The Economy, Health Costs and the Future

1
The Economy, Health Costs and the Future

• 2002 National Health Policy Conference

2

• General Motors
• 2001 Health Care
• 1.2 million plan members
• 500,000 employees family
• 700,000 retirees family
• 4.2 billion spend
• 200 health plans (134 HMOs)
• 30 million transactions
• 4,300 hospitals
• 36,000 pharmacies
• 241,000 physicians

3
Why Do Purchasers Care About Health Care?
Inflation Index (1987 100)
U.S. Medical Costs
Direct Indirect Costs
X GAP
Global Sales Price
4
Evolution of Employers Managementof Health Plans
Community Health
Employee Health
Quality Leadership
Value Purchasing
Selection / Negotiation
Pay Premiums
5
Quality Cost Drivers
GMs Key Health Care Initiatives
Process Improvement Workshops
LifeSteps
Benefit Design
Public Policy
Managed Care
Safety Initiatives
Value Purchasing
Prescription Drugs
Disease Management
Managed Indemnity
Member Behavior Health
Integrated Corporate Health
Delivery System
Community Initiatives
Carrier Performance
6
GMs Big Issues

• Driving patient safety and quality improvement
  efforts
• public disclosure/informed consumers
• Reducing waste and inappropriate care in the
  delivery system
• decision support
• Encouraging the appropriate use of prescription
  drugs

7
Preventable Deaths Personalized

• Preventable deaths per year 98,000
• U.S. Population 250,000,000
• GM covered lives 1,210,000
• Preventable deaths per 100,000 per year 39
• General Motors preventable deaths
• per year 468
• per day 1.3!

8
Managed Care Continuum
Direct Contracting w/ delivery systems
Group/Staff HMO Highly Integrated IPA (Benchmark
plans)
Degree of Management and Integration Low

High
IPA HMO
Managed PPO
PPO
Managed Indemnity
Unmanaged Indemnity
Low
High value
9
Managed Care

• Quality initiatives reward performance
• influencing market share
• Quality Report Card
• financial incentives
• public recognition
• benchmark status
• sharing best practices with top HMOs
• disease management
• Rx management
• patient safety
• referral process/service

10
Managed CareThe Next Generation

• Direct contracting with Integrated Health Systems
• Aligns quality and financial incentives
• Activecare
• physician led plan
• organized, integrated delivery system
• offers broad access of Indemnity Plan with low
  cost sharing of HMO option
• in and out-of-network benefits
• consumer, purchaser, provider financial
  incentives align with best practices
• pilots in SE Michigan and Dayton, OH

11
Prescription Drug Challenge

• GM spends 1billion on Rx drugs
• Fastest growing cost component with 18-20 cost
  increases --no end in sight!
• demographics, new drugs, DTC, high U.S. prices,
  inappropriate prescribing
• Do that many people need the purple pill?

12
Prescription Drugs

• GM initiatives
• pharmacy network
• generic vs. brand
• working with drug manufacturers
• educate enrollees and physicians
• dosing optimization
• cost sharing/plan design
• move to mail order
• internet-interactive voice system
• three auto company initiatives
• Rx legislation
• interactive point-of-care technology

13
Community Initiatives

• Joint GM-UAW Community Initiatives
• launched in 1995
• Expectations/objectives
• improve quality of outcomes
• leads to enhanced cost effectiveness
• reduce duplicate services
• increase collaboration/cooperation
• address variation in provider practice patterns
  driving toward best practices that generate the
  best clinical outcomes
• resist unnecessary capacity expansion
• identify best providers and encourage enrollees
  to select them

14
Legislative Issues

• Medicare Choice
• CMS must reward good performers
• resurrect CPAC
• reduce plan reporting burden
• flexibility for the group market
• Medicare Rx
• universal
• quality measures and reporting
• benefit design, limits
• equitable financing

15
Legislative Issues

• Prescription Drugs
• continuing market exclusivity
• stifling generic competition
• DTC advertising
• U.S. pricing vs. other countries
• detailing practices
• Flex Spending Accounts
• repeal use-it-or-lose-it rule
• allow non-taxed balance rollovers
• establish portability / allow purchase

16
Public/Private Partnerships

• QuIC
• Federal
• State opportunities
• NHCPI
• National Quality Forum
• Leapfrog
• NCQA / HEDIS
• FACCT
• CMS / APME
• Federal Employees Health Benefits Plan

17
Summary

• GM believes the way to reduce health care cost is
  to improve qualityi.e. preventing over use,
  under use and misuse of the health care system
  and provide people with the information on
  quality to make smart health care choices.

In other words, get the WASTE out so the dollars
can be put to better use!