Healthcare Trends in America

8/3/2019 Healthcare Trends in America

1/101

HealthcareTrendsin AmericaA Reference Guide from BCBSA

2010 Edition


2/101

Contents

Introduct ion................................................ ......................................... 1

Section1:ImprovingAccesstoHealthCoverage...........................3

Section2 :KeepingHealth careAf fordable..................................... 17

Section3:ImprovingQualityandSafety.......................................33

Section4:ImprovingConsumerHealth.........................................53

Section5:ChangingCareDeliveryModels....................................77

Methodology.............................................. ....................................... 90

Glossaryof Abbreviat edTerms...................................................... 91

IndexofTables..................................................................................92

Bibliography............................................... ....................................... 95


3/101

1 Blue Cross and Blue Shield Association

Dear Colleague:

I am pleased to share with you the 2010 Healthcare Trends

in America: A Reference Guidefrom the Blue Cross and Blue

Shield Association, offering a comprehensive compendium and

analysis of healthcare economics and key trends inuencing

healthcare in our country.

Now in its eighth year of publication, the guide organizes

data in four key categories essential to improving our nations

healthcare system: improving access to health coverage,

keeping healthcare affordable, raising the quality and safety

of care and improving consumer health. We have also devoted

an entire section of the guide to changing care delivery models

designed to improve our healthcare system.

Through the use of national research and other well-respected,

fact-based data sources, the guide is designed to make us all

more informed about healthcare and the economics of health-

care through an extensive annual examination of healthcare

costs and trends.

In keeping with our 80-year heritage of local and national

healthcare leadership, Blue Cross and Blue Shield companies

are collaborating with key stakeholders from policy makers

and leading medical organizations to consumer groups and

major employers to design and implement a better healthcare

delivery system for our nation.

New data from Blue Health Intelligence (BHI) the nationslargest healthcare data warehouse with claims information on

more than 54 million members is helping us achieve our goal.

The robust new information and insights from BHI included in

the Reference Guideprovides far greater transparency to help

alter the way we view healthcare and help change the way care

is delivered in our country.

We also have included a CD-ROM in the guide with an interac-

tive PDF version for access to PowerPoint slides of each chart.

Yours in good health,

Scott P. Serota

President and Chief Executive Ofcer

Blue Cross and Blue Shield Association


4/101

2HealthcareTrendsinAmerica:AReferenceGuidefromBCBSA(2010Edition)


5/101


Improving Access to Health Coverage

U.S.Populatio nwithHeal thInsuranc einMillions.....................................................5

CoveragebyTypeofHeal thInsuran ce........................................................................6

EmployersO fferi ngHealthBen ets............................................................................7

Employer-Spo nsoredHe althPlanEnrollm ent............................................................8

EnrollmentinC OBRA.....................................................................................................9

AccountImplementationofBenetChangesasaResult

ofCurrent EconomicEnvir onment............................................................................. 10

EnrollmentinM edicaidandM edicare....................................................................... 11

Medicar eAdvantageEnr ollmentinMillio ns............................................................. 12

Percent ageofUninsure dbyIncomeLevel...............................................................13

Percent ageofUninsure dbyState............................................................................. 14

Breakdowno ftheUninsure d......................................................................................15



Section

1



6/101



While more than 85 percent of the nations 300 million people

have health insurance, 15 percent of Americans do not have

coverage and many others may lose their health insurancedue to the struggling economy.

Of the insured population, nearly 60 percent receive their

health insurance through their employers. Enrollment in

government programs has risen slightly in the past few years

and now represents nearly 30 percent of those with coverage.

Direct purchasers represent the remainder.

Blue Cross and Blue Shield is committed to extending healthinsurance to those who do not have coverage, and The Blues

believe the best way to accomplish this goal is to build on

our employer-based system. In 2009, more than 95 percent

of American rms with more than 50 employees offered health

insurance coverage to their employees. However, less than

half of companies with fewer than 10 employees offer health

benets. Increasing the percentage of small employers that

offer health benets is critical to increasing coverage levels.

Additionally, there must be a focus on those most likely tolack coverage, such as young adults aged 18-34, Hispanics,

and African-Americans.

The Blues have been active participants in the ongoing health-

care reform debate and have led the industry in identifying

insurance reforms that would guarantee coverage to everyone,

regardless of pre-existing conditions or health status. In order

to accomplish this goal and keep coverage affordable for

everyone, there must be a mechanism for ensuring that peoplehave insurance and not simply wait until they are sick to

purchase insurance. It is imperative that we nd new and

innovative ways to address the crisis of the uninsured.

Summary


7/101



U.S. PopulationPersons with Health InsurancePersons with Employer-Sponsored Coverage

20082007200620052004

176.9 177.2 176.3177.4176.2

247.7 249.0253.4 255.1249.8

291.2293.8

296.8299.1

301.5

U.S. Population with Health Insurance in Millions

In 2008, about 85 percent of more than 300 million Americans had health insurance.

Source: U.S. Census Bureau (2009) Historical Health Insurance Tables, Table HIA-2.

85.1% 84.7% 84.2% 84.7% 84.6%

PercentagewithHealthInsurance


8/101



Private Insurance

66.7%

69.0%

58.5%

60.5%

8.9%

9.5%Direct Purchase

Employment-Based

Any Private Plan*

Military Healthcare**

Medicaid

Medicare

Any Government Plan

Government Insurance

29.0%

27.3%

14.3%

13.6%

14.1%

13.0%

3.8%

3.7%

Uninsured

Uninsured

15.4%

14.9%

2004 2008

Coverage by Type of Health Insurance

Among those with health insurance coverage, two-thirds are covered by private insurance plans.

*Any private plan includes employment-based and direct purchase health insurance plans.**Military healthcare includes Comprehensive Health and Medical Plan for Uniformed Services (CHAMPUS)/Tricare and Civilian Health and Medical Program of the Department ofVeterans Affairs (CHAMPVA), as well as care provided by the Department of Veterans Affairs and the militar y.Note: The estimates by types of coverage are not mutually exclusive; people can be covered by more than one type of health insurance during the year.Source: U.S. Census Bureau (2009) Historical Health Insurance Tables, Table HIA-2.


9/101



60%

2005 2009

60%

33%

31%

28%29%

Offering Health Benefits*

Offering Retiree Health Benefits**

Offering Health Benefits to Part-Time Workers***

3 - 9 10 - 24 25 - 49 50 - 199 200 or

moreNumber of Workers per Firm

47% 46%

72% 72%

87% 87%

93% 95%98% 98%

Percentage of Firms Offering

Health Benefits by SizePercentage of Employers

Offering Health Benefits

2005 2009

Employers Offering Health Benets

The percentage of employers offering health benets to employees has been relatively stable. At least 95 percent of rms with morethan 50 employees offer health benets.

*Among all rms.**Among all rms with 200 or more workers offering health benets to active workers.***Among rms offering health benets.Source: Employer Hea lth Benets 2009 Annual Survey, (#7936), The Henry J. Kaiser Family Foundation and HRET, September 2009.This information was reprinted with permission from the Henry J. Kaiser Family Foundation. The Kaiser Family Foundation is a non-prot private operating foundation based in Menlo Park, Calif., dedicated

to producing and communicating the best possible information, research and analysis on health issues.

Employer-Sponsored Insurance Coverage


10/101



2005 2009

Employer-Sponsored Health Plan

Enrollment by Plan Type

15%

61%

21%

3%

8%

10%

60%

20%

1%

HDHP/SOPOSPPOHMOConventional

Among Firms Offering Health Benefits, Percentage that

Offer an HDHP/HRA or an HSA-Qualified HDHP

2005 2006 2007 2008 2009

2% 2%

1%

6%

3%

7%

3%

11%

2%

10%

HDHP/HRA HSA-Qualified HDHP

Employer-Sponsored Health Plan Enrollment

Sixty percent with employer-sponsored coverage are covered by PPOs. Over time, HDHP enrollment has increased to 8 percent,likely driven by more employers offering them.

Note: HMO is health maintenance organization. PPO is preferred provider organization. POS is point-of-service.Source: Employer Hea lth Benets 2009 Annual Survey, (#7936), The Henry J. Kaiser Family Foundation & HRET, September 2009.This information was reprinted with permission from the Henry J. Kaiser Family Foundation. The Kaiser Family Foundation is a non-prot private operating foundation, based in Menlo Park, Calif.,dedicated to producing and communicating the best possible analysis and information on health issues.


