(Section 1) 2018 Annual Report — CEO Letter

2018
ANNUAL
REPORT

Keeping Members and Customers at the Center

Kim A. Keck
President and CEO, BCBSRI

Randy A. Wyrofsky
Board Chair, BCBSRI

Guided by our vision to passionately lead a state of health and well-being across Rhode Island, Blue Cross & Blue Shield of Rhode Island (BCBSRI) found new ways in 2018 to improve how our members and customers experience healthcare.

For the second consecutive year, we showed positive financial results. Even more meaningful to us, we remained the insurer of choice for more than 375,000 Rhode Islanders. There is nothing more valuable to our company than the trust our members and customers place in us. In both our annual and community reports, we share stories of how we continue to earn that trust.

In the area of controlling medical costs, strengthened relationships with providers made a difference. In 2018, the 40% of providers who participated in coordinated systems of care served more than 60% of BCBSRI members. All of those providers were paid in part based on patient outcomes rather than number of services rendered. That is one important milestone on the journey toward reaching the triple aim of the right care in the right setting at the right time. Along these same lines, homing in on decreasing unnecessary use of emergency services, our emergency department task force employed a multipronged approach to help members understand the best options for care, which we estimate avoided approximately $4.5 million in costs.

Even as we implemented more affordable solutions for our members and customers, we redoubled our efforts to increase access to high-quality care, most evidently in behavioral health. Through policy changes and the creation of new programs, we opened additional doors for Rhode Islanders of all ages seeking behavioral health services, including help for substance use disorders. Our leadership investment of $5 million over five years to the new Behavioral Health Fund at The Rhode Island Foundation will advance statewide innovations in this arena.

Innovation will also benefit our Medicare members as we partner with Oak Street Health®, a company making incredible strides in the area of coordinated care with services like transportation and events designed to battle the social isolation so many seniors in underserved neighborhoods face. Oak Street Health will open three primary care centers in 2019.

Thank you for your support—and your trust.

(Section 2) 2018 Annual Report — Accelerate

ACCELERATE

New ideas change how we think about care

BCBSRI listens and delivers on ways to improve the healthcare system

40⁺
Oak Street Health centers nationwide

40^%
fewer ER visits and hospital admissions with Oak Street Health*
*According to Oak Street Health

Bringing a new model of care to Rhode Island

BCBSRI raised the bar for healthcare by announcing a new collaboration with Oak Street Health. We are creating a model that works for older Rhode Island residents who have many health challenges and need to spend significantly more time with their doctors. The move is designed to provide Medicare members with access to high-quality, personalized care in a community setting. Overall, 9 out of 10 Oak Street Health patients say they would recommend it to a family member or friend. They will open two primary care centers in Providence and a third in Warwick in 2019. Our Medicare members can expect:

Appointments that last 20 minutes or more
A dedicated care team who takes the time to get to know them and their goals
Same-day or next-day appointments
Transportation to their Oak Street Health appointments
Telephone support 24/7
Community events, like health seminars and game nights to socialize with friends and neighbors

Oak Street Health care teams also help members understand their Medicare benefits, just as our Medicare Concierge Team does, and they host community activities like the ones at our three Your Blue Store locations.

Encouraging coordination across the state

Over the past several years, we have worked with Rhode Island’s major healthcare providers to establish “systems of care.” In these systems, primary care providers (PCPs) coordinate their patients’ care with specialists and hospitals. This type of coordinated care can show measurable improvements in results for members. We have achieved significant participation, with 40% of network providers in a system of care and 63% of members treated in a system of care.

In 2018, we reached a milestone. Every system of care in our network collaborated with us on a new payment model—one in which they share responsibility for the quality and cost of their patients’ healthcare. They are rewarded when they achieve good results for their patients while controlling costs. And they share the financial burden when they don’t meet those criteria. Few markets can claim the same level of participation with this type of payment model.

Sharing responsibility

Pie Chart

70% of systems of care (2017) | 100% of systems of care (2018)

See one way we’re spreading the word about PCPs.

Making access easier for behavioral health

Behavioral health and substance use disorder issues in Rhode Island are serious and complicated. In our work, we strive to remove financial and other barriers to seeking treatment. BCBSRI has developed programs designed to help members get the care they need, in a variety of settings, from homes to hospitals.

