Future of Health Care Delivery and Benefits

Mark Donahue

Regional Vice President, Labor

Anthem BCBS

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Strategic Platforms for the Plan of the Future

Affordability

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Waste in the System

Of the $2.7T spend on health care in the US, it is estimated that one-third of these costs – $700B – are waste1

1 Thomson Reuters, 2009 White Paper: Where Can $700B in Waste BE Cut From the US Healthcare System

By eliminating 50-70% of waste,we can reduce medical costs 15-20%

Administrative and system inefficiencies 4-6%

Provider inefficiencies and errors 3-4%

Lack of care coordination 1-2%

Unwarranted use 11-21%

Preventable conditions and avoidable care 1-2%

Fraud and abuse 5-8%

% of total medical costs that is wasted 30%

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How to Improve Affordability

Current State▪ network access & discounts

Developing▪ Consumer Engagement

▪ Transparency for consumers to make better decisions

▪ Care Comparison & other tools

Next Phase▪ Payment Reform

▪ Value Based Benefit Designs• Diabetes example

▪ Value Based Purchasing Design

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Examples of VBBD

Marriott• 3,000 employees ID’ed with Chronic conditions, lower co-payments for

specific conditions

Pitney Bowes▪ 22,000 employees, reduced or consolidated preventive screenings

(dental, hearing, vision plus removal/reduction of chronic condition copays

PPG Industries▪ 60,000 employees, plants compete against each other to achieve

program goals. May include weight loss, smoking cessation, walking, etc.

State of Washington ▪ 125,000 employees, eliminated all cost sharing (OOP) for preventive

visits, tobacco cessation counseling, and purchase of glucometers

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Key Concepts for increasing Rx Compliance

Member noncompliance is a serious issue and is generally the rule rather than the exception.

Low compliance drives higher overall health care cost.

Member cost share impacts member compliance.

Plan designs that reduce cost share decrease overall health care costs.

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MemberNoncompliance

*Robyn Tamblyn, Rejean Laprise, James A Hanley, “Adverse Events Associated with Prescription Drug Cost -Sharing Among Poor and Elderly Persons,” Journal of the American Medical Association, May 8, 2008.

Noncompliance is a Serious Issue

Literature findings: ▪ Medication Possession Ratio (MPR) is between 50 percent and

65 percent in the general diabetic population*

▪ Average individual diabetic-related costs are approximately $5,500 per year*

Anthem findings:▪ MPR for oral diabetes drugs is approximately 65 percent

▪ Average individual diabetic-related costs are approximately $4,700 per year

9 9Article: Medco Health Solutions: Medical Care - Volume 43m #6, June 2005

MemberLow ComplianceLow Compliance Drives

Higher CostIncrease in compliance leads to reductions in total healthcare costs

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For every $1 increase in copay for insulin products, compliance decreases by 1%

MemberCost Share

Member Cost Share Impacts Compliance

Member Copay (Adjusted to 30-Day Supply)

11* Osterberg L. Blaschke T. Adherence to Medication. NEJM 2005;353:487-497

Investing in members for better health

Richer benefits for medications that treat chronic conditions:

▪ Promotes member compliance

▪ Improves member health

▪ Decreases avoidable hospitalizations or costly procedures

▪ Increases employee productivity

“Of all medication-related hospital admissions in the United States, 33 percent to 69 percent are due to poor medication adherence, with a resultant cost of approximately $100 billion a year “ *

12 12 *Robyn Tamblyn, Rejean Laprise, James A Hanley, “Adverse Events Associated with Prescription Drug Cost -Sharing Among Poor and Elderly Persons,” Journal of the American Medical Association, May 8, 2008.

Literature findings: ▪ Medication Possession Ratio (MPR) is between 50 percent and

65 percent in the general diabetic population*

▪ Average individual diabetic-related costs are approximately $5,500 per year*

Anthem findings:▪ MPR for oral diabetes drugs is approximately 65 percent

▪ Average individual diabetic-related costs are approximately $4,700 per year

13 13 *Robyn Tamblyn, Rejean Laprise, James A Hanley, “Adverse Events Associated with Prescription Drug Cost -Sharing Among Poor and Elderly Persons,” Journal of the American Medical Association, May 8, 2008.

•Value-Based Purchasing Design for Hip and Knee Surgeries-CalPERS

•In June 2010 the CalPERS Board approved a cost-savings program for hip and knee replacements for its PPO health plans administered by Anthem.

•Established a $30,000 threshold for knee and hip surgeries and worked with Anthem to identify facilities throughout California that were highest quality and most cost effective.

•Program successful, expanded to other insurance carrier partners

Value Based Purchasing Design

Access

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Care Delivery Innovations

• Global Payments

• Accountable Care Organizations

• Patient Centered Medical Home

• Bundled Payments

• Gain Sharing

• Pay for Performance

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Why a Primary Care Patient Centered (P2) Approach?