Denitions

High-deductiblehealthplanswithsavingsoption(HDHP/SOs)aredenedasa: HDHP/HRA:Healthplanwithadeductibleofatleast$1,000forsinglecoverageand$2,000forfamilycoverageofferedwithaHealthReimbursementArrangement(HRA) HSA-qualiedHDHP:High-deductiblehealthplanthatmeetsthefederallegalrequirementsadeductibleofatleast$1,150forsinglecoverageand$2,300forfamily

coveragein2009topermitanenrolleetoestablishandcontributetoaHealthSavingsAccount(HSA).


11/101



Dec-09

Oct-09

Aug-09

Jun-09

Apr-09

Feb-09

Dec-08

Oct-08

Aug-08

Jun-08

Apr-08

Feb-08

Est.

Unemployed

Population -7.5 mil lion

Est.

Unemployed

Population -15.3 million

4.8%5.0%

5.5%

6.1%

6.6%

7.4%

8.2%

8.9%

9.5%

9.7%

10.1% 10.0%

2009(p)*200620052004

2.82.6

3.1

7.0

Uptake of COBRA

by eligible workersdoubled during

subsidy period

Enrollment in COBRA

Higher unemployment rates coupled with government subsidy is likely driving increased COBRA uptake.

*Projected by the Confessional Budget Ofce.Note: Government programs include American Recovery and Reinvestment Act (ARRA) and Defense Appropriations Bill.Source: U.S. Department of Labor, Bureau of Labor Statistics (2009); UBS Investment Research (2009) Managed Care UBS COBRA Tracker; Congressional Budget Ofce (2009); National BusinessGroup on Health (2009) Congress Extends Federal COBRA Subsidies; The COBRA Subsidy and Health Insurance for the Unemployed, (#7875-02), The Henry J. Kaiser Family Foundation, December 2009This information was reprinted with permission from the Henry J. Kaiser Family Foundation. The Kaiser Family Foundation is a non-prot private operating foundation, based in Menlo Park, Calif., dedicated to

producing and communicating the best possible analysis and information on health issues.


COBRA Subsidies

GovernmentlegislationprovidedtemporarysubsidiestosomeworkerswhowereinvoluntarilyterminatedbetweenSept.2008throughFeb.2010,tohelpmaintaincoverage:

Withoutsubsidy,eligibleworkerspaythefullpremiumplus2percentadministrativefee

Subsidiescovered65percentofthecostofCOBRAforacumulative15months


12/101



Plan to ImplementAlready Implemented

Limit New Hire Benefits

Provide Defined Contribution

Decrease or Eliminate

HSA Contribution

Limit or ExcludeDependent Coverage

Limit or Cut Retiree Benefits

Institute Single-Plan Design

as Full Replacement

Move Employees to HDHP

Increase Employee Cost Sharing 19% 30% 49%

32%

13%

12%

11%

10%

9%

7%

20%

6%

4%

6%

5%

4%

4%

12%

7%

8%

5%

5%

5%

3%

Account Implementation of Benet Changes as a Result of Current Economic Environment

As a result of current economic conditions, many large, multi-state employers are increasing employee cost sharing.

Source: Blue Cross and Blue Shield Association (2009) National Account Decision-Maker Survey.



13/101



33.6

39.237.4

46.943.0

40.4

11.0

48.1

43.941.4

17.4

47.145.0

42.0

25.9

Medicare Part DMedicare Part BMedicare Part AMedicaid

2008200720062000

Medicaid and Medicare Beneficiaries(in Millions)

Stand-alonePDP

17.5M

Medicare

Advantage Drug Plan

9.2M

RetireeDrug

Coverage

7.9M

Other Drug

Coverage*6.2M

No DrugCoverage**

4.5M

Prescription Drug Coverage AmongMedicare Beneficiaries in 2009

Medicare Beneficiaries = 45.2 Million

Enrollment in Medicaid and Medicare

Enrollment in Medicaid and Medicare Part A and B has been relatively stable in the last three years. More than 90 percentof Medicare beneciaries have drug coverage.

*Includes Veterans Affairs, retiree coverage without retiree drug subsidy (RDS), Indian Health Service, state pharmacy assistance programs, employer plans for active workers, Medigap, multiple sourcesand other sources.**Includes RDS and FEHBP and TRICARE retiree coverage.Note: Medicare Part D was introduced in 2006. PDP is prescription drug plan. Figures may not add up due to rounding.Source: Centers for Medicare and Medicaid Services (2009); The Medicare Prescription Drug Benet An Updated Fact Sheet, (#7044-10) The Henry J. Kaiser Family Foundation, November 2009

This information was reprinted with permission from the Henry J. Kaiser Family Foundation. The Kaiser Family Foundation is a non-prot private operating foundation, based in Menlo Park, Calif.,dedicated to producing and communicating the best possible analysis and information on health issues.

Public Programs


14/101



7.7

2010*2009200820072006

10.1

10.611.0

8.8

Medicare Advantage Enrollment in Millions

More than 11 million are enrolled in Medicare Advantage, growing more than 40 percent since 2006.

*2010 Medicare Advantage enrollment as of January 2010.Note: Enrollment gures are as of December of each year.Source: Centers for Medicare and Medicaid Services (2010).

Public Programs


15/101



Uninsured by Income Level

(2008 Uninsured: 46.3M)

13.7M

14.9M

8.0M

9.7M

24.3% 24.2% 24.9% 24.5% 24.5%

21.1% 21.4%21.1%20.1%19.8%

13.0% 13.3%14.4% 14.5% 14.0%

8.2%7.8%8.5%8.2% 7.7%

$75,000+

$50,000 - $74,999

$25,000 - $49,999


16/101



WA

OR

CA

NV

AZ

UT CO

NM

MT

WYID

SD

ND

NE

KS

OK

TXLA

AR

MO

IA

MN

WI

ILID

MI

KY

TN

MS ALGA

FL

SC

NC

VA

WV

OHPA

NY

VTNH

ME

MACT

RI

NJ

DE

MD

HI

AK

17.5% or higher

15.5% to 17.4%

12.4% to 15.4%

12.3% or lower

Percentage of Uninsured by State

In 2008, 17 states had a higher uninsured rate than the national level of 15.4 percent.

Source: Health Insurance Coverage of the Total Population, states (2007-2008), U.S. (2008), statehealthfacts.org, The Henry J. Kaiser Family Foundation, 2009This information was reprinted with permission from the Henry J. Kaiser Family Foundation. The Kaiser Family Foundation is a non-prot private operating foundation, based inMenlo Park, California, dedicated to producing and communicating the best possible analysis and information on health issues. Reprinted with permission of the Urban Institute.

The Uninsured


17/101



2008 Uninsured: 46.3M

65 and

Older

1%Under 18

16%

25 - 34

23%

35 - 44

17% 45 - 64

24%

18 - 24

18%

By Age By Ethnicity

Non-Hispanic

White

46%

Asian

5%

Hispanic

31%

Black

16%

By Citizenship Status

American Citizens

73%

Not a Citizen

21%

Naturalized

Citizens

6%

Breakdown of the Uninsured

Young adults aged 18-34 comprise the largest portion of the uninsured; nearly one-third of the uninsured are Hispanic.

Note: Figures may not add up to 100 percent due to rounding. Segments per U.S. Census Bureau.Source: Census Bureau (2009) I ncome, Poverty, and Health Insurance Coverage in the United States: 2008.

The Uninsured


18/101



19/101


Keeping Healthcare AffordableKeeping Healthcare Affordable

Section

2ComponentsofGrossDomesticProduct(GDP).......................................................19

Healthc areSpendinginBi llions.................................................................................19

Internat ionalHealt hcareSpend ingasaPercent ageofGDP...................................20

GrowthRatesofHealthcareSpending,WagesandSalaries,

andtheCPI....................................................................................................................21

TheNationsHea lthcareD ollar...................................................................................21PercentageSpentonHealthcarebySourceofFunds.............................................22

ChangeBetween2004and2007inTotalCostsforHospitalStays........................22

PercentageChangeinHealthcareUtilizationandCosts.........................................23

PhysicianO fceV isits................................................................................................. 24

HospitalEmployeesinMillionsandPercentageofHospitals

withPhys icianAf liationsbyOr ganizatio n..............................................................25

AnnualGrow thinDrugSpen ding..............................................................................26

GenericPrescriptionsasaPercentageofTotalScripts,2006-2008.....................27

AverageConsumerPharmacyCopaymentsbyTier................................................27

GenericDrugApprovals..............................................................................................28

AverageAnnualPremiumforFamilyCoverage......................................................29

HospitalPayment-to-CostRatiosforMedicare,Medicaid

andPrivatePayers.......................................................................................................30

PercentageofMembersOut-of-PocketCostSharingbyProductLine,

2006-2008....................................................................................................................30

ActionsOrganizationsAreTakingRegardingTheirHealthcare

ProgramsG ivenRecentEven tsinEconom y............................................................. 31

PrivateHealthPlanAdministrativeExpensesasaPercentage

ofPremiums..................................................................................................................32

SavingsandRec overiesfro mFraudInvest igationsinMil lions..............................32

17

Keeping Healthcare Affordable


20/101



Summary

Comprising 17.3 percent of the nations Gross Domestic Product,

healthcare spending represents a signicant portion of the U.S.

economy. The current healthcare spend represents more than$8,000 annually for every man, woman and child in the nation

a far greater per-capita spend than any other country.

