Can Employers Drive Value Can Employers Drive Value Based Purchasing?Based Purchasing?

Andrew Webber, President & CEO

National Business Coalition on Health

Leonard Davis Institute of Health Economics

February 27, 2004

Presentation OutlinePresentation Outline

NBCH IntroductionImagine – Crossing the Quality

Chasm We Have Met the EnemySome Hopeful Signs

National Business Coalition on National Business Coalition on HealthHealth

National, non-profit, 501 (c)(6), membership organization of employer-based health coalitions- 85 coalition members- 7,000 individual employer members of coalitions- Representing 30 million covered lives

Not to be confused with the National Business Group on Health

National Business Coalition on National Business Coalition on HealthHealth

Vision – Establishment of a value-based health care market in every community

Value-based purchasing fundamentals:

- Publicly report performance information

- Reward health plan/provider performance

- Leading to: an accelerated pace of health

care delivery system reengineering

National Business Coalition on National Business Coalition on Health Health

Mission – To provide superior membership service

- Building the capacity of NBCH members to advance value-based purchasing

- Identification and dissemination of best

practices

Some Major NBCH InitiativesSome Major NBCH Initiatives

Sponsor of the Common RFI/eValue8 Product Leapfrog Partner – 75% of Regional Roll Outs led

by NBCH Members Exploring Bridges to Excellence Initiative Active participant in National Quality Forum and

Disclosure Group

NBCH Summary: A Distribution Network for Best Practices in Value-based Purchasing

Imagine – Crossing the Imagine – Crossing the Quality ChasmQuality Chasm

An Abundance of OpportunityAn Abundance of Opportunity

44,000 – 98,000 preventable hospital deaths Widespread variation in medical practice and

health outcomes Fragmented delivery system Poor information technology infrastructure Lack of transparency and disclosure Toxic payment system Gap between what we know and do

Volume 348(26) 26 June 2003 pp 2635-2645

The Quality of Health Care Delivered To Adults In the United States

McGlynn, Elizabeth A.: Asch, Steven M.: Adams, John: Jeesey, Joan: Hicks, Jennifer:DeCristofaro, Alison: Kerr, Eve A.

BACKGROUNDWe have little systematic information about the extent to which standard processes involved in healthcare—a key element of quality—are delivered in the United States.METHODSWe telephoned a random sample of adults living in 12 metropolitan areas in the United States and…received written consent to copy their medical records…to evaluate performance on 439 indicators of quality of care for 30 acute and chronic conditions as well as preventative care…RESULTSParticipants received 54.9 percent of recommended care. CONCLUSIONSThe deficits we have identified in adherence to recommended processes for basic care pose serious threats to the health of the American public. Strategies to reduce these deficits are warranted.

The Opportunity RestatedThe Opportunity Restated

50% Quality Defect Rate

40% Wasted Spending

The Demand Side Challenge: The Demand Side Challenge:

Misaligned Financial IncentivesMisaligned Financial Incentives Health care is one of the only industries

where a “do over” is a revenue sourceSystem pays for throughput rather than

outcomesConsumer insulated from the cost

consequences of their demand for servicesSupply-side induced demand for servicesProviders not rewarded to improve care

Market-Based Reform: A Path Market-Based Reform: A Path ForwardForward

Performance disclosure Pay for performanceConsumer choice

Desired Outcomes:Health Care System ReengineeringQuality Up and Costs Down

Performance DisclosurePerformance Disclosure

Common set of metrics At plan, provider, physician level Also benefit/risk information at treatment level Publicly reported In ways that the public can understand

Goal: To Embarrass the DeliverySystem into Improvement

Pay for PerformancePay for Performance

Differential payments to plans/providers based on understood and recognized performance metrics

Question: what % of total reimbursement needs to be tied to performance to influence behavior change

Goal: Financial Rewards to High Performers Motivating Improvement by Others

Consumer ChoiceConsumer Choice

Health benefit architecture designed to incentivize/reward employee selection of high performance plan/providers and evidence based medical treatments

Question: What are the copayment thresholds that will influence consumer selection?

Question: What is the ROI?

Goal: Patient Volume Migration To High Performers

““We have met the enemy and We have met the enemy and they is us”they is us”

Pogo Pogo Walt KellyWalt Kelly

Health System Reform Starts at Health System Reform Starts at Home with Home with

Employers/PurchasersEmployers/Purchasers

Taking ownership and responsibilityParticularly for the misaligned

financial incentivesAnd failure to incentivize and reward

quality and efficiency

A Report Card on Employer A Report Card on Employer Performance Performance

Investment in Human Capital, Employee Health & Worker Productivity

1. Provision of health insurance benefits B-2. Provision of worksite health promotion and

prevention programs C3. Investment in disease management programs C-4. Employee education C5. Demonstration of corporate leadership and

trust C-

A Report Card on Employer A Report Card on Employer Performance Performance

Track Record in Value-based Purchasing

Support managed care during backlash C- Reward plan and provider performance

through differential payments D Activate employees/consumers through

innovative benefit architecture D Demand health plan engagement in I/Rs C- Participate in coalitions and group purchasing C

Some Hopeful SignsSome Hopeful Signs

Public Reporting of Public Reporting of PerformancePerformance

NCQA Health Plan Accreditation/HEDISLeapfrog Hospital SurveyState and Community Report Cards NCQA Physician Recognition ProgramCMS Voluntary Hospital Reporting

ProgramMedicare Pay for Reporting Requirement

Pay for PerformancePay for Performance

Bridges to Excellence Integrated HealthCare Association – P4P Project CMS/Premier P4P Demonstration Medicare Drug Bill Payment Demos at Physician

Level IOM and MedPAC Studies of suitable measures

for P4P Health Plan Initiatives

Consumer ChoiceConsumer Choice

General Motors – Plan SelectionBoeing – Hospital SelectionPitney Bowes – Pharmaceutical

SelectionBridges to Excellence – Physician

Selection

Can Employers Drive Value Can Employers Drive Value Based Purchasing?Based Purchasing?

Yes, But – The pace is slow Corporate leadership is lackingBest practice models are neededConsumers, government purchasers, and

health plans must all get on board

SummarySummary

Opportunities for improvement abound Employers have not done their part Market-based reform still best opportunity for

accelerating the pace to a health care system that is:- Evidence-based- Patient-centered- System-minded- Safe and efficient