Value Based Purchasing: From Theory to Practice

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Value Based Purchasing From Theory to Practice

• Andrew Webber, President and CEO
• National Business Coalition on Health
• Maine Health Management Coalition
• October 4, 2007

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Presentation Outline

• Setting the Table What Employers Want
• Value Based Purchasing From Theory to Practice
• The Unmet Challenge Employer Leadership and
  Action

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National Business Coalition on Health (NBCH)

• Our identity National, non profit association
  of 65 business and health coalitions
• Our vision Health care reform, through value
  based purchasing, community by community
• Our primary mission To build coalition
  leadership capacity

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Setting the Table
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What Do Employers Want?

• Two Things
• Improved workforce health and productivity!
• Improved health care!
• And Both Impact the Bottom Line!

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But Employers Bewildered

• A Tale of Two Cities
• Worst of Times Rising health care costs put
  American industry at a competitive disadvantage
• Best of Times But industry leaders know that
  reengineering and technology can drive improved
  quality and lower cost

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And Employers to Blame!

• For a Toxic Payment System that Pays for
• Throughput rather than outcomes
• Individual units of care rather than episodes of
  illness
• Acute care not prevention
• Medical errors and do overs
• With no performance based payment
• And for a Consumer Entitlement Mentality
• That insulates individuals from cost sensitivity
  because of 3rd party payment
• No Business Case for Quality!

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The Problem in Summary

• Two of My Favorite Quotes and Pop Quiz
• Every system is perfectly designed to achieve
  the results it achieves.
• Getting better at what were currently doing is
  not the answer.

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Value Based Purchasing From Theory to Practice
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The IOM Blue Print for Reforming the Health Care
System
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Value Based PurchasingMeasure, Report, Reward,
Lead

• Five Pillars
• Performance Measurement
• Transparency and Public Reporting
• Payment Reform
• Informed Consumer Choice
• Purchaser Leadership and Action
• Accelerating the Pace to the Ultimate Goal
  Health and Health Care Improvement

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A Few VBP Pillar Sound Bites

• Performance Measurement
• Foundation for both improvement and reward
• Measurement needed at multiple levels community
  patient population medical intervention and
  plan/provider levels
• Clinical, patient care outcome/experience/self-man
  agement, and efficiency measures all needed the
  Bob Brook, John Ware, Jack Wennberg Triad
• Slow progress because of complexity and lack of
  will practice guideline deficiencies, risk
  adjustment, attribution, cost burden, no trusted
  convener for data aggregation, and lack of
  national investment in comparative
  effectiveness/outcome research and measurement
  development

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A Few Sound Bites

• Transparency and Public Reporting
• Consumers have right to know
• Its how every competitive market works
• Public reporting leads to improvement!
• No evidence that public reporting alone leads to
  market shift to better performers at least not
  yet - but hope that it will only take a few to
  move a market
• Translation of performance information for
  consumers a tremendous challenge

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Quality Counts The Alliance Hospital Report Care
115 Eligible Hospitals in Wisconsin
Three hospitals were lost to closure and two
hospitals were ineligible due to overlapping
administrative structures
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Percentage of hospitals who had poor scores at
baseline and who improved their scores in the
post-report period
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A Few Sound Bites

• Payment Reform
• The largest mountain to climb and certainly the
  most emotionally charged
• New payment architecture and aligning payment
  with performance needed
• Need to move from visit and individual resource
  use FFS to more global/bundled payments
• Need to rethink the relative value of primary
  care vs. specialty care as reflected in current
  reimbursement
• The largest public (Medicare) and private payers
  (national health plans) and coalitions must lead
  but employers must push and cant do alone

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Payment Reform Bridges to Excellence

• Structure (PPC)

• Patient safety e-prescribing
• Guideline-driven care EHRs
• Focus on high-cost patients Care coordination
• Improved compliance Patient education support

Process Outcomes (DPRP HSRP)

• HbA1Cs tested and controlled
• LDLs tested and controlled
• BP tested and controlled
• Eye, foot and urine exams

• LDLs tested and controlled
• BP tested and controlled
• Use of aspirin
• Smoking cessation advice

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Buyers Health Care Action Group

• BTE Implementation
• BHCAG formed a Guiding Coalition of stakeholders
  to launch diabetes program statewide in 2006
• Stratis (MN QIO)
• MN Medical Association
• Several large employers
• Providers
• 4 large MN health plans
• Institute for Clinical Systems Improvement (ICSI)
• MN Community Measurement
• BHCAG and Guiding Coalition lead a collaborative
  effort on the design, development,
  implementation, and strategy for BTE programs in
  Minnesota
• MN Community Measurement assesses performance of
  medical groups. For performance results, visit
  www.mnhealthcare.org.