Government programs fund almost half of the nations total

healthcare expenses, while private insurance funds one-third.

The remainder is largely covered by consumer out-of-pocket

payments.

Two-thirds of the total healthcare spend is devoted to hospitalcare, physician and clinical services, and prescription drugs.

Major trends in these three largest components show:

The cost of hospital stays are increasing, even though length

of hospital stays are on the decline.

While the total number of physician visits has remained

relatively at with the majority of visits to general/family

practitioners and internists the trend shows a rapidly

growing number of visits to specialists.

Growth in total and specialty drug spending has risen,driven largely by higher unit costs.

Health insurance premiums have risen, reecting the impact

of overall rising healthcare costs. Private payers continue to

pay hospitals more than Medicare and Medicaid as hospitals

apply higher charges to private payers to compensate for

a widening gap in payments from government programs.

Recognizing the value of offering coverage to their employees,

employers continue to cover nearly 75 percent of annualemployee premiums.

Facing a projected growth rate of 3.9 percent, stemming the

rise in healthcare costs is a top national priority. Finding ways

to improve healthcare quality and safety, while keeping health-

care affordable remains a major challenge.


21/101



Components of Gross Domestic Product (GDP) Healthcare Spending in Billions

The whole healthcare sector represents a signicant portionof the U.S. economy.

Healthcare is projected to be almost 18 percent of GDPby 2015.

*Annual gure for 2009 projected by Centers for Medicare and Medicaid Services. Other data pointsare as of Q4 2009.Note: Healthcare costs reect National Health Expenditure (NHE) which measures the total amountspent in the U.S. to purchase healthcare goods and services during the year. The amount invested inmedical sector structures and equipment and in non-commercial research in the U.S. is also included.

Source: Bureau of Economic Analysis (2010); Centers for Medicare and Medicaid Services (2010).

*Projected by Centers for Medicare and Medicaid Services.Source: Centers for Medicare and Medicaid Services (2010).

Healthcare Spending Healthcare Spending

Motor

Vehiclesand Parts

Gasoline

and OtherEnergy Goods

FoodNational

Defense

Housing

and Utilities

Healthcare*

13.1%

5.5% 5.5%

2.5% 2.2%

17.3%

NHE

2015(p)*2010(p)*2009(p)*200820072006

$2,113 $2,240$2,339

$2,472 $2,570

$3,442

NHE as a Percentage of GDP

15.8% 15.9% 16.2%17.3% 17.3% 17.7%

$7, 07 1 $ 7, 42 3 $ 7, 68 1 $ 8, 047 $ 8,2 90 $10 ,63 1

PerCapita


22/101



International Healthcare Spending as a Percentage of GDP

The U.S. spends a higher proportion of GDP on healthcare than any other country, four percentage points ormore above all others.

Source: World Health Organization (2009); Centers for Medicare and Medicaid Services (2010)

Healthcare Spending

Less than or equal to 3

3.1 - 5

5.1 - 8

8.1 - 10

10.1 - 13

>13

Data not available

Global GDP Spendingon Healthcare

U.S.spendsthemostonhealthcare:17.3%

Germany,FranceandSwitzerland:10.1%-13.0%

Canada,theUnitedKingdomandJapan:8.1%-10.0%

Russia,MexicoandBrazil:5.1%-8.0%

China,IndiaandSaudiArabia:3.1%-5.0%


23/101



Growth Rates of Healthcare Spending, Wages and Salaries,and the CPI

The Nations Healthcare Dollar

Healthcare spending in 2010 is expected to grow 3.9 percent,twice as much as CPI but less than wages and salaries.

Nearly two-thirds of annual healthcare spend is for hospitalcare, physician and clinical services and prescription drugs.

*Projected by Centers for Medicare and Medicaid Services.Source: Centers for Medicare and Medicaid Services (2010); Congressional Budget Ofce (2010).

*Figures do not add to 100 percent due to rounding.**Other spending includes dental services, other professional services, durable medical products,other non-durable medical products, public health activities, structures and equipment, otherpersonal healthcare and research.Note: Figures are from year-end 2008.

Source: Centers for Medicare and Medicaid Services (2010).

Healthcare Spending Healthcare Spending

Consumer Price Index (CPI)Wages and SalariesNHE

2010(p)*2009(p)*200820072006

6.6% 6.0%

5.7% 5.9%

3.9%

6.3%

5.6% 4.4%

4.0% 4.0%

1.7%

3.8%

2.8%3.2%

-1.0%

Federal

35%

State &

Local12%

Private

Insurance

34%

Out of

Pocket12%

OtherPrivate

7%

Where it Came From Where it Went*

Hospital

Care

31%Other

Spending**23% Physician

& Clinical

Services

21%PrescriptionDrugs 10%

Nursing Home

Care 6%

Government

Administration andNet Cost of Private

Health Insurance7%

HomeHealthcare

3%


24/101



Percentage Spent on Healthcare by Source of Funds

Hospitals, physician and clinical services, and prescriptiondrugs account for 77 percent of private health insurance

spending, 61 percent of public spending and 43 percent of

out-of-pocket spending.

*Other spending includes nursing home, home health, dental services, other professional services,durable medical products, other non-durable medical products, public health activities, research,structures and equipment, government administration and net costs of private health insurance,and other personal healthcare. Figures are from year-end 2008.**Figures do not add to 100 percent due to rounding.Source: Centers for Medicare and Medicaid Services (2010).

Healthcare Spending

Other*Prescription DrugsPhysician and

Clinical Services

Hospital

Out-of-Pocket**Public**Private Health Insurance

23%

13%

31%

33%

40%

8%

16%

37%

56%

17%

18%

8%

Change Between 2004 and 2007 in Total Costs for Hospital Stays

Hospital costs are on the rise; between 2004 and 2007, costsfor all hospital stays increased $344 billion.

Source: Agency for Healthcare Research and Quality, Center for Delivery, Organization, and Markets,Healthcare Cost and Utilization Project, Nationwide Inpatient Sample, 2004 and 2007.

Hospital and Physician Expenditures

Hospital Stays withProcedure Performed

All Hospital Stays

$344B

$296B

6.3% 7.2%

PercentageChange


25/101



Percentage Change in Healthcare Utilization and Costs

Inpatient healthcare utilization declined between 2007 and 2008, but outpatient care and professional visits rose.Costs associated with healthcare services increased in the same time frame.

Note: Data include commercially insured individuals below age 65.Source: BHI (2009)BHI is a registered trademark of the Blue Cross and Blue Shield Association. The information contained herein is proprietary and was derived from claims informationsubmitted by Member Plans of the Blue Cross and Blue Shield Association.2009 BHI All Rights Reserved. No reproduction without permission.


Pharmacy

Scripts per

Member

Professional

Office Services

per Member

Outpatient

Services per

Member

Inpatient Days

per 1,000

-0.4%

1.7%1.7%

-3.9%

Percentage Change in Healthcare

Utilization Between 2007 and 2008

Percentage Change in Healthcare

Costs Between 2007 and 2008

Allowed

Amount per

Script

Professional

Office Allowed

Amount per

Service

Outpatient

Allowed

Amount per

Service

Inpatient

Allowed

Amount per

Day

7.7%

4.4%

2.5%

2.9%


26/101



Physician Ofce Visits

The total number of physician visits has remained relatively stable. Over half of visits are for primary care.

Source: Centers for Disease Control and Prevention. Health, United States, 2006-2009, Centers of Disease Control and Prevention (2008) National Health Statistics Reports, Number 3.


