A word with Drew Hobby, Blue Cross of Idaho, senior vice president, healthcare economics

Long-time health care executive Drew Hobby has ambitious goals. He’s tasked with one of Blue Cross of Idaho’s top strategic priorities: make health care more affordable for clients and members.

His efforts are showing results. In 2019, Blue Cross of Idaho won the IBM Watson Health Advantage Award for use of data analytics to improve outcomes and reduce costs.

Hobby joined Blue Cross of Idaho in April 2017 as the vice president of provider partner and payment innovation. In this role, he led Blue Cross provider network functions including efforts to shift from a fee-for-service provider payment model to value-based payments.

After demonstrating success, he was promoted to senior vice president of healthcare economics, where he directs the healthcare economics division focusing on identifying, implementing and monitoring health care affordability initiatives.

Hobby came to Blue Cross of Idaho from WellCare Health Plans, Inc., in Tampa, Florida. He served the company in numerous roles, most recently as vice president of Medicaid network management.

Hobby received his bachelor of science degree in business process management from Indiana University.

He recently chatted with the Idaho Business Review about his work and what it means for Blue Cross of Idaho’s various stakeholders.

What does a typical day entail for you?

When I took the role at Blue Cross of Idaho, I was given one task: Make health care more affordable. That sounds like an impossible job, but I’m lucky to work in a state with providers, employers and regulators who share our passion for affordability and high-quality care.

Blue Cross of Idaho processes more than half of its member claims through value-based arrangements. In layman’s terms, what does this mean and how is this relevant to your customers?

Fee-for-service, the old way of paying for health care, is all about volume. A primary care physician sees as many patients as he/she can in a day and gets paid for each visit. On paper, the fee-for-service model makes sense: see a patient and get reimbursed for your time. But we believe that fee-for-service lacks an appropriate incentive for the provider to deliver higher quality care in a cost-effective manner.

In 2014, Blue Cross of Idaho began to transition our provider contracts from the old fee-for-service to a cutting-edge value-based system. In fact, we were the first health insurer in the state to do so.

We want a primary care physician to invest in his/her patients and be rewarded for delivering high-quality care in a cost-effective manner. Today, we believe we are leading the nation using proven data to help providers and patients get the best care possible at a lower rate. We arm Idaho’s providers with data about the complexity of care – imaging, referrals, physical therapy, surgery and anesthesia.

So, if you injure your knee, your family doctor has access to the range of pricing for an MRI. This could span from $500 to $1,500 in the same geographic area with no difference in image quality. Similarly, if you need surgery, an ACL (knee) repair can cost from $12,000 to $35,000 in the Treasure Valley region. Blue Cross of Idaho’s goal is to encourage physicians to recommend services and facilities that provide the best health outcomes at a lower cost.

That’s the core element of value-based care: rewarding physicians for delivering high-quality care at a lower cost.

How does what you’re doing on this front manifest itself in terms of more affordable health care for your employer members?

In our value-based care system, providers, patients and insurers work together to coordinate care with other providers; reduce unnecessary tests or procedures; use evidence-based, lower-cost care; and know cost trends and best practices.

Blue Cross of Idaho began its value-based payment model in 2014, and we now have over 3,100 providers and 635 clinics participating in the program. Further, we process over 60% of our member claims through value-based arrangements.

Our data shows that there was a 15% reduction in surgery claims, and emergency room use was 41% lower for our members in a value-based system.

Because of sharing our cost and quality data with primary care and specialist physicians, we’ve seen a 3% decline in orthopedic costs.

Affordability is one of those buzzwords everyone is talking about. Do we need a national definition, similar to what you described around quality measures?

I’m hesitant to ask Congress to agree upon a definition of “affordability.” Instead, we need Congress to partner with the private health care industry to find solutions to drive costs down and improve quality. A 2018 study from the Journal of the American Medical Association found Americans spend twice as much as 10 high-income countries on medical care, but the health outcomes were the worst among the top 10 developed nations across the globe.

All of us – payers, providers and members of Congress – need to be willing to address all components of health care to lower premiums and cost-share. We also need to find ways to move people to the highest quality care at the lowest cost setting, address rising hospital costs, end the increase of surprise bills and halt the skyrocketing cost of pharmaceutical drugs.

Blue Cross of Idaho received the 2019 IBM Watson Health Advantage Award for its use of data analytics to improve outcomes and lower costs in episodes of care. What exactly did the organization do to achieve this honor? Are you delivering this information to your providers?

We developed a three-tiered commercial fee schedule utilizing IBM Health Insights. The software reviews the total cost of care for a medical episode – say a torn ACL ligament – then identifies the physician and/or clinic on performance. We then compare physicians to physicians or clinics to clinics to evaluate efficiencies across Idaho.

Next, we can provide our physicians with actionable data so they know the lower cost, higher quality specialists, facilities or even drug choices outside of their offices. It’s an advanced health care technology that improves performances throughout the entire spectrum of care.

IBM Watson is helping us look at data differently than we did before. That software, plus predictive analytic and continuous measurement capabilities, allows us to drive smarter decisions through better outcomes – and save our large and small groups money.

Here’s an example: One of our large employer groups wants to cut employee tobacco use in half. We review the company’s data and use it in predictive modeling and to forecast different solutions. Next, we present the best solution to the employer group and what it could mean for its employees and the financial bottom line. We implement the solution and then, after a set period of time, we review the real data and find out where we performed well or where our solution may need adjustment.

Our goal is to use data in a way that allows Blue Cross of Idaho to focus on the right areas and where we can move the needle.

You recently announced a new three-year agreement with IngenioRx, a new pharmacy benefit manager. Can you share more about the agreement and what you found attractive about IngenioRx?

About every three years, we look at pharmacy benefit managers to ensure we’re keeping up with the latest programs and offering the most affordable rate for prescription drugs to our members. My team did a comprehensive evaluation of nearly 10 possible PBMs on the market today, and IngenioRx was the best solution for our needs.

It is critical to our mission to be proactive and innovative in the market, along with offering an affordable, sustainable prescription drug formulary that is easy for our members to understand. Further, IngenioRx offered extra benefits we found would work for our members, such as significantly reduced costs.

Starting Jan. 1, 2020, IngenioRx will be the exclusive provider of pharmacy benefits on behalf of our commercial membership.

There’s a lot of movement in Washington, D.C., right now on surprise billing. What is Blue Cross of Idaho doing to address this issue?

Surprise billing is an inexcusable practice by providers, and Blue Cross of Idaho stands by our members if they receive an excessive bill from an out-of-network provider. Surprise billing is a revenue maximization strategy leveraged by certain types of providers that is executed on the backs of Idahoans. It is time to keep the patient held harmless.

Blue Cross of Idaho has been working with federal and state legislators, the Department of Insurance, along with updating our provider contracts to address surprise billing. We support language in federal and state legislation that uses a market-based approach to compensate non-contracting providers. Local benchmarks ensure providers are paid an adequate, reasonable rate. Further, it creates certainty for providers in rural parts of Idaho.