In collaboration with Bradley Hospital, BCBSRI is promoting alternatives to inpatient hospitalization for children and teens facing mental illness.

See how Mindful Teen helped one family

BCBSRI has changed policies to improve our members’ access to high-quality, affordable healthcare. Members now have copays that are consistent for behavioral health office visits and primary care office visits. We have removed a prior approval requirement, as well as reviews for continuing treatment, for in-network mental health or substance use disorder services.

We expanded our provider collaborations to improve urgent access to children’s mental healthcare. Now children and teens can access services with Child and Family Psychiatry, which has made additional appointments available each week. This seemingly simple change is critical in a state where so many children had trouble obtaining needed mental healthcare.

55^% of children 3-17 have trouble accessing mental healthcare*
*2018 Rhode Island Kids Count Factbook

BCBSRI made Narcan available to members with no prior authorization required. We also removed prior authorization and other barriers to medication-assisted treatment (MAT), an effective way to promote recovery from opioid use disorders. And we initiated a program with Roger Williams Medical Center that provides timely, reliable access to MAT.

In 2018, BCBSRI became the lead investor in the newly created Behavioral Health Fund at the Rhode Island Foundation, which will supplement the state’s investments in behavioral health, with a focus on prevention. BCBSRI committed to:

^$5 million

investing in Behavioral Health Fund over 5 years

BCBSRI served as exclusive production sponsor and premiered the TV broadcast of “The Fix: Examining Rhode Island’s Opioid Epidemic,” exploring the toll the opioid crisis has taken on Rhode Island.

Watch Video

Providing alternatives to emergency care

Emergency departments save lives. They usually aren’t necessary for problems like lower back pain (not associated with trauma), headaches, or sprains that could be managed in a primary care provider (PCP) office. So we created a task force to address avoidable emergency room visits, including efforts to help members choose the most appropriate place to receive care. As a result of this task force, we have learned, based on claims data, that 40% of ER visits could be managed in a provider’s office and that $90 million is spent annually in preventable ER visits.

The task force found opportunities to support members in their decisions about where to seek care, including articles in The Rhode Ahead member newsletter. BCBSRI case management teams and PCP offices launched campaigns to help frequent ER visitors find a PCP. In 2018, we estimate that BCBSRI’s task force efforts have resulted in:

^$4.5 million

in costs avoided in the Rhode Island healthcare system

We continue to explore opportunities to help members find the right care in the best setting. We provide several options for members to engage with care teams and case managers at BCBSRI and in doctor offices throughout Rhode Island:

Doctors Online telemedicine service*
Wellness apps and programs
Condition management programs
Health classes at Your Blue Store locations

Hear the full story in our Rhode to Health podcast

* Doctors Online is a telemedicine service provided by American Well^®, an independent company that administers Doctors Online on behalf of Blue Cross & Blue Shield of Rhode Island.

Listening to providers to CONTROL COSTS

BCBSRI continually explores innovative ways to achieve our goals of enhancing the patient experience, improving quality of care, and controlling costs. In 2018, we held our first-ever summit of local providers to hear their ideas, and the results were outstanding.

Healthcare providers from across the state submitted first-round application ideas in the spring. From that list, nine were accepted for presentation at the summit. All nine participated in the event, accompanied by colleagues from throughout the community. While all the ideas were worth further exploration, these three were chosen to move forward immediately:

Mobile Integrated Health Pilot

To reduce emergency department and hospital bed utilization by chronically ill patients, this program uses EMS providers to fill gaps in local healthcare infrastructure so patients can be safely treated at home and avoid hospital stays.

Dr. Bryan Choi, Brown Emergency Medicine

Geri RADE (Reducing Adverse Drug Events)

This pilot program aims to lower the incidence of adverse drug events among seniors. It combines education, individual provider feedback, and clinical decision support to reduce potentially inappropriate medication prescribing.

Dr. Elizabeth Goldberg, Brown Emergency Medicine

Spine Care: Moving from Disarray to Community Pathway

This program aims to improve the effectiveness and efficiency of spine care by engaging providers, patients, employer groups, and others. The approach emphasizes evidence-based decision-making, patient engagement, and process improvements.