20072006200520042003

317 315

329

307

336

General andFamily Medicine

23%

InternalMedicine

14%

Obstetrics andGynecology

8%

Opthalmology

6%

Orthopedic

Surgery5%

Oncology

2%

Pediatrics14%

All Others

28%

Physician Office Visits per 100 People Office Visits by Physician Specialty

K i H l h Aff d bl


27/101



Hospital Employees in Millions and Percentage of Hospitals with Physician Afliations by Organization

Hospitals are employing more staff and reducing external afliations.

Source: Adapted from the American Hospital Association and Avalere Chartbook 2009: Trends Affecting Hospitals and Health Systems.


Group Practice without Walls

Management Service Organization

Independent Practice Organization

Physician-Hospital Organization

Hospital Full-time Equivalents

20072003

4.1

4.5

21%

16%

13%

10%9%

4%

3%

19%


28/101



Annual Growth in Drug Spending

After several years of declining trend, the rate of growth in specialty and overall drug spending rose between 2007 and 2008,driven by increased unit costs.

Note: Medicare utilization is included in Medcos overall trend as of January 1, 2006.Source: Drug Trend Report: The Great Healthcare Debates. 2009 Medco Health Solutions, Inc.; Drug Trend Report: Predictions. 2008 Medco Health Solutions,Inc.; Drug Trend Report: Humanomics. 2007 Medco Health Solutions, Inc.; Drug Trend Report: Personalizing Healthcare. 2006 Medco Health Solutions, Inc.

Prescription Expenditures

Unit CostUtilization

Total

Drug

Specialty

Drug

Total

Drug

Specialty

Drug

Total

Drug

Specialty

Drug

Total

Drug

Specialty

Drug

Total

Drug

Specialty

Drug

20.4%

4.5%

15.9%

8.5%

3.1%

16.9%16.1%

5.4%

2.8%

12.4%

2.0%

3.3%

15.8%

6.6%

2.7%

8.8%

1.8%

8.4%

11.5%

0.4% 4.4%

10.3%

2.7%

7.3%

1.0% 1.6%3.9% 4.3%

-1.1%

5.4%

2004 2005 2006 2007 2008

Specialty Pharmaceutical

Specialtydrugsaccountedfor

12.8%oftotalpharmacyspend

in2008.Thetoptherapeutic

classescontributingtospecialty

drugpharmacyspending

includeautoimmuneconditions,

multiplesclerosisandcancer,

togethercomprising60percent

ofspecialtydrugspend.

K i H lth Aff d bl


29/101



200820072006

53.4%56.1%

58.8%

Generic Prescriptions as a Percentage of Total Scripts, 2006 - 2008 Average Consumer Pharmacy Copayments by Tier

As a percentage of all scripts, generic scripts are on the rise,up 5.4 percentage points between 2006 and 2008. While average copayments for generic prescriptions remain at$10, copayments for other prescriptions continue to rise.

Note: Data include commercially insured individuals below age 65.Source: BHI (2009)BHI is a registered trademark of the Blue Cross and Blue Shield Association. The informationcontained herein is proprietary and was derived from claims information submitted by Member Plansof the Blue Cross and Blue Shield Association.2009 BHI All Rights Reserved. No reproduction without permission.

*Fourth-tier drugs are drug products, such as lifestyle or injectable drugs, that are paid for using new types ofcost-sharing arrangements that typically have higher copayments or coinsurance. The average copayment forfourth-tier drugs is calculated using information from only those plans that have a fourth-tier copayment amount.Source: Employer Health Benets 2009 Annual Survey, (#7936), The Henry J. Kaiser Family Foundation andHRET, September 2009. This information was reprinted with permission from the Henry J. Kaiser Family Founda-tion. The Kaiser Family Foundation is a non-prot private operating foundation, based in Menlo Park, Calif., dedi-cated to producing and communicating the best possible information, research and analysis on health issues.

Prescription Expenditures Prescription Expenditures

20092005

Other(Tier 4)*Non-PreferredDrugs(Tier 3)

PreferredDrugs(Tier 2)

Generic Drugs(Tier 1)

$10 $10

$23$27

$40

$46

$74

$85


30/101



Generic Drug Approvals

Each year about 100 rst-time generics are introduced. Patent expirations of several blockbuster drugs in the next two yearswill open almost $18 billion to generic competition.

Note: First-time generics are those drug products that have never been approved before as generic drug products and are new generic products to the marketplace.Source: Center for Drug Evaluation and Research, Food and Drug Administration (2010) www.fda.gov/cder/ogd/approvals/default.htm, Drug Trend Report: The Great Healthcare Debates. 2009 Medco Health Solutions, Inc.

Prescription Expenditures

20092008200720062005

93

10099

91

112

First-Time Generic Drug Approvals

PatentExpiration

DrugBrandName(Manufacturer)

Use/Indication

2008U.S.Sales

(BillionsofDollars)

2010

Flomax(BoehringerIngelheim)

EffexorXR(Wyeth)

BenignProstaticHypertrophy

Depression

$1.3

$2.8

2011

Aricept(Eisai)

Levaquin(Ortho-McNeil)

Actos(Takeda)

Zyprexa(Lilly)

Lipitor(Pzer)

AlzheimersDisease

BacterialInfections

Type2Diabetes

Schizophrenia

HighCholesterol

$1.2

$1.7

$2.6

$1.9

$6.4

Total $17.9

Blockbuster Drugs Going Off-Patent



31/101



Average Annual Premium for Family Coverage

Due to rising healthcare costs, annual family health insurance premiums have risen 23 percent in the last ve years; employerscontinue to cover nearly three-fourths of those costs.

Note: Coverage is for a family of four.Source: Calculated based on Employer Health Benets 2009 Annual Sur vey, (#7936), The Henry J. Kaiser Family Foundation and HRET, September 2009This information was reprinted with permission from the Henry J. Kaiser Family Foundation. The Kaiser Family Foundation is a non-prot private operating foundation, based in Menlo Park, Calif., dedicatedto producing and communicating the best possible information, research and analysis on health issues.

Private Health Insurance

75.1% 74.1% 72.9% 73.5% 73.7%

Percentage of Employer Contribution

Employee ContributionEmployer Contribution

20092008200720062005

$10,880

$2,713 $2,973$3,281 $3,354

$3,515

$8,167 $8,508 $8,824 $9,325 $9,860

$11,480$12,160

$12,680

$13,375


32/101



Hospital Payment-to-Cost Ratios for Medicare, Medicaidand Private Payers

Hospitals use higher charges to private payers to compensatefor a gap in payments from Medicare and Medicaid.

Note: Payment-to-cost ratios indicate the degree to which payments from each payer covers the costs oftreating that providers patients. Data are for community hospitals and cover all hospital services. Imputedvalues were used for missing data (about 35% of observations). Most Medicaid managed care patientsare included in the private payers category.Source: Adapted from the American Hospital Association and Avalere Health TrendWatch Chartbook 2009:Trends Affecting Hospitals and Health Systems; Avalere Health analysis of American Hospital Association

Annual Survey data, 2008, for community hospitals.


MedicaidMedicarePrivate Payers

20082007200620052004

100%

129% 129% 130%132%

128%

91%91%91%92%92%

90%87% 86%

88% 89%

Break Even (Payment = Cost)

Percentage of Members Out-of-Pocket Cost Sharingby Product Line, 2006 - 2008

Between 2006 and 2008, percentage of members out-of-pocket cost sharing remained relatively at, but actual

member out-of-pocket spending increased.

Note: Data include commercially insured individuals below age 65. TRD is traditional health plan.Source: BHI (2009)BHI is a registered trademark of the Blue Cross and Blue Shield Association. The information con-tained herein is proprietary and was derived from claims information submitted by Member Plansof the Blue Cross and Blue Shield Association.2009 BHI All Rights Reserved. No reproduction without permission.


TRDPOS PPOHMO

200820072006

13.2%13.0% 13.1%

11.6% 11.5%11.1%

9.3%10.4%

10.8%

5.9%5.7%5.6%

AnnualMemberOut-of-PocketSpending

$230 $261 $287



33/101



2008200720052003

43%

59%

73%

62%

Employers Who are Very Confident that Healthcare Benefits

Will be Offered by Employers for the Next Decade

Actions Organizations Are Taking Regarding Their Healthcare

Programs Given Recent Events in Economy

Actions Organizations Are Taking Regarding Their Healthcare Programs Given Recent Events in Economy

About 60 percent of companies are very condent they will continue to offer healthcare benets in a decade, a decline from 2007.

Source: Towers Watson and NBGH (2009) The Keys to Continued Success: Lessons Learned from Consistent Performers. 14th Annual Employer Surveyon Purchasing Value in Healthcare.