To change the way our members access and receive health care services to optimize value

More patient participation in

medical decision making

Increased physician

satisfaction with medical practice

Increased patient

adherence to treatment plans

Cost-efficient management of

chronic and complex

conditions

Coordination of patient

preventive, acute and

chronic needs

Ability to foster value-based

referrals

Looming shortage of

primary care physicians

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What is Transformation to Patient Centered Care?

Support for high risk patients

Coordination of care across the delivery

system

Facilitated & ensured access

Shared decision making &

accountability with patients and their

caregiver

Promotion of wellness and prevention

Outcomes and compliance with evidence based

guidelines is measured and

monitored

The Hallmarks of a Patient (Consumer) Centered Care Model

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Anthem Patient Centered Medical Home Pilots

What is it?

▪ Redesigns PC reimbursements to reward physicians for aspects of care most important for good outcomes

Ten Pilots; three cited in Health Affairs article

▪ September 2012; Volume 31, Issue 9

▪ Payment Reform To Achieve Better Health Care

Different by state; key component’s include care coordination fees, quality recognition, enhance reporting for clinical management

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Anthem Patient Centered Medical Home Pilot Results

Colorado

▪ -18% reduction admissions

▪ 15% reduction ER visits

▪ ROI range 2.5:1-4.5:1

New Hampshire

▪ ER visit reduction

▪ 5% trend vs. 12% for in traditional practices

New York

▪ Increased compliance (example-diabetes patients HemoA1c testing)

▪ Lower inappropriate use antibiotic

▪ Reduced ER

▪ Lower monthly costs

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Anthem Patient Centered Medical Home Pilot

Anthem Status▪ Pilot status ongoing in 2012; continued investment and

development

▪ 2013-growth of “PC2” in Anthem and Blue markets

▪ 2014-growth across all Blue Plans

▪ Pass-through of “bulk” or bundled payments to ASO clients will begin in 2013, 2014.

Consumer Experience

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Defining & Enhancing the Consumer Experience

Consumers are looking for an ally to help explain their benefits and guide them through their health care experience▪ A health plan that had advocacy level service would ‘delight’

members and be perceived on going above/beyond.

▪ Consumers want accessible, relatable, reliable service, and knowledgeable representatives.

▪ Some want to have immediate access.

▪ All consumers expect a variety of options for getting help, including phone, email, web and live online chat.

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How do members make informed decisions?

Four Types of information required:

• How much does health care actually cost?

• What will be my real out-of-pocket cost?

• How do you comparefacilities or providers?

• What quality measures should I consider?

• How do other patients feel about their own similar experiences?

• What do the ratings mean?

• Does my insurance cover this at all?

• How does my health insurance cover this?

Coverage Cost QualityPatient

Satisfaction

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Start with the Basics

Easy, secure access to personalized member services

Quick access to the most common member tasks

Seamless transition from public to private site for secure content

Tone is consumer friendly, helpful, simple language without insurance jargon

One-click access to high-value transparency and health improvement tools

Ability to access your health dashboard

Integrated benefits summary for all plans, including specialty products

Quick links to find a doctor, refill a prescription and check claim status

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The Website – A Vital Consumer Resource

Research has shown that online is an important channel of information and tools for consumers.

▪ Consumers want information and tools available 24/7

▪ They want the information available anywhere and everywhere they go

▪ They prefer personal, up to the minute information and data that printed materials often cannot provide

This is true for insurer websites as well. Through our research we have learned:

▪ A majority of consumers prefer to access information online, which leads to over 7 million core transactions on our website each month

▪ Communicating about the tools, services and information available on our website is an important driver of member communication satisfaction

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Sample Web Registration Campaign

Overview• Campaign to drive registrations,

tell the cost of care story, & provide timely reminders to members when to use tools

Objective• Drive registrations• Increase utilization of

transparency tools

Timing• First Quarter 2013

Key Tactics• Electronic & print toolkit• Member Incentives

Campaign MetricsWeb registrationsEstimate Your Costs tool utilizationZagat Health Survey completes

Establish New View of Health Insurance

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Healthcare Management to Well-Being

Current World▪ UM, case management, pre-certification

Evolving▪ Care coordination

▪ Personal health coaches

▪ Incentives

Overall Well-Being▪ 360 approach-integrate all components of health

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Blue Zones –A “Well Being” ExampleWhat are they?

• Verifiable parts of the world where people live the longest and have the highest levels of Well-Being, in other words, the healthiest people on the planet

Where are they?▪ Okinawa, Japan; Sardinia, Italy; Loma Linda, CA; Nicoya, Costa

Rico; Ikaria, Greece

What makes them so healthy?▪ Move naturally, eat wisely, have the right outlook, and are

connected

Application?

Google is creating an environment for employees to take steps to create company “Blue Zones” on path to overall Well-Being.

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Summary

• The Health Plan of the Future is going to require a paradigm shift for all of us

• Willingness to change

• Patient centered, member focused create activities & plan designs to support “Well Being”

• Key concepts• Value Based Plan Design, Value Based Purchasing

• Network re-configuration to PC2 type delivery models

• Focus on total health (Well Being) vs. managing care

• Partnership-Fund, vendors, leadership, membership