Wellness plans that encourage workers to live healthier, medical procedure price transparency and value-based models are among the moves that could help control the country's health care costs, the boss of one of California's largest insurers said in a talk Tuesday.

Bruce Bodaken, CEO of Blue Shield of California, told attendees at the 8th annual American Health Care Conference in Anaheim, Calif. that the country's fee-for-service model was a "disaster for American medicine."

"If we can kill fee-for-service over the next decade, we'll all have done a very good thing," he said.

In his talk, the chief of the non-profit health plan, California's third-largest, discussed ways to keep in check out-of-control health care spending.

And it's been rising fast. Bodaken noted that over the past decade premiums for health plans surged 135 percent, while inflation rose just 25 percent. He also noted that one of the main drivers of spending has been hospitals, where the average cost per acute inpatient bed day in California has gone up with a compound annual growth rate of 13 percent, rising from $1,875 per day in 2000 to $5,769 per day in 2010.

"This simply can't last," he said.

And although he said utilization has gone down since the Great Recession, he expects it to ramp back up by 2014 as people begin undergoing procedures they had put off during economically troubled times.

"It's possible people have deferred even expensive things that they will now start to get because they can't wait anymore," he said.

Wellness to the rescue

But Bodaken outlined a few programs that show promise in reducing system-wide costs.

One, wellness programs, has been controversial. Generally, in these programs, employers give discounts to health plans or other bonuses to employees who follow certain health guidelines, such as quitting smoking or lowering their blood pressure. The Safeway grocery store chain has famously implemented such a system.

Bodaken said he thinks they work, even if they're "not for the faint of heart."

At his company, Blue Shield, he said they instituted a similar program a few years ago. In it, Blue Shield gives financial incentives for people to do biometric screenings, and if they get a coach to work on biometrics that are "off normal," they get a health day off. "If they continue doing that throughout the year, they get a reduction in out-of-pocket (expenses), which can go down to zero," he said.

"We're starting to see a return on reduction in claims data, but it took about three years to see that," he said.

Transparently better

In addition to wellness programs, his group has been championing something he said everyone in health care doesn't necessarily like: cost transparency.

In a slide during his talk, Bodaken noted that a heart bypass in Marysville, a town north of Sacremento, costs roughly five times the state average.

"This is the function of a system that is not based on value, but a system that has been based on how much can I negotiate for my piecework," he said.

One response has been legislative. Bodaken said his group backed SB 751, signed into law earlier this year by California Gov. Jerry Brown, which he said lets health plans share hospital cost and quality information with members, and forbids hospitals from inserting gag clauses in contracts with plans.

More directly, he said Blue Shield is trying to be transparent about profits, of which income is capped at two cents per dollar of revenue. Excess income is given back to customers or the community. Last year, Blue Shield gave back $180 million. This year, $295 million, he said.

"We think it gives the consumer informed choice," he said. "We think that's the first step."