HaveAlreadyTakenAction

ExpecttoTakeAction

NoActionExpected

Delay/CancelPlannedChangesinPlanDesign

6% 7% 87%

Delay/CancelPlannedProgramOfferings

5% 8% 86%

DevelopContingencyPlanforMidyearChanges

1% 13% 86%

IncreaseEmployeeCostSharing

34% 23% 44%

RevampHealthcareStrategy

30% 30% 41%


34/101



Private Health Plan Administrative Expenses as a Percentageof Premiums

Savings and Recoveries from Fraud Investigations in Millions

Administrative costs of private health plans represent about9 percent of overall premiums. Additionally, administrative

functions covered by private health plans exceed that

of Medicare.

Blue Cross and Blue Shield Companies anti-fraud efforts arehelping to control costs, yielding savings and recoveries of

nearly $350 million in 2008.

*Medicare may perform these functions in a limited capacity.Source: Douglas B. Sherlock, CFA, Administrative Expenses of Health Plans (2009).

Source: Blue Cross and Blue Shield Association (2009).

Administrative Cost Efciencies Administrative Cost Efciencies

9.2%

Private Health Plans

Administrative Functions

InadditiontotheadministrativefunctionsthatMedicareperforms,privatehealthplansalsoperformthefollowingfunctions:

MedicalManagement/QualityAssurance,includingCareCoordination,DiseaseManagementandWellness

ProviderContracting*

CorporateServices

RecoveriesSavings

200820072006

$187

$128

$114

$150

$59

$134

$197

$248

$347

Investigations Closed

9,817

11,655

16,612

Improving Quality and Safety



35/101





Section

3


PotentialSav ingsfromIm provement sinHealthc areQualityan dSafet y.............35

SentinelEven ts............................................................................................................. 36

VariationsinTreatingPat ients....................................................................................37

KneeandHipRepl acementSur geryper10,00 0Membersin2 007byRegion......38

InappropriateUseofAntibiotics................................................................................39

ExamplesofMHAKeystoneCenterCollaborative...................................................40

AHRQ/BostonMedicalCenterProjectRED(Re-EngineeredDischarge)...............41

Percent ageofHosp italPatien tsReceiv ingEvidenc e-Base dCare..........................42

BlueDistinctionCentersDesignations....................................................................43

PatientOutcomesatBlueDistinctionCenters........................................................44

AverageCostofInitialBariatricProcedure...............................................................45

ClinicalQualityInformationNeededWhenSelecting

aPhysician/Facility......................................................................................................46

EffectivePolicyStrategiestoControlCostswhileMaintaining

orImprovingQuality....................................................................................................46

Initiati vesAimedtoIn creaseQuali tyofCare...........................................................47

PaymentPoliciesInvolvingNeverEvents.................................................................48

Pay-for-Pe rform ance(P4P)P rograms........................................................................49

Componen tsinProvid erMeasurem entforP4PPr ograms.....................................50

Percent ageofP4PProgr amsRepor tingImprove ment............................................51

CMSHospit alP4PDemons trationAver ageCompos iteQualit yScore..................52


36/101

HealthcareTrendsinAmerica:AReferenceGuidefromBCBSA(2010Edition)


34

Improving patient safety and care by delivering consistent,

high-quality care is critical to achieving a better healthcaresystem. Inconsistencies in the quality of care can lead to prevent-

able illness, injury, unnecessary hospitalization or even death.

Promoting and adhering to proven, evidence-based treatments

and procedures will help save lives and lower healthcare costs.

The impact of treatment variations and inconsistencies is

signicant, with some estimates indicating that better quality

and safety could save nearly 90,000 lives and as much as $400

billion a year. There are positive signs as payers are no longerreimbursing claims related to never events serious medical

errors that should not happen. In fact, all 39 Blue Cross and

Blue Shield companies have adopted payment policies that

prohibit reimbursement to contracted acute care hospitals for

12 preventable events identied by the Centers for Medicare &

Medicaid Services.

Collaborating with leading medical organizations across the

country, Blue Cross and Blue Shield companies have morethan 1,600 Blue Distinction programs in 46 states and the

District of Columbia committed to improved quality and

safety standards in the areas of cardiac care, bariatric surgery,

complex and rare cancers, transplants, spine surgery and

knee/hip replacement. In order to receive a Blue Distinction

designation, facilities must meet stringent evidence-based,

quality-focused selection criteria developed with the help of

expert physicians and medical organizations.

Efforts by the Blues and others to reward higher quality care

will improve health outcomes and patient medical experiences,

and is a cornerstone for maintaining healthcare affordability.

Summary



37/101



Potential Savings from Improvements in Healthcare Quality and Safety

Quality and safety initiatives can help reduce unnecessary medical spending, estimated at more than $400 billion annually or 16percent of healthcare spending.

Source: PricewaterhouseCoopers Health Research Institute (2009) The Price of Excess: Identifying Waste in Healthcare Spending.

TOTALDefensiveMedicine

Non-Adherence

PreventableHospital

Re-admissions

PoorlyManagedDiabetes

MedicalErrors

UnnecessaryER Visits

TreatmentVariations

HospitalAcquiredInfections

Over-prescribingAntibiotics

$1B $3B $10B$14B

$17B

$22B

$25B

$100B

$210B

$402B

I i Q lit d S f t


38/101



Sentinel Events

Sentinel or never events situations that should not happen continue to be a problem nationwide.

*Cumulative as of Q3 2009.Note: A sentinel or never event is an unexpected occurrence involving death or serious physical or psychological injury, or the risk thereof. Serious injury specically includes loss of limb or function.The phrase or the risk thereof includes any process variation for which a recurrence would carry a signicant chance of a serious adverse outcome. Such events are called sentinel because they signalthe need for immediate investigation and response.Source: Joint Commission (2009) Sentinel Event Statistics as of Sept. 30, 2009.

2009*2008200720062005

367344

450

510 507

Self-Reported Sentinel Events

33

12

12

15

19

12 21

23

18

3332

8

16

19

15

17

1816

11

16

14

21

22

25 17

14

21

25

15 14 22

17

16

19

1815

1419

16

5710

13

23

14

241643

26

29

34

DC: 96

JCAHO Reviewed Sentinel Events per Million by State

PR: 12



39/101


p g y y

Variations in Treating Patients

There is considerable variation by region in the quality of care delivered for treating diabetes and cardiovascular disease.

Note: Measures include only commercially insured members and exclude Medicare and Medicaid members.Source: National Committee for Quality Assurance. The State of Healthcare Quality Report, 2007-2009.

NewEngland

+5.6MidAtlantic:

+0.5

South

Atlantic:-1.7

SouthCentral:

-5.3

West North

Central:

+1.3

Mountain:

-0.8

Pacific:

+1.2East North

Central+1.8

Variation in the Quality of Care for Diabetes

New

England+5.3Mid

Atlantic:

+2.3

South

Atlantic:

-1.5

SouthCentral:-4.9

West NorthCentral:

-0.7

Mountain:-1.5

Pacific:

-0.5East North

Central+2.0

Variation in the Quality of Care for Cardiovascular Disease

-2.5% or more -1.0% to -2.5% Within 1.0% of mean +1.0 to 2.5% +2.5 or more

Difference From National Average



40/101



Knee and Hip Replacement Surgery per 10,000 Members in 2007 by Region

There also is variation in procedures, for example, the rate of hip and knee replacement surgeries nationwide.

Note: Data include commerically insured individuals below age 65.Source: BHI (2009).BHI is a registered trademark of the Blue Cross and Blue Shield Association. The information contained herein is proprietary and was derived from claims information submittedby Member Plans of the Blue Cross and Blue Shield Association.2009 BHI All Rights Reserved. No reproduction without permission.

New

England14.0

Mid

Atlantic:

13.6

SouthAtlantic:

16.1West South

Central:17.2

EastSouth

Central:

17.5

West NorthCentral:

21.5Mountain:

20.9

Pacific:13.6 East North

Central

18.2

Knee Replacements

National Average: 17.4Hip Replacements

National Average: 8.5

New

England

9.4

MidAtlantic:

8.7

SouthAtlantic:

8.3West SouthCentral:

6.7

East

SouthCentral:

7.6

West NorthCentral:

10.2Mountain:

10.3

Pacific:

8.3 East NorthCentral

9.8



41/101


Inappropriate Use of Antibiotics

There is inconsistency in the appropriate use of antibiotics.