Dr. Donald Murphy, Rhode Island Spine Center

Delivering pharmacy advice to all members

Many BCBSRI members have been getting advice from pharmacists that we located in their doctors’ offices. Now all members can get help from our expanded team of pharmacists on the phone and in person at Your Blue Store locations and community events. While members learn more about their medications and how to take them, our pharmacists help identify and close gaps in care. This Patient-Centered Pharmacy Program has helped produce better results for members, and we estimate it has prevented millions of dollars in unnecessary costs throughout the healthcare system.

^$37.5 million
saved since the program began in 2014*

See how a pharmacist helped this member

*Based on direct costs of reduced or avoided drug costs annualized and on indirect costs supported by an actuarial model estimating the cost of a medical intervention

Improving the patient experience

We launched several quality programs with our providers in 2018. Those efforts to improve the patient experience helped BCBSRI earn an “Excellent” rating from the National Committee for Quality Assurance (NCQA) for exceptional service and clinical quality. The accreditation status applies to our preferred provider organization (PPO) and point of service (POS) product lines.

4.55
PPO products in the Private Health Insurance Plan Ratings 2018-2019

113
PPO plans nationally with a score of 4.5 or above

examples of quality initiatives

Full-time on-site nurse case managers at each Your Blue Store location.
Continued investment in our value-based primary care provider quality incentive program. BCBSRI and providers work together to close gaps in care and meet quality measures.
Introduction of Patient I Wants^© program created by Help Me Health, LLC to introduce providers and their staff to innovative tactics for fostering and supporting a patient-centric culture change.

(Section 3) 2018 Annual Report — Innovate

INNOVATE

Customer preferences drive alternative solutions

Businesses and members benefit from forward-looking programs

Wellness Program

Helping business earn up to 8% back

BCBSRI introduced an innovative program designed to promote healthy behaviors among employees while also reducing costs for employers. We are the only insurer in the state offering Wellness Premium Rewards.

In this program, employers with fewer than 50 employees can earn as much as 8% back on their medical premiums. The more actively their workers participate in our well-being program, the higher the reward, and employees can earn as much as $200 annually.

Regional plan extends consumer focus

In 2018, BCBSRI expanded the fast-growing family of New England regional plans to incorporate two new aspects. First, employees who choose the newest plan, called Access Blue New England, can open a health savings account (HSA). This allows them to set aside money pre-tax for qualified medical expenses. That can save on taxes for both members and employers.

Second, employers can choose a new option that reduces out-of-pocket costs for members using certain preventive drugs, reducing the likelihood they will skip important medications. Employers can choose this option for the Access Blue New England and BlueSolutions plans.

Serving members close to home

Your Blue Store locations in East Providence, Lincoln, and Warwick continue to expand their offerings and the services they provide. As the only health plan with retail locations in Rhode Island, we take seriously our role in helping members stay healthy and make sense of their healthcare. Besides the popular fitness classes and seminars and face-to-face consultations with nurses and dietitians, members now can set up time with BCBSRI pharmacists to help them understand their medications.

51,472
total Your Blue Store visits

31.6% from 2017

15,426
fitness class attendance

113% from 2017

1,935
classes offered

from De-Stress with Pets to Zumba

Delivering results in wellness

Employers have long believed that wellness programs can lead to higher levels of employee satisfaction and productivity. Now the BCBSRI wellness program is seeing real results in helping to manage claims costs as well. In a three-year review of BCBSRI group customers, we saw a lower cost trend among employees who participate in one piece of our overall offering, the Virgin Pulse^® wellness platform.

Wellness participants vs non-participants*

^$71 lower per member per month (PMPM) costs

24^% lower PMPM

One group, Roger Williams University, showed even better results*:

10^% decrease in PMPM costs (Participants)

32^% increase in PMPM costs (Non-participants)

*3-year trend of participants (2015-2017) vs non-participants using the Virgin Pulse platform. The information provided above is based on an analysis of BCBSRI’s experience with its employer groups. It is not intended to represent or guarantee that any individual employer group will achieve the same or similar results.