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Informed Consumer Choice

• The Goal To influence the individual consumer
  to make informed choices at many levels
• to live a healthy lifestyle
• to seek preventive services/care when sick
• to share in, and make the right, treatment
  decisions
• to comply with treatment regimen and self-manage,
  particularly chronic disease
• to select a plan, hospital, physician.

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A Few Sound Bites

• Informed Consumer Choice
• Area of greatest influence for employers
• Change the entitlement mentality
• Focus on front end health not just health care
• Establish a principle of self-responsibility but
  with robust support
• Support strategy must include creative mix of
  economic incentives, peer support, timely
  information, coaching/counseling

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An Example Value Based Benefit Design

• Basic health insurance benefit architecture
  should tier medical services by evidence of
  effectiveness - and providers by evidence of
  performance
• Co-pay levels (incentives) should vary by tiers
  in a way to help steer individuals toward
  effective services and high performing providers.
  And vice versa.
• Economic incentives, through value based benefit
  designs, can influence better consumer choices
  but should be joined with timely information,
  coaching, and peer support

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Pitney Bowes

• Pharmacy tier co-pay and benefit changes
• Tier 1 10 co-pay includes
• Most generics
• All medications for Diabetes / Asthma /
  Hypertension
• Tier 2 30 co-pay
• Most preferred brand name drugs
• Tier 3 50 co-pay
• Non-preferred brand name drugs
• Other Pharmacy Changes
• No mandatory mail order
• No mandatory generic
• No step therapy
• Limited prior authorization requirements

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Pitney Bowes Diabetes Results

• Market Share
• Use of impacted drugs increased from 41 to 71
• For Type 2 diabetics, use of impacted drugs
  increased from 29 to 52
• 85 of people on impacted drug remained on
  treatment
• Cost Utilization
• Median total medical cost of a diabetic decreased
  6
• Office visits per 1,000 declined 4
• ER visits per 1,000 declined 35
• Pharmacy
• Net per member per month pharmacy costs declined
  12
• Decreased cost of drugs used to treat
  complications offset increase in cost of diabetic
  drugs
• Decreased pharmacy costs of 7 for diabetics

Source Pitney Bowes, 2004
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An Integrated Strategy HealthMapRx (The
Asheville Model)

• Reinvention of community pharmacy through
  consumer coaching/counseling
• With value based benefit design
• Led by American Pharmacists Association
  Foundation and NBCH through national distribution
  agreement
• 4 member coalitions participating a dozen more
  coalitions with expressed interest
• Demonstrated ROI

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Asheville Project Results

• Over 1500 patients from 10 employers enrolled for
  diabetes, asthma, hypertension, lipid therapy
  management, and depression
• Patients realize improved outcomes increased
  medication adherence
• 50 reduction in sick days
• Zero workers comp claims in the City diabetes
  group over 6 years
• Average net savings of 1,600-3,200 per person
  with diabetes each year from year 2 on
• Employers saved over 5,000,000 in health care
  costs

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The Unmet Challenge Employer Leadership and
Action
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So Great Battle Plan, but Where are the Employer
Generals?

• The unanswered question
• Culture beats strategy every time.
• Without top employer leadership engagement, there
  will be no reform
• National and Community leadership required

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What are the Impediments?

• Not our business We make widgets
• Health care dynamics hard to master
• And frustration for those that do
• Corporate silos HR and HealthSafety
• Many employers in the business of health care
• Hard to look beyond individual employer strategy
  to collective engagement

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Its Springtime Some Signs of Hope

• Secretary Leavitts Value Driven Health Care
  Initiative
• The Partnership for Value Driven Health Care
• NBCHs eValue8 tool a common RFI for health
  plans
• The Leapfrog Group, Bridges to Excellence, The
  Asheville Model
• Advanced Medical Home

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Its Springtime Some Signs of Hope

• Integrated Healthcare Association (IHA)
  California P4P Initiative
• Coalition led initiatives Maine Health
  Management Coalition in particular
• AQA Pilots and the emerging Chartered Value
  Exchanges
• Robert Wood Johnson Foundation Aligning Forces
  for Quality The Regional Market Project

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Insert the Community Visual
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Some Key Take Aways

• Theres gold at the end of the rainbow of
  improving health care quality and efficiency.
• Business and health coalitions are the key to the
  vision of health care reform, through value
  based purchasing, community by community
• The biggest obstacle to progress is not absence
  of value based purchasing strategies but absence
  of employer engagement and leadership.