Note: Measures include only commercially insured members and exclude Medicare and Medicaid members unless stated.Source: National Committee for Quality Assurance. The State of Healthcare Quality Report, 2007-2009.

200820072006

Measure:

Percentage of people aged 18 to 64 diagnosed with acute

bronchitis and given an antibiotic prescription.

71.3%74.6%

75.4%

Use of Antibiotics for Acute Bronchitis

Acutebronchitisisarespiratoryinfectioncharacterizedbyacoughthatlastsuptothreeweeksandiscausedbyabacteriainonlyoneinevery10cases,suggestingthatantibiotictreatmentisrarelywarranted.

Prescriptionofantibioticsforviralinfectionsareineffectiveandresultinwastedexpenditure.

Overprescriptionof

antibioticscanpotentiallyleadtoresistanceandincreasedcosts.



42/101



Examples of MHA Keystone Center Collaborative

Quality initiatives, such as the use of checklists, have resulted in lives saved, shorter hospital stays and reduced costs.

Note: MHA is the Michigan Health and Hospital Association.Source: MHA Keystone Center for Patient Safety and Quality (2009) Setting the Healthcare Agenda. 2009 Annual Report.

Quality Initiatives

IntensiveCareUnite(ICU) Hospital-AssociatedInfection(HAI)

Initiative

LaunchedinOctober2003withresultsfrom74hospitalsasofMarch2009 Reducecentralline-associatedbloodstreaminfections(CLABSIs)and

ventilator-associatedpneumonia(VAP)inintensivecareunit(ICU)patients

Launchedin2007withinitialresultsfrom16hospitals EliminateHAIs

Interventions Setupateamthatincludeshospitaladministrator,directors,nurses

andphysicians Utilizeachecklisttoensureadherencetoinfectioncontrolpractices

Focusonappropriatehandhygiene,reducingcatheter-associatedurinarytractinfections(CA-UTI)andavoidingCLABSIs

Collectdata,sharendingsandtweakinterventionaccordingly

Results

Lives Saved AvoidedHospital Days

HealthcareDollars Saved

1,830140,700

$271M

Jul 08Jan 08

Patients

withCA-UTIs

AvoidedHospital Days

HealthcareCosts Saved

32K29K

1,000 $1M



43/101


AHRQ/Boston Medical Center Project RED (Re-Engineered Discharge)

A well-dened hospital discharge protocol leads to better patient outcomes and reduced costs.

Quality Initiatives

*Hospital visits include initial visit plus readmission when applicable.Source: Agency for Healthcare Research and Quality ( 2009) Project RED (Re-Engineered Discharge) Toolkit.

$412,544

$21,389

$11,825

$8,906

$12,617

$1,203

$791

$268,942

Cost for:

Hospital Visits* ER Visits PCP Visits Per DischargedPatient

Non-Intervention Patients Intervention Patients

Overview

Focusoneducatingpatientsaboutpost-hospitalcare

1.Denerolesandresponsibilitiesofeachstaffmember

2.Educatepatientsthroughouthospitalization

3.Useawrittendischargetofacilitateowofinformationbetweenpatientsdoctorand

hospitalteam



44/101



Percentage of Hospital Patients Receiving Evidence-Based Care

There has been a dramatic increase in the percentage of patients receiving evidence-based care for heart failure, pneumoniaand heart attacks.

Note: All improvements in performance are statistically signicant. Composite measures combine the results of all individual measures into a single percentage rating calculated by adding, or rolling up, the numberof times recommended care was provided to patients and dividing this sum by the total number of opportunities to provide this care.Source: The Joint Commission (2009) I mproving Americas Hospitals: The Joint Commissions Annual Report on Quality and Safety.

Quality Initiatives

20082002

Heart Attack Care

Composite

Pneumonia Care

Composite

Heart Failure

Composite

59.7%

91.6%

72.3%

92.9%

86.9%

96.7%

ImprovementSinceInceptionofMetric

HeartFailureCareComposite 31.9%

PneumoniaCareComposite 20.6%

HeartAttackCareComposite 9.8%



45/101


Blue Distinction Centers Designations

The Blues

promote quality care with more than 1,600 programs designated as Blue Distinction Centers

(BDCs) across 46 statesin the U.S.

Note: Designation as Blue Distinction Centers means these facilities overall experience and aggregate data met objective criteria established in collaboration with expert clinicians and leading professionalorganizations recommendations. Individual outcomes may vary. To nd out which services are covered under your policy at any facilities, please call your local Blue Cross and/or Blue Shield Plan.Source: Blue Cross and Blue Shield Association (2010).

Quality Initiatives

WA

OR

CA

NV

AZ

UT CO

NM

MT

WYID

SD

ND

NE

KS

OK

TXLA

AR

MO

IA

MN

WI

IL ID

MI

KY

TN

MS AL GA

FL

SC

NC

VAWV

OH

NY

VT

NH

ME

MACT

RINJ

DEMD

HI

AK

PA

Blue Distinction Centers

for Bariatric Surgery

Blue Distinction Centersfor Cardiac Care


for Complex and Rare Cancers


for Knee and Hip ReplacementSM

Blue Distinction Centersfor Spine SurgerySM


for Transplants



46/101



Patient Outcomes at Blue Distinction Centers

Blue Distinction Centers (BDCs) deliver signicantly better overall quality outcomes.

Note: Results shown are mean values. Mortality rates for bypass surgery and heart transplant are risk-adjusted.Source: Blue Cross and Blue Shield Association (2010) BCBSA Analysis of 2005-06 Hospital RFI Data. Bone marrow transplant data based on 2009 actuarial analysis of RFI data.Heart transplant data include facility results abstracted from the Scientic Registry for Transplant Recipients.

Quality Initiatives

OtherBDC

Bariatric Surgery

(30 days post)

Heart Transplant

(1 year post)

Adult Allogeneic

Stem Cell Transplant

(1 year post)

Bypass Surgery

Statistically significant difference

2% 3%

39%

54%

11%

19%

5%8%

Mortality Rates Complication Rates



47/101


Average Cost of Initial Bariatric Procedure

Blue Distinction Centers (BDCs) demonstrate a statistically signicant cost advantage while demonstrating quality expected from

BDCs robust designation requirements

Note: BDC signicantly different than non-BDC with p


48/101

p g y y


Clinical Quality Information Needed When Selectinga Physician/Facility

Effective Policy Strategies to Control Costs while Maintaining orImproving Quality

Consumers indicate that physician participation in andrecognition by quality programs inuences selection of

physician or facility.

Leading health experts believe aligning incentives is a way to

control costs and improve quality.

Source: Blues Cross and Blue Shield Association (2009) Transparency Survey. Base: Opinion leaders in health pol icy and innovators in healthcare del ivery andnance within the U.S., as identied and nominated by peers. Figure captures responseof very or extremely effective.Source: Commonwealth Fund Healthcare Opinion Leaders Survey, April 2009.

Quality Initiatives Aligning Incentives

Physician

recognized by

quality assessmentorganization

Physician follows

early disease

detectionguidelines

Physician follows

prescription

medicationguidelines

Hospital

participates

in medicalerrors program

68%

53% 53%49%

More consumer cost-sharing

Malpractice liability reform

Reporting information on provider

quality and efficiency

Incentives for patients who choose

high-quality providers

All-payer rate setting

P4P with rewards to

high-quality providers

Provider payment reform, moving away

from FFS toward bundled payment 70%

45%

40%

35%

30%

24%

19%



49/101


Initiatives Aimed to Increase Quality of Care

Several quality improvement initiatives are focused on aligning incentives with performance.

Source: Blue Cross and Blue Shield Association (2009).

Aligning Incentives

Efforts Organizations Tactics

Provider Performance Measurementand Recognition

FederalandStateGovernmentMedicareandMedicaidPrograms

TheJointCommissionontheAccreditationofHealthcareOrganizations(JCAHO)

TheLeapfrogGroup

PrivatePayers

Measureproviderperformanceforvariousmetricsrelatedtodiagnosis,treatmentandmanagementofdiseasetoprovideabaselineforprovidersandgaininsightaboutpossibleareasofimprovement.

Promoteadherencetoevidence-basedcare.

Makeinformationavailabletoconsumerstoincreasetransparencyandaidindecisionmaking.

Alignnancialincentivesamongproviderstocreateasystemofjointclinicalandnancialaccountability.

Notpayingforneverevents.

Possiblyprovidedisincentivesfortheprovisionoflowerqualityhealthcare.

Createmechanismstoreviewandmonitorinformationtoidentifypotentialerrorsandrisks.

