Five Questions With: Peter Andruszkiewicz

BLUE CROSS President and CEO Peter Andruszkiewicz sees reforming the health care system as a challenge to all the stakeholders, from providers to payers to patients. / COURTESY BLUE CROSS & BLUE SHIELD OF RHODE ISLAND
BLUE CROSS President and CEO Peter Andruszkiewicz sees reforming the health care system as a challenge to all the stakeholders, from providers to payers to patients. / COURTESY BLUE CROSS & BLUE SHIELD OF RHODE ISLAND

As president and CEO of Blue Cross & Blue Shield of Rhode Island, the state’s largest health insurer, Peter Andruszkiewicz is aware that the company often serves as the lightning rod for all the things that are “wrong” with the current health care delivery system.
In the two years since he took the helm in 2011, he has been a strong advocate for health care reform and payment reform. Blue Cross has become a major investor in primary care and the patient-centered medical home model, and created innovative, shared savings contracts with hospitals and physicians’ groups alike. He freely admits there is no silver bullet to correct a fragmented system with perverse incentives.
He spoke with Providence Business News about the challenges facing Rhode Island as it moves to implement health care reform.

PBN: How does Blue Cross view the launch of the R.I. Health Benefits Exchange?
ANDRUSZKIEWICZ:
That’s a wide open question. I love that. Because you given me that kind of latitude, I’m going to take it back, one step further,
We need health care reform in Rhode Island – and in the United States. Health care reform, in my mind, can occur only when two things happen, two big structural changes. The mess that we have in health care today, we have created a system that is not really a system at all in Rhode Island.
One is the lack of universal coverage; the second is payment dysfunction, with perverse incentives and payments to providers.
The Accountable Care Act – through Medicaid expansion, through federal subsidies, through the elimination of medical underwriting as we know it now – guarantees universal coverage.
The implementation of the exchange creates a simplified way for consumers and for health plans to bridge from B-to-B business to a B-to-C business.
The exchange if implemented well, and if it achieves its goals, gives me a lot of comfort that we’re addressing that one of the fundamental structural problem with health care, universal coverage.

PBN: And the second fundamental structural problem, payment reform?
ANDRUSZKIEWICZ:
The Affordable Care Act tries to address it as well, but it’s not as clear a line to the system solution around payment reform.
The whole notion of the accountable care organization is to change the incentives for providers. We need to. The incentives in the system today are for more business and more fragmentation. That’s where all the incentives are in the system today.
Everything that we’re doing at Blue Cross is focused around collaborating with providers, collaborating with government folks, and with our customers to change those incentives to the thing that we all want – community population health, higher levels of care and quality, and prevention programs.

We want to activate consumers who are well today and to keep them well. If they have chronic diseases, we want to make sure they get the treatment that they need, and that there’s not a financial barrier to do that.
So, the exchange really gets at the universal coverage piece very nicely, I think.
Working along with government and providers, the change in provider incentives is what our work is really about.

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PBN: What kinds of new products are you planning to introduce as part of the new health insurance marketplace?
ANDRUSZKIEWICZ:
Our new SelectRI plan, which is very similar to the Coastal Medical shared savings contract, was introduced a few months ago, and it is really gaining traction. Some 35 to 40 accounts have chosen it – both small businesses and a couple of large groups.
What you’ll see with these products is that not all customers are choosing it as their total replacement, but they are putting it alongside the plan that they already have.

So, businesses are giving their employees a choice, which is something new in Rhode Island.
You can still keep the old plan, but it’s going to cost more, because it costs us a lot more, too.
Or, you can take the new plan and your contribution will be lower.
PBN: Is this sort of weaning people off of preferred provider organization plans?
ANDRUSZKIEWICZ:
I would prefer to look at as making people better educated, and better health care consumers, when there is skin in the game for them as well.
There’s been skin in the game for the employer, and employers are saying, “I can’t make it any more.”
Rhode Islanders have had very rich benefits, and with these very rich benefits plans, [and] it has insulated consumers in Rhode Islanders from the costs.
If people are insulated from the real cost of anything, from any service, then they use more of it, that’s a basic economic principle. If it’s free, or if you think it’s free, you’ll use more of it.
We’re actively working with both of the two big systems, Lifespan and Care New England, on advanced contracting models. We will turn those efforts into products similar to SelectRI. These products will be sold both on and off the exchange.
PBN: According to Dr. G. Alan Kurose, president and CEO of Coastal Medical, his analysis of costs has shown that roughly 20 percent of his medical costs are for inpatient hospital services, and 80 percent are from other sources. Of that, 20 percent of his costs are from pharmacy. What kinds of payment reform are needed in terms of drugs?
ANDRUSZKIEWICZ:
Pharmacy costs are about 17 percent of our total spend. That’s very high, in my experience.
Those costs are escalating, – especially when you consider the injectible and infusion drugs, such as cancer drugs. These drugs are escalating specialty pharmacy rates of 20 to 22 percent a year. These specialty drugs are about a third of our overall spend a year – that’s $350 million a year on pharmacy in total.

Drugs will continue to be an area of focus. We have to learn how to do the right thing with drugs, so that they are imbedded as part of the care a patient receives through their primary care doctor.
One of the biggest problems with the drugs is the number of drugs people are taking prescribed by the numerous providers they are seeing. This is especially true with the senior population, who sometimes see six or eight physicians, all of them prescribing drugs, and often times no one is really taking stock of what they’re taking.
Pharmacy integration is at least as important as pricing.
And, drug therapies can cost tens of thousands of dollars a month. Payment reform for drug costs is a big part of the equation.
Blue Cross is connected at the hip with Coastal in terms of incentives. We’re trying to achieve these outcomes together. There’s no magic, there’s no silver bullet, there’s not one thing – it’s not pharmacy, it’s not behavioral health, it’s all of these things, the perverse incentives.
It’s the system, and it’s not a system at all. It doesn’t work.
We are all accountable. You can put the health insurance companies at the head of the list, if you want. But we all are responsible for creating the system – providers, hospitals, government and employers. We all have a piece of this. And we all need to work together to fix it.

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