think about it, then you can end up in some kind of antitrust issues where if you have two providers, another price. we get into a whole other area of complicated issues. so it's not likely these will

occur there. >> we have only a few minutes left and we ask you to not only spend those listening, but filling out the evaluation form if you would. we have another california centered question here. how about a market heavily penetrated by hmos, and the question wonders how the reference based prices for anthem's ppo compared with the prices in california hmos. the prices that they pay. >> well, the -- the hmo in california in general, it's

decreasing gradually and the ppo is increasing, but there's still a large number of hmo members. in most cases, as far as anthem goes, the hospital pricing is a contract between anthem and the hospital. so, the professional component is where the -- with the exception of about 15% of our network, which is a full risk of a global setting with a contract with the hospitals, so the answer in short is that the hmo is currently not part of this initiative. and the prices paid at those institutions are the prices that t the. >> and this is a -- thinks it's related. it might not be. why can't reference pricing be part of the carrier network

contracting negotiations, discounting up to the reference price. with was that a reasonable question in this context? >> i'm a physician at heart. in the negotiation rather than the negotiated price agreed upon by both parties. >> i guess that's right. as you establish a network that's willing to meet that price, can you leverage that from those outside that range and negotiate that as part of your new contract. >> i'm not going to venture too far into that other than to emphasize the fact there was that pressure on the

nonconfirming institutions with the initiative to actually bring the prices down, which happened without it being a direct goal, so it may well be that it could be effective. >> from affairs perspective, it's where we want it to go, right? so, we want to be able to bring the cost down of all of those services in a particular category. so, hopefully, target pricing or reference based pricing is eventually going to lead us there. it's just one of the initiatives trying to get us more aligned in a community. >> i think it's really important to understand that reference pricing is is ultimately a benefit strategy. it's not a payment strategy. so, while you are capping the payment, you could still pay for it on bundled payment or fee or service or in other methods, so reference pricing is a benefit design, so while you know, cal pers, i don't want to speak for

david here, but implemented reference pricing without having to renegotiate contracts and anthem didn't. price of $30,000,n hospitals moved cordingly. and then surely, i would benefit price. and hospitals moved accordinglye and surely in subsequent a contracting cycles, that becomeh parts of the conversation, you don't have to implement b referenceec pricing through a contract negotiation, although once it's etoccurred, it probab does become a part of it. >> right now, i'm with taft we' hartley fund. anyone who has a good 60

relationship with a carrier like anthem, they say, we'll give you a guaranteed discount of 60%, but it's based on the usual and customary, what i'm suggesting is we would have a lot more be manpower if our carriers weren'f just negotiating on my behalf or kroger's behalf, on their book p of business and telling some of these facilities, we will take a 60% discount but up to a a reference price as opposed to the usual and customary, which is more supply driven.somethin and so it's a really kind of oud of the box way to think, but it's something i think that everyone in the room could till benefit from, if they have, youg know, stronger negotiations, while we still have a chance before network negotiations go t away, because everyone in the country is going to have stion insurance. and a hospital won't take a discount any more.- >> that's a very improved some

formulation of your question from mine. ea >> the point i would make is that i -- that this whole area y of pricing has been changed as d result of the -- the shroud is being lifted. the bereave yous discussions that occurred on discount or abt design target price were ced discussions around the argument about percentages off. now the discussion is different and those high priced an institutions for my own personal experience in california are aware of the fact that their df prices are now out there, and at can be seen by the public and st it is a different discussion, te the extent that the end point ae you've described, i can't speakn to that. but i believe the nature of the discussion has changed, because of the fact that when the target prices are put out by these

institutions they could be e recognized as way out of range of averages and reasonableness. i think it's a positive. >> and by the way, one of the best illustrations of the impacs on the nonparticipating hospitals is in the chart. our and we've heard some discussion of this before, but jamie robinson. and we have our friends to thank for the readable one page chart. the hospitals that were not . participating in the calpers experiment. bob? >> bob grist, with all the

discretion that the pairs have e in setting reference pricing that you've disclosed in this p panel. and with the tendency of employers to cost shift in terms of employees, usually in greater deductibles or co payments. what are the protections for consumers from reference pricinn which sets a standard price and expects the consumer to pay anything over that reference he price? it seems like a very dangerous a precedent even ifti it's in they interest of the pair in the cint shortot run. you haven't given any indicatiok paat this isn a way of reducing

total health care costs, we don't know if the hospital is going to follow the procedure with regard to other pairs or whether they're going to shift u thoset costs on to other procedures and i'm not sure how comfortable we should feel aboul this particular short term strategy to help pairs reduce e certain costs. the pan tellself is telling one story and we don't have on the panel providers or consumers whs have been discriminated against because their unique needs did t not fill the -- you know, you ce sort of assumed that quality remains the same, but in fact that may not be the case, in most health care situations. >> i think it's about being an informed patient and it's hey h completely voluntary to choose e

where they get care. we don't tell them they have toy choose. the choice is theirs. they have an opportunity to be informed before they obtain a ct scan or mri or get a particular prescription. and to make a thchoice.r as to whether or not they wanted to stay under the target price e or they want to.ers the choice is abocompletely the. it's about us and helping them be informed consumers of health care. so they know whether or not ahd they're going to be paying more, if they chose to do so. >> it's a very good question, it would say to the issues of patient protection, there is the protection that if the member stays within the defined y

reference paced network, their share is fixed as to whatever o benefit structure they have wit. their employer. the only time they would be ens. subject to additional costs is if they went outside the network. t i don't think it's necessarily y bad in that sense.and the quality issue is relevant, t when you're talking about quality in general, there are ac few hundred organizations out de there when it am coulds to lot specific quality issues within these detailed procedures, there's a lot of quality metrict that need to -- hopefully will come out of registries, what we have at the moment is not completely adequate.av orgaerms of the overall success, i would just say that there arer a number of initiatives that have been put out there, and there are various organizationso that describe various oment ha

initiatives. very many of them have fail ed and this is one of the few that at the moment has had success. the success is well documented by any partial third party with the health economists at uc sucs berkeley. i think there's some validity to this study.ins to i think it's a success story. whether it can be replicated that remains to be seen it's a successful initiative. i'm biassed, of course, but i think it has done something to push the knowledge and the practice of health care delivery along. >> go t ahead, david. >> calpers is extremely sensitive, given who we represent. in fact in the jamie robinson

article includes an analysis of the out of pocket to the pairs. i didn't include it. o we did see the out of pocket went down to our members to oure members. and in general, if you think t about somethinerg like -- in th case, the deductible plays a big role in terms of how the out of pocket hits you. knowthing with the colonoscopies, the cataracts, b the co insurance still plays a t roll othere, and so the lower costs are going to benefit you out of pocket. in terms of total costs, that t was also included, looking at out of pocket plus the net pay and the loud costs, that went down dramatically as well. think for the hips and knees, that mab have been due to the deductible