Shared Accountability

Incentive Programs

Employers



50/101


Payment Policies Involving Never Events

Payers are not reimbursing hospitals for never events, which encourages quality of care.

*2008 survey results are based on 1,282 acute care hospitals in 44 states.Source: Centers for Medicare and Medicaid Services (2009); The Leapfrog Group, Leapfrog Hospital Survey Report, 2009; Lembitz, A et al. (2009) Clarifying Never Events and Introducing Always Events.Patient Safety in Surgery. December 2009; Blue Cross and Blue Shield Association (2010); Dallas Business Journal ( 2008) Medicare, Insurers to Stop Reimbursing for Errors. October 17, 2008.

Aligning Incentives

20082007

53%

65%

Percentage of Hospitals Agreeing to ImplementLeapfrogs Never Event Policy*

Never Events Overview

In2002,theNationalQualityForum(NQF)established27neverevents

(currentlythereare28),adverseeventsthatwereserious,largelypreventable.Exampleincludeswrong-sitesurgery.

In2006,TheLeapfrogGroupissuedanevereventpolicybasedontheNQFlistthat\askshospitalstowaiveincrementalcostsassociatedwithneverevent.

OnJanuary15,2009,theCentersforMedicareandMedicaidServices(CMS)nolongercoveredasurgicalorinvasiveprocedurecostofoperatingroom,hospitalizationsandotherservicesrelatedtoapractitionererroneouslyperformingadifferentprocedure,thecorrectprocedurebutonthewrongbodypart;orthecorrectprocedurebutonthewrongpatient.

Privatepayersarenotpayingforneverevents

All39independentBlueCrossandBlueShieldcompanieshaveestablishedapaymentpolicythatprohibitsreimbursementtocontractedacutecarehospitalsforneverevents

Aetna,CIGNAandUnitedHealthcareareincorporatingnevereventslanguageintotheircontracts



51/101


Pay-for-Performance (P4P) Programs

Pay-for-performance (P4P) programs are expanding and many are leading to improvements in both quality and cost.

*Data are specic to physician P4P programs only and does not include hospital P4P.Note: Fifty-two plans responded to the survey in 2006 and 62 plans reported to the survey in 2008.Source: Med-Vantage, Inc., The Leapfrog Group and Integrated Healthcare Association (IHA). 2008 Surveys of P4P and Transparency Programs. All rights reserved.

Aligning Incentives

52

62

6.8%

1.9%

7.3%

2.5%

CostQuality

20082006

43%

10%

52%

21%

HospitalPhysician

20082006

Average P4P Incentives as aPercentage of Total Compensation

Percentage of Programs ReportingImprovements in Performance*



52/101


Components in Provider Measurement for P4P Programs

Clinical quality, safety and efciency are common features in the Various P4P programs offered by individual Blue Cross and

Blue Shield Plans.

*Figures do not add up to 100% due to rounding.**Not part of hospital-based survey.***Not part of physician-based survey.Note: Each BCBS Plan, acting as an independent entity, makes its own determination on all issues involving benets, claims, coverage, accounts, and provider contracting (including but not limited toand P4P features).Source: Med-Vantage 2009 National P4P Survey - BlueCross BlueShield Plan Responses.

Aligning Incentives

Other (Administrative, Clinical HIT Adoption, Member Access**, and Utilization***)

Patient satisfactionEfficiency or cost of care

Patient safety or medical error reductionClinical quality

58%21%

9%

5%7%

Hospitals Physicians*

51%

27%

5%

16%

2%

Clinical quality accountsfor at least 50 percent

of P4P metrics



53/101


Percentage of P4P Programs Reporting Improvement

Of the Blue Cross and Blue Shield Plans that analyzed the impact of P4P programs, more than 80 percent report improvements

in physician and hospital clinical measures after implementing P4P.

Source: Med-Vantage 2009 National P4P Survey - BlueCross BlueShield Plan Responses.

Aligning Incentives

HospitalPhysician

Too early to tellCost performance

has improved

Performance on

patient surveys

has improved

Providers have

invested in QI or

electronic systems

Performance on

clinical measures

has improved

82%88%

64%

25%

55%

13%

27% 25%

18%13%



54/101


CMS Hospital P4P Demonstration Average Composite Quality Score

CMS P4P demonstration program has resulted in the delivery of higher quality care.

Source: Centers for Medicare and Medicaid Services (2008) Roadmap for Implementing Value Driven Healthcare in the Traditional Medicare Fee-for-Service Program.

Aligning Incentives

Year 3Year 1

AMIHip and Knee

Replacement

CABGPnuemoniaHeart Failure

64.5%

88.7%

69.3%

90.5%84.8%

97.4%

84.6%

96.9%

87.5%

96.1%

Hospital P4P:Premier Demonstration Overview

DemonstrationstartedinOctober2003

250hospitalsin38states

CMSP4Pcoveredveclinicalareas:

AcuteMyocardialInfarction(AMI)

CoronaryArteryBypassGraft(CABG)

HeartFailure Pneumonia

HipandKneeReplacement

24.2% 21.2% 12.6% 12.3% 8.6%

ImprovementBetweenYear1andYear3

Promoting Quality and Safety

Improving Consumer Health


55/101

LeadingCaus esofDeathinT housands.................................................................... 55

DirectandIndirectCostsRelatedtoDiseaseandPoorLifestyle

ChoicesinBilli ons........................................................................................................ 56

IncreaseinV isitingPhy siciansAnn uallyBetw een2006and20 08........................57

EmployerStra tegiesforP romotingP rimaryCar e.................................................... 57

AdultsAge18andOverwithCardiovascularDiseaseinMillions..........................58

Hospit alDischar gesforCard iovascularDis ease...................................................... 59

ManagingCardiovascularDisease.............................................................................60

Screeningf orandManagingCar diovascularD isease.............................................61

Prevalenceo fCancer..................................................................................................62

Impacto fCancerScr eening........................................................................................63

PreventiveSc reeningforC ancer................................................................................64

PhysicalActivityLevelsinChildrenandAdults......................................................65

ChildrenandAdultsConsideredOverweight...........................................................66

Prevalenceo fObesit yAmongU.S.Adul tsbyStat e................................................67

IncreaseinAdultPerCapitaMedicalSpendingAttributabletoObesity,ByInsuranceStatusandTypeofService,2006(in2008Dollars)..........................68

UtilizationRatesandMedicalExpendituresforChildren

withPrivateInsurance.................................................................................................68

ScreeningandManagingObesityandPromotingPhysicalActivity.....................69

Obesit yandDiabetes .................................................................................................. 70

PrevalanceofD iabetesA mongChildre nandAdults.............................................. 71

Preventingan dManagingDiab etes...........................................................................72

Screeningf or,Monitoringand ManagingDiab etes.................................................73

PrevalanceofSm okingAmo ngHighScho olStudent sandAdult s....................... 74

Impactof Smoking.......................................................................................................75

Monitorin gandAdvisin gAgainstSmo king.............................................................. 76


Section

4Improving Consumer Health



56/101

HealthcareTrendsinAmerica:AReferenceGuidefromBCBSA(2010Edition) 54

Improving the health of Americans represents a major

challenge. By some estimates, nearly half of our total national

health expenditures are spent on treating heart disease, cancer,

diabetes (three of the top ve leading causes of death in the

U.S.) and poor lifestyle choices such as smoking, sedentary

behavior and over-eating.

Obesity and sedentary behavior are linked to the onset of diabetes

and are risk factors for several other conditions. Obese adults

spend $1,400 more on healthcare services and prescription drugs

annually than adults with normal weight. Overweight children

are also more likely to need physician visits, be hospitalized or

need treatment for mental or physical conditions.

Regular exercise and maintaining a healthy weight help prevent

diabetes. Today, two-thirds of adults and one in six children

aged six-19 are overweight. Fewer than half of all children meet

physical activity guidelines, and only 31 percent of adults report

having regular exercise, while nearly 40 percent of adults report

being inactive. In addition, the rate of children and adults

diagnosed with diabetes is on the rise even though in many

cases the onset of diabetes can be prevented.

Prevention can help alleviate the impact of other diseases as well.

Early screening for cancer can reduce the number of people who

die from colorectal cancer by at least 60 percent while blood

pressure control reduces the risk of heart disease and stroke

among people with diabetes by as much as 50 percent.

Blue Cross and Blue Shield companies are teaming up with

employers and other key stakeholders to provide educationmaterials and health information to improve the health of the

communities they serve. Most recently, Blue Cross and Blue

Shield companies produced a diabetes toolkit for healthcare

physicians and patients to help them prevent, treat and manage

diabetes in children and adults.

