Julie Brunner, Executive Director, Minnesota Council of Health Plans
The Civic Caucus
8301 Creekside Circle #920, Bloomington, MN 55437
July 27, 2012
Notes of the Discussion
Verne Johnson (chair), Dave Broden, Audrey Clay, Janis Clay, Pat Davies,
Rick Dornfeld, Diane Flynn, Paul Gilje (coordinator), Dwight Johnson,
Sallie Kemper, Ted Kolderie, Dan Loritz (vice chair), Tim McDonald, Eileen
Summary of discussion:
Julie Brunner, Executive Director, Minnesota
Council of Health Plans, describes her organization's view of state and
federal reforms now underway. In particular, she comments on the design of
Minnesota's health insurance exchange and the state's method for assessing
outcomes of care.
A. Introduction of interviewee
- Julie Brunner is the executive director of
the Minnesota Council of Health Plans, an association of Minnesota's
nonprofit health care companies that provide health insurance coverage to
more than four million people.
Before becoming the Council's executive director
in January 2003, Brunner served as the deputy commissioner of the
Minnesota Department of Healthwhere she managed the development of budget
initiatives, legislative proposals and general operations. Prior to that
position she was county administrator for St. Louis County and director of
child support enforcement for the Ramsey County Attorney's office. Her
experience also includes serving as assistant commissioner for the
Minnesota Department of Human Services and as a lawyer with the Office of
- The Minnesota Council of Health Plans has
seven members. Member companies include Blue Cross Blue Shield/Blue Plus
of Minnesota, HealthPartners, Medica, Metropolitan Health Plan,
PreferredOne, Sanford Health Plan and UCare. The Council focuses solely on
health plan payer systems, not health care provider systems. Two members,
HealthPartners and Sanford, "wear two hats," Brunner said, because they
are both payers and providers of health care services.
The Council does all its work among its
membership by committee. Their scope includes policy work on issues of
health care reform and data analysis, lobbying on issues of concern to
members, and interaction with state and federal regulators on members'
Brunner noted that Minnesota is the only state
in the union where HMO's are required to be nonprofit, Brunner said. As a
consequence, one well known for-profit insurance company, United Health
based in Minnetonka, cannot sell HMO products in the state.
Minnesota aligning with the federal Affordable
Care Act (ACA)
"To say the last two years have been ramping up
the treadmill speed is an understatement," Brunner told the group.
Many of the 2008 legislative reforms that were
supported by the health plans are reflected in the federal Affordable Care
Act (ACA), she said. There is a lot of Minnesota reflected in the ACA,
which made it easier for the state to ease into the first round of changes
that took place in September of 2010.
For example, the state had already adopted a law
requiring insurers to include children up to 25 years old, 3 years longer
than most, while the ACA set it at 26. Minnesota already had medical loss
ratio requirements in place for coverage by small employers and
individuals. The federal legislation's medical loss ratio restriction,
which requires a provider to spend a minimum 80 percent of revenue on
medical costs and not more than 20 percent for investment and
administration functions, added larger employers and moved Minnesota's
minimum to 80 percent
Given these previously adopted policies, the
reluctance of the Minnesota Legislature to take action in response to the
ACA, Brunner said, did not have a significantly negative effect upon its
Patients choose care based on cost and quality.
Brunner said that all major plans have published
information on health outcomes on their websites. The information on
health care quality is provided through MN Community Measurement website
and is supported by the health plans and by both the Minnesota Hospital
Association and the Minnesota Medical Association.
A participant in the discussion noted that while
information may be available on a website, patients are not held
accountable for their choices with most providers. An exception is
HealthPartners, where incentives are built into health plans to make those
providers that are better quality at lower cost more desirable - and there
is a consequence to the customers for their choices of higher cost
providers, in the form of higher co-pays.
Cost information is necessary as well as data on
outcomes, Brunner said. Both are necessary in order to adopt changes to
insurance resulting in payments based on relative cost and quality. She
added that payment reform has been underway in Minnesota, moving away from
strictly fee for service and toward efforts by payers to increase
incentives to providers within their networks to keep costs low while
improving quality. They give preferential status to those providers with
better quality outcomes at lower costs. This restructuring of health plan
incentives is often referred to as "value-based purchasing."
Innovations in payment reforms include "gain
sharing" (sharing savings realized by providers) and "capitation", which
involves providing a certain amount of money to a provider for the
treatment of a particular condition and allowing the provider to retain
whatever part of that sum is not spent.
"There is actually less fee-for-service than
what people realize," Brunner said. The system is going toward these
relationships where the contracts between the insurer and provider have
mechanisms that reward both improved quality and cost containment.
