Hartford Business Journal

8 Hartford Business Journal • June 25, 2018 • www.HartfordBusiness.com Reporter's Notebook Matt Pilon | mpilon@HartfordBusiness.com Health Care/Bioscience, Startups & Entrepreneurs, Government/Law and Energy HEALTH INSURANCE Cigna's top doc: Value-based care best hope for lowering healthcare costs I nsurers and medical providers continue their slow, steady march toward a reimbursement system that financially rewards doctors for keeping people healthy rather than the traditional fee-for-service model. While "value-based" or "account- able" care is still a ways off from top- pling fee for service as the industry norm, the top medical doctor at Cigna says the Bloomfield health insurer's decade-long experience with such con- tracts (which it brands as "Collabora- tive Care") has shown promise, though there's still work to do. Cigna inked its first Collaborative Care deal in 2008 in Texas. A year later, it began testing the model in its home state with Middletown-based ProHealth Physicians. Today, Cigna says it has 10 such arrangements in Connecticut, with provider locations dotted across every part of the state, and between 250 and 500 contracts nationwide. During a recent appearance at a Con- necticut Partners for Health conference in Hartford, Cigna Chief Medical Of- ficer Dr. Alan Muney told a crowd that Collaborative Care is showing results. Cigna's annual medical-cost growth rate, across all types of contracts, has been hovering around 3 percent, he said. Nationally, employers have seen medical costs grow between 6 and 7 percent per year, according to PwC's Health Research Institute. While that's a big im- provement over the 8.9 to 11.9 percent growth rate observed between 2007 and 2011, Muney says it's still too high. "That is not a sustainable path," he said. "In a perfect world we don't only get to zero growth," but to declining medical costs. In Connecticut, Cigna says its Col- laborative Care contracts are produc- ing about $33 million in annual savings compared to its overall population of contracted doctors (that's about a 4 percent savings). Care quality is also 15 percent better than the national aver- age in such metrics as diabetes care and breast cancer screenings, he said. "We're starting to see those results, that's good," Muney said. "Scaling this, getting more patients in these rela- tionships, getting more doctors with these types of incentives, is really the way to go." But there are plenty of hurdles. For one, not every provider group is ready, Muney said, adding that Cigna must be selective when choosing new partners, otherwise results might be subpar, and its employer customers won't be happy. Second, there's the impact of indus- try consolidation. Muney said he goes to his cardi- ologist every few years for a checkup because his father died of heart disease at age 49. As someone with deep knowledge of the insurance industry, Muney always checks his bill. Each visit typically cost about $700. But on one of his more recent visits, Muney said the bill ended up being about $1,800. The reason? The physician group he visits — Muney didn't name it — had been acquired by a health system. "All of the sudden, the office be- comes an outpatient hospital facility," Muney said. Patients are having similar experi- ences "day in and day out," he added. Even still, he understands the mo- tives for consolidation. Inadequate Medicaid reimbursements are causing hospitals financial strain. And the recent repeal of Obamacare's individual health insurance mandate could start to send uncompensated care costs creeping upwards, after a decline, he said. "The pressure that delivery systems are under is pretty incredible," Muney said. "One of the only outlets is to cost shift onto the commercial insurance population." That population is Cigna's customer base, so the stakes remain high. VENTURE CAPITAL CI's 3Q investments rise The state's quasi-public venture capital arm, Connecticut Innovations, says its third-quarter equity investments rose 32 percent on higher deal volumes. CI says it invested $10.4 million during the three months ended March 31, up from $7.9 million in the third quarter of fiscal year 2017, and from $9.4 million last quarter. A total of 38 companies received funding, up from 28 a year ago. CI said its recent invest- ments also leveraged more capital from outside inves- tors. The deals it was involved in drew an additional $78.3 million in outside money, up from $56.5 million last year. The bulk of CI's recent invest- ments ($7.7 million) went to the biotech sector, while $2.7 million went to informa- tion-technology firms. "This was another strong quarter for investments in Connecticut companies," said David Wurzer, CI's executive vice president and chief investment officer. "We continue to find excellent opportunities for bioscience and technology companies, and our early stage involve- ment in these companies provides them with an op- portunity to grow." CI now has 150 companies in its VC portfolio, supporting about 1,627 jobs. Dr. Alan Muney, Cigna's chief medical officer, spoke about healthcare costs at a conference in Hartford earlier this month. David Wurzer, Executive Vice President and Chief Investment Officer, Connecticut Innovations HBJ PHOTO | MATT PILON HEALTH CARE Could uncompensated care costs rise? One financial pressure healthcare officials are worried about is the amount of money owed to hospitals by patients who are unable to pay or don't pay. The sum of "charity care" and "bad debt" (known as uncompen- sated care) totaled $205.4 million at Connecticut hospitals in 2016. The Affordable Care Act helped push down the national average of uncompensated care as a percentage of operating costs at hospitals, said Cigna Chief Medical Officer Dr. Alan Muney. But Congress' recent gutting of the ACA's penalties for not having health insurance could change that. "We can probably look forward to that going up," Muney said this month in Hartford. Below are Connecticut hospitals' combined uncompensated care costs since 2011. Source: CT DPH $0 $50 $100 $150 $200 $250 Uncomensated care (in millions of dollars) 2011 $212.3M 2013 $216.5M 2015 $200.2M 2012 $228.1M 2014 $236M 2016 $205.4M

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