Summary

National Healthcare Trends



57/101


Leading Causes of Death in Thousands

Preventable and controllable illnesses, such as cardiovascular disease, diabetes and stroke, are among the leading causes

of death in the U.S.

Source: Centers for Disease Control and Prevention. (2009) Health, United States, 2003 and 2008.

Burden of Disease

200620052000

DiabetesChronic Lower

Respiratory Disease

Cerebrovascular

Disease (Stroke)

Malignant

Neoplasms (Cancer)

Heart Disease

711

652632

553 559 560

168144 137

122 131 125

69 75 72



58/101


Direct and Indirect Costs Related to Disease and Poor Lifestyle Choices in Billions

The estimated costs related to three major conditions cardiovascular disease, cancer and diabetes and poor lifestyle choices

have been rising.

Source: National Institutes of Health, National Heart, Lung and Blood Institute Fact Book, Fiscal Year 2003, 2007 and 2008, PricewaterhouseCoopers Health Research Institute (2009)The Price of Excess: Identifying Waste in Healthcare Spending.

Burden of Disease

Indirect CostsDirect Costs

200920042009200420092004

$368.4

$141.7

$161.5

$120.4

$144.4

$23.8

$30.3

$226.7

$313.3

$69.4

$99.0

$61.5 $85.6

$474.8

$189.8

$243.4

$85.3

$115.9

Cardiovascular

Disease

Cancer Endocrine, Nutritional

and Metabolic

Poor Lifestyle Choices

Obesity/Overweight

$200billion

Smoking

Upto$191billion




59/101


Increase in Visiting Physicians Annually Between 2006 and 2008

Primary care, such as annual visits with a members

physician, can identify at-risk individuals early. More

people are seeing their physician on an annual basis,

but there is room for improvement.

Note: Data include commercially insured individuals below age 65.Source: BHI (2009).BHI is a registered trademark of the Blue Cross and Blue Shield Association. The informationcontained herein is proprietary and was derived from claims information submitted by Member Plansof the Blue Cross and Blue Shield Association.2009 BHI All Rights Reserved. No reproduction without permission.

Primary Care

14%

25%

Males, Age 20-64, with an

Annual Physician Visit

Females, Age 20-64, with

an Annual Physician Visit

Employer Strategies for Promoting Primary Care*

Employers are promoting the use of primary care through

educational materials and incentives.

*Percentage of employers with better healthcare cost trends implementing strategies relative tothose with worse cost trends.Source: Towers Watson and NBGH (2009) The Keys to Continued Success: Lessons Learned fromConsistent Performers. 14th Annual Employer Survey on Purchasing Value in Healthcare.

Primary Care

Planned for 2010In place now

Provide general education material

to employees and dependents

Designate in the networkprovider directory

Waive/reduce copays for

primary care office visits

Steerage at times of interaction

with health management programs

Incent selection/use of

primary care physicians

Provide online messages to

support primary care utilization

Participate in community-based

pilot programs

56%

40%

24%

21%

16%

9%

4%

6%

4%

5%

2%

2%

1%

62%

41%

26%

25%

19%

14%

6%

3%



60/101


Adults Age 18 and Over with Cardiovascular Disease in Millions

In 2008, more than 33 million Americans had cardiovascular disease an increase of about 3 million in the last ve years.

Source: Centers for Disease Control and Prevention (2009) National Health Interview Survey 2004-2008.

Cardiovascular Disease

StrokeHeart Disease

20082007200620052004

30.2 30.8 29.7 30.5

33.1

5.5 5.2 5.6 5.4

6.5

24.7 25.6 24.1 25.1 26.6




61/101


Hospital Discharges for Cardiovascular Disease

More people are hospitalized as a result of cardiovascular disease than any other condition.

Source: Centers for Disease Control and Prevention, National Center for Health Statistics (2009),National Heart, Lung and Blood Institute (2009).


Neoplasms

Endocrine System

Respiratory System

Digestive System

Obstetrical

Cardiovascular 6.2

4.1

3.5

3.5

1.7

1.6

Hospital Discharges in Millions

for the Leading Diagnostic Groups

Hospital Discharges Associated with

Cardiovascular Disease in Thousands

20062004200220001990

5,161

6,3636,3736,294 6,161



62/101


Managing Cardiovascular Disease

Reducing blood pressure and cholesterol levels signicantly lowers the risk of cardiovascular disease.

Source: Centers for Disease Control and Prevention (2009) Chronic Disease Prevention and Health Promotions.


Stroke

Cardiovascular

Disease

Coronary Heart

Disease

Overall

Deaths

13%

21%

25%

37%

StrokeHeart Attacks

30% 30%

Reducingsystolicbloodpressure12-13mmHgoverfour

yearscanreduce:Reducingserumcholesterollevelsby10percent

canreduce:




63/101


Screening for and Managing Cardiovascular Disease

Among those with cardiovascular disease, 89 percent receive proper cholesterol screening, while only 63 percent of those at risk

have reduced their blood pressure to recommended levels.

*Specic to patients with cardiovascular conditions.Note: Measures include only commercially insured members and exclude Medicare and Medicaid members unless stated. LDL-C is low density lipoprotein cholesterol.Source: National Committee for Quality Assurance. The State of Healthcare Quality Report, 2007-2009.


Cholesterol Screening* High Blood Pressure Management

200820072006

87.5% 88.2% 88.9%

59.7%63.4%62.2%

200820072006

Percentage of:Membersaged18to75whoweredischargedforaheartcondition

whoreceivedanLDL-Cscreening

Hypertensivemembersage18to85whosebloodpressurewas

controlledtolessthan140/90mmHgduringthepastyear



64/101


Prevalence of Cancer

Cancer is the number two leading cause of death in the U.S. The prevalence of cancer has gradually declined.

Source: Centers for Disease Control and Prevention (2009) Health, United States, 2008.

Cancer

Overall Prevalence ofCancer per 100,000 Prevalence of Cancer byOrigin per 100,000

20062005200420032002

469.3 456.9 456.0447.5 439.9

Cervical (Female)Breast (Female)

Prostate (Male)Colorectal (Male)

20062005200420032002

176.0

163.1 163.3

148.6155.1

131.6122.6 122.7 121.9 119.6

59.5 57.7 55.8 53.2 51.1

8.3 8.1 7.7 7.7 7.3




65/101


Impact of Cancer Screening

Routine cancer screening can reduce cancer mortality rates by up to 60 percent.

Source: Centers for Disease Control and Prevention (2009).

Cancer

60% 25%

20%

20%

60%During a

10-year period

Routinecolorectalcancer

screeningcanreducethenumberofpeoplewhodie

fromcolorectalcancersby:

Gettingamammogramevery

1-2yearsforwomenage40andovercanreducemortality

ratesby:

Afterimplementationof

screeningprogram,ratesofcervicalcancerdropped

upto:



66/101


Preventive Screening for Cancer

Although more people are getting the necessary screening for cancer, there is room for improvement.

Note: Measures include only commercially insured members and exclude Medicare and Medicaid members unless stated.Source: National Committee for Quality Assurance. The State of Healthcare Quality Report, 2007-2009.

Cancer

Breast Cancer Cervical Cancer

69.9% 69.1% 70.2%

200820072006 200820072006

81.0% 81.7% 80.0%

200820072006

Colorectal Cancer

54.5%58.7%

55.6%

Measure

Percentage of:Womenaged40to69whohadatleastone

mammograminthepasttwoyears

Womenaged21to64whohadatleastonePap

testinthepastthreeyears

Adultsaged50to80whohadappropriate

screeningforcolorectalcancer




67/101


Physical Activity Levels in Children and Adults

Children and adults are not getting enough exercise.

Note: Those that are classied as inactive report no sessions of light/moderate or vigorous leisure-time activity of at least 10 minutes duration, while those who are classiedas performing regular activity report three or more sessions per week of vigorous activity lasting at least 20 minutes or ve or more sessions per week of light/moderate activitylasting at least 30 minutes in duration. Figures do not add up to 100 percent, the balance remaining are those individuals who report engaging in some physical activity.Source: Troiano R, Berrigan D, Dodd K, et al., Medicine & Science in Sports & Exercise (2008); Centers for Disease Control and Prevention (2009) Health, United States, 2008.

Inactivity and Obesity

Percentage

Date post:	06-Apr-2018
Category:	Documents
Upload:	priyapsalms
View:	222 times
Download:	0 times

Healthcare Trends in America

Documents