Moving to the forefront of controlling costs

BCBSRI played a leadership role in the state's first-ever efforts to slow the growth of medical spending in Rhode Island. CEO Kim Keck served as co-chair of the Rhode Island Health Care Cost Trends Steering Committee, which led a rigorous process to establish Rhode Island’s first medical expenditure growth target. In December, members of the steering committee signed the "Compact to Reduce the Growth in Health Care Costs and State Health Care Spending in Rhode Island."

The compact positions Rhode Island at the forefront of a critical national issue, as only two other states have set medical spending goals. The 3.2% target will work to stem what has become an unsustainable rise in costs. Implementing this target now means we can more fully invest in future opportunities for the next generation of Rhode Islanders.

Supporting the Rhode Island economy

As a participating Anchor, we played an active role in Governor Raimondo’s SupplyRI initiative, which encourages Rhode Island businesses to use local vendors. At the SupplyRI Business to Business Connection, the BCBSRI strategic sourcing team conducted one-on-one matchmaking sessions with potential suppliers for upcoming opportunities. During the Relish Rhody event at Hope & Main, local farmers and food merchants learned about opportunities with BCBSRI and our cafeteria managers.

	2017	2018	Increase
Economic value to state	$300M	$329M	9.7%
RI suppliers used	300	370	23%
Spend with local suppliers	$34M	$37.3M	9.7%

Sending a message – 261,000 of them

In 2018, we ramped up our efforts to reach our members when and where they want to hear from us. Messages were sent via email and a text messaging service designed to be private and secure. Most messages are personalized and focused on decisions members could make about their health. Thousands of members took some action, and we estimate they helped avoid more than $1 million in the healthcare system, based on internal and external projections of per member cost avoidance.

261,259
messages sent

^$1,200,000
(approx.) estimated cost avoidance in the healthcare system

In mid-2018, we integrated email and text messaging into our nurse care management programs to help reach and communicate to members with complex medical conditions. We sent 5,321 messages, and through members’ engagement managed to reach approximately $180,000 in cost avoidance in the healthcare system.

(Section 4) 2018 Annual Report — Enable

ENABLE

Enhanced services boost options for members

BCBSRI uses digital tools to reach more Rhode Islanders

Providing new ways to see a doctor

To expand access to high-quality care, we launched the Doctors Online telemedicine service. BCBSRI members can see a doctor—365 days a year, 7 days a week—on their phones or computers. Doctors and nurse practitioners are board-certified professionals, and the online experience—via mobile, tablet, or desktop computer—is designed to be private and secure. Doctors Online is an option for common, non-emergency health issues when a doctor’s office is not accessible.

"It's so easy. I downloaded the app on my phone. I added my medical history and my Blue Cross information once, then it’s ready whenever I need it.

—Jennifer DeMello, BCBSRI member

Making information easier to find

The new BCBSRI website delivers more than a clean, easy-to-read design. It also serves up much more information for members, providers, and employers without the need to log into their online accounts. It delivers that information faster and more reliably than ever before on any device, computer, tablet, or phone.

60^%
faster page loads

9.38 seconds → 3.81 seconds

70^%
increase

in page views

Promoting safe, affirming care

In a significant expansion of our efforts to promote access to healthcare, we certified Lifespan Physician Group, Inc., Psychiatry & Behavioral Health Services as a BCBSRI LGBTQ Safe Zone provider. The Safe Zone certification identifies healthcare practices that provide safe, affirming, and inclusive care to the LGBTQ community. This provider group joins more than a dozen other practices statewide designated as BCBSRI LGBTQ Safe Zone certified providers.

The practice has been recognized for its inclusive Adult Gender and Sexuality Behavioral Health Program, which focuses specifically on the behavioral health needs of adult transgender and nonbinary individuals.

We list all certified BCBSRI LGBTQ Safe Zone certified practices on our website.

"Inclusive programs such as Safe Zones provide the comfort of knowing which providers address the specific needs of the LGBTQ population before ever stepping into the office."

—Agnieszka Janicka, M.D., Director, Adult Gender and Sexuality Behavioral Health Program

Reaching more Rhode Islanders

In 2018, we launched several new ways to reach Rhode Islanders with important messages about healthcare and healthy living. All of these work toward our vision of passionately leading a state of health and well-being across Rhode Island.

