CalPERS Health Chief Wields The Power Of Data To Tame Costs

As prices for drugs and procedures soar, and health insurance premiums for employer-based and individual policies inexorably climb, more than are few people are asking: Is the health care industry spiraling out of control?

Liana Bailey-Crimmins, a top official with California’s public employee benefits and retirement system (CalPERS), offered a simple response.

“Yeah,” she said.

But Bailey-Crimmins is in the driver’s seat at one of health care’s most powerful vehicles — and she has some ideas about how to slow costs down. The decisions she makes ripple far beyond the state workers and retirees she represents, affecting the cost of health care for the entire state, if not the nation.

“To me, I think you can either sit in the passenger seat … or you can go into the driver’s seat and effect change,” she said.

This year, the state’s pension giant will spend an estimated $9.1 billion to insure its 994,000 current employees and 467,000 retirees and their dependents. That makes it the second-largest health care purchaser in the nation, behind the federal government.

Since she took over as chief information officer of CalPERS in 2013, Bailey-Crimmins has managed its wealth of data to analyze health care trends and recommend policies to stem rising costs.

“It’s part of my DNA,” she said. “I can’t spend three decades in IT and not look at data.”

For instance, one of her initiatives, approved by the board in March, ties some members’ deductibles to cost-saving behaviors like getting flu shots or seeking second opinions on elective surgeries.

Some of these changes have contributed to reduced premium hikes, Bailey-Crimmins said.

CalPERS will raise rates for its 1.4 million retirees and public employees by an average of just 1.16 percent next year — its smallest increase in more than two decades.

Bailey-Crimmins, a self-proclaimed “data geek,” said she takes her role as a steward of health costs seriously.

That’s partly because she has experienced the health care system at its worst. At 14, she was diagnosed with severe scoliosis, a curvature of the spine, and her parents’ insurance wouldn’t cover her care, she said.

“I was lucky enough to be sponsored several months later at Shriners children’s hospital in San Francisco … so I know firsthand what it means for a family to have affordable, quality care,” said Bailey-Crimmins, who now makes $187,000 annually and lives with her husband in Galt, Calif.

After studying computer science at California State University-Sacramento, she started her career in 2002 at the California Youth Authority, now the Division of Juvenile Justice, as the agency’s infrastructure chief.

“I tell people that when I hired her, she had braces,” joked Joe Panora, the California Youth Authority’s chief information officer at the time. After two years, Bailey-Crimmins followed Panora to the California Department of Corrections and Rehabilitation, working under him there for almost four years until she was recruited to head up the information-technology division of California Correctional Health Care Services.

Panora is now a retiree covered by CalPERS. He said he’s counting on Bailey-Crimmins to keep his health care costs down.

“My gut feeling is that she really, truly understands data,” he said. “You can’t manage what you don’t measure.”

Bailey-Crimmins is currently experimenting with how to lower drug prices, and the CalPERS board in June approved her proposal to expand a process called “reference pricing” next year. The initiative will cap the amount the agency pays to cover three classes of drugs: nasal corticosteroids, thyroid medications and estrogens.

If a member takes an expensive prescription medication that has a lower-cost alternative, he or she can either switch to the cheaper one, covered by CalPERS, or pay the full list price themselves.

CalPERS introduced this model for shoulder- and knee-replacement procedures in 2011, which led to a roughly 17 percent drop in the average prices CalPERS paid to hospitals, according to a 2015 study in the Journal of Bone and Joint Surgery.

Stephanie Hueg, executive vice president of the California State Retirees’ Board of Directors, which represents retirees who worked for the state, said she fears that doctors, pharmacists and health plans won’t communicate the changes effectively. As a result, she said, retirees and other patients might forgo necessary treatment rather than take unfamiliar substitutes for their usual medications.

“They might be 80 years old, they’re hearing-impaired and the pharmacist tech that’s waiting on them has this low voice,” explained Mary McDonnell, a district director for the California State Retirees. “They’re embarrassed because they might have 16 prescriptions on the counter and they don’t challenge it.”

Bailey-Crimmins recognizes this possibility and said participating doctors will be informed about the new policy and low-cost drug alternatives. But she also expects patients to take an active role in their care, she said.

She mentioned a trip to the pharmacy with her now-22-year-old son to pick up his acne medication.

“It was $200,” she explained. “I had to go back to the doctor and say, “’Could you please prescribe something different?’”

Still, balancing cost savings with member satisfaction is tricky.

“She’s walking quite the tightrope,” said Hueg, who praised Bailey-Crimmins as an effective communicator and advocate.

Donna Snodgrass, director of health benefits for the Retired Public Employees’ Association of California, a group that represents CalPERS members, said that while Bailey-Crimmins is intelligent and professional, she lacks a certain human touch.

Since 2005, Snodgrass and other retirees have gathered for breakfast in the CalPERS cafeteria before board meetings. The health chiefs who preceded Bailey-Crimmins typically joined the gathering, at least for a cup of coffee, to speak candidly about the policies and decisions they presented to the board, Snodgrass said.

But not Bailey-Crimmins, she said.

“Liana has never come down there and even opened that door. We miss those kind of open conversations,” she said. “She’s a little more withdrawn from the kind of ‘in the trenches’ work that gets done.”

Despite her affinity for data, Bailey-Crimmins acknowledged that numbers don’t tell the whole story. To understand what such information means on a human level, Bailey-Crimmins said she relies not only on annual member surveys but personal feedback.

“I hear directly from members a lot. They have no qualms,” Bailey-Crimmins said. “We’re a big customer-first organization.”