"The biggest fee-for-service system in the
country is Medicare, and it is also the most inflationary. Any national
strategy eventually has to bring Medicare into the mix," Brunner added. In
Minnesota's case, the state is seriously disadvantaged on Medicare
reimbursement rates. Nothing included in the ACA addressed this disparity.
Designing a health insurance exchange
By January 1, 2014 a Minnesota health exchange
must be operational; otherwise, the state defaults to the federal
government's health exchange model. Minnesota's insurance exchange could
well consider a "tiered" system of health plans, Brunner said. "Tiering"
is a method for health plans to create incentives for patients to choose
the more effective and efficient providers over those that are lower
quality and more costly, through varied levels, or tiers, of co-payments
or other means. The exchange will also be a portal for Medicaid
recipients, and will incorporate the rebuilding of the Medicaid
The state will need legislation to set up an
exchange, she said, and the administration's efforts are now underway. A
health exchange task force has convened under the authority of the
Commerce Commissioner, and work groups have been organized under the task
force to design the exchange's structure and components.
Some key aspects that need legislative authority
include an ongoing funding source and any desired changes to insurance
law. Insurers are not required to sell in the exchange; therefore, the
exchange needs to include incentives for insurers to participate. Options
for funding the exchange include fees on payer participation,
contributions by people who use the exchange, or a tax on the premiums of
products sold on the exchange. The last option, the tax, would require
Brunner said she believes the vision of the
people designing the exchange is to find ways to highlight and feature
those plans that offer better value to consumers. Many innovations
currently underway in the private market could be featured in the
Prevention could bring the greater savings.
Chronic diseases are not treatable by hospital
services, a participant observed, and the discussion of getting better
value for the care for sickness seems to be within the medical hospital
framework. It doesn't include a discussion of prevention of illness in the
No, it doesn't, Brunner agreed. The money
available for the State Health Improvement Program - a public health
effort - has shrunk from $40 million to $5 million. Those who are talking
about lowering health costs aren't always talking enough about prevention.
Overall quality of care is measured in Minnesota
by clinical outcomes, patient satisfaction, the use of technology such as
electronic medical records, and administrative costs.
A few years ago health plans, in collaboration
with the Minnesota Medical Association (MMA), launched
MN Community Measurement
(MNCM) to provide the
necessary performance measurement and public reporting of health care
quality data. Its aim is to gather the statewide data that will enable
providers to improve care and help patients to make better healthcare
While the measures are developed by groups of
physicians, some take issue. Some physicians don't want to be held
accountable for a patient who, for instance, continues to smoke as the
doctor attempts to treat his/her diabetes.
Knowledge of the price of health care is, of
course, necessary to the assessment of value. Could you imagine, a
participant asked, an issue of Consumer Reports on cars absent the price
data? While there will presumably be something about price in the
exchange, there is debate Brunner said, over the inclusion of "costs" and
"charges" - there are costs to the provider, and then there are charges to
the insurer. These figures could be the same or different, so the debate
continues over which to use.
Payment reform can add consistency to pricing.
For example for a hip replacement a "bucket" of the total cost of care is
determined not for a single procedure, but the full cost to resolve the
issue. Payers are asking providers to decrease that total cost of care
without decreasing quality.
"We have a very good base to build from for
assessment," Brunner said. The cornerstone of it is MNCM. "It's an
independent data base not controlled by government, or any one of the
stakeholder systems. That's the place to start."
The state contracts for many things, a
participant observed. If there's a great private effort underway why
doesn't the state just contract with them?
"That is absolutely a smart idea," Brunner
replied. "We believe if there is an independent, credible asset that
exists, the state shouldn't set up a competing institution."
Brunner's team has been somewhat frustrated in
that the development of the exchange has not been as open as they think it
should be. However, Brunner is optimistic. A parallel measurement system,
duplicating what already is up and functioning within the state, is
unnecessary and costly, she continued. She understands part of the
exchange task force work will focus on some linking to existing resources.
"We need to be really smart and strategic. That's in the Minnesota
tradition. The Affordable Care Act requires that there is information on
cost and quality, and we are already well positioned with a really strong
C. Conclusion -
"I've been working for 40 years, Brunner said in
closing. The past two years have been the most professionally challenging
for me with the passage of the ACA. But it's exciting," she added, "things
are changing and with some work the state can make important progress
toward improving both the cost and quality of the delivery of healthcare
throughout the state."
The chair thanked Brunner for the visit.
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. The Core participants
include persons of varying political persuasions, reflecting years of leadership in politics and
business. Click here
to see a short personal background of each.
Verne C. Johnson, chair; David Broden,
Paul Gilje, Jim Hetland, Marina Lyon,
Joe Mansky, John Mooty, Jim Olson,
and Wayne Popham