UNBOXING HEALTHCARE

Unboxing Healthcare takes ideas like primary care and coinsurance and breaks them down into simple explanations, using fun animation to capture attention and make them memorable.

Watch

The Rhode Show

BCBSRI teamed up with The Rhode Show on WPRI Channel 12 to deliver smart tips for healthy living. Segments ranged from Chief Customer Officer Melissa Cummings showing viewers around Your Blue Store in East Providence to Chief Medical Officer Dr. Gus Manocchia sharing tips for preventing the flu.

Check out recent segments

Ask the Dietitian

Ask the Dietitian videos bring the expertise of BCBSRI dietitians to a wider audience with advice for cooking and eating healthy. Now all Rhode Islanders can learn what BCBSRI members have always had access to, whether on the phone or at Your Blue Store locations.

Watch

RHODE TO HEALTH

The Rhode to Health podcast began early in 2018 with a discussion of the role that BCBSRI nurses play in our members’ health, whether at Your Blue Store locations, on the phone, or in the community.

Listen

Healthcare Basics

We completely revised our Healthcare Basics information to make it more accessible to people who are new to the healthcare system, and we learned that it’s just as popular and useful for people who’ve had health insurance for decades.

Know the basics

Veg Out

Rhode Islanders love recipes, and we have delivered healthy cooking ideas to them with the Veg Out series of digital cookbooks. Thousands of members requested these collections of plant-based, heart-healthy recipes—from appetizers to desserts—that prove healthy eating can be delicious and easy.

Cook up with Veg Out

(Section 5) 2018 Annual Report — Financials

FINANCIALS

Campaigns to improve care while managing costs show results

Our commitment to improve access to "the right care at the right time in the right place" and our increased administrative efficiency are showing results. The systems of care we’ve created in partnership with local providers incorporate payment models that reward outcomes rather than volume of services. Our efforts to reduce avoidable ER visits are lowering costs for members and others in the healthcare system. Digital outreach to members expands our capabilities without adding significant cost. For the second consecutive year we have shown positive financial results, allowing us to contribute $9 million into reserves, money we set aside for the protection of all our members to pay future claims.

Overall profit/loss

2016

(^$34,532,000)

2017

^$22,616,000

2018

^$$9,411,000

Revenue

In 2018, we recorded $1.71 billion in premiums from members (individuals and employers). We also recorded a loss of $1.5 million on investment revenue.

^$1,708,865,000
Premium Revenue

- ^$1,474,000
Investment Revenue

^$1,707,391,000
Total Revenue

Expenses

From total revenue, $1.42 billion was used for medical and dental claims for our members. This amount accounted for 82.9% of premium revenue collected. The company spent $221.0 million (including premium taxes) on expenses to support the core operations of our business, or 12.9% of premiums. An additional $59.7 million was spent on other expenses, including $35.9 million on assessments required by the Affordable Care Act.

^$1,417,367,000
Payments to Providers

+ ^$220,878,000
Administrative Expenses

+ ^$59,734,000
Other Expenses

^$1,697,980,000
Total Expenses*

*Numbers may not add up due to rounding.

Net gain

Overall, total revenue stood at almost $1.71 billion, and expenses exceeded $1.69 billion in 2018, resulting in a net gain of $9.4 million.

^$9,411,000

Premium reserves

In 2018, premium reserves that we held for the protection of our members totaled $299 million at year end.

^$298,659,000
Premium Reserves as of 12/31/2018

This formulation represents unaudited results utilizing Statutory Accounting Principles. The Blue Cross and Blue Shield Association licenses Blue Cross & Blue Shield of Rhode Island to offer certain products and services under the Blue Cross and Blue Shield brand names. Blue Cross & Blue Shield of Rhode Island is an independent organization governed by its own Board of Directors and solely responsible for its own debts and other obligations. Neither the Association nor any other organization using the Blue Cross and Blue Shield brand names acts as a guarantor of Blue Cross & Blue Shield of Rhode Island’s obligations. A copy of Blue Cross & Blue Shield of Rhode Island’s most recent financial statements is available on request to: Blue Cross & Blue Shield of Rhode Island, 500 Exchange Street, Providence, RI 02903.