Maine Businesses Role in Health Care. Kevin Gildart Vice President, HR General Dynamics: Bath Iron Works

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1 Maine Businesses Role in Health Care Kevin Gildart Vice President, HR General Dynamics: Bath Iron Works

2 General State of Affairs United States

3 United States v. World Health Care Spending & Quality World Health Organization Ranking 5 Factors Health Level Service Quality Health Outcomes Responsiveness Individual Spending US approx 15 th in quality US approx. 15 th in quality (unadjusted for cost)

4 United States v. World Health Care Spending & Quality (cont.) US highest percent of GDP spent on health care Previous slide shows average performance against this spend

5 United States v. World Health Care Spending & Quality (cont.) Fastest growing rise in health care cost as percentage of GDP in industrialized countries

6 US Health Care Spending Trend From 1965 to 1990, annual growth in real per capita spending averaged about 5.5 percent. From 1994 to 1999, annual growth never exceeded 2.8 percent. Coincided with sustained economic growth The share of GDP devoted to health care during those six years remained virtually unchanged Coincided with tail end of managed care approaches Since then, sharp increase in health care spending as a share of GDP from12.5 percent in 1999 to 14.5 percent in 2005 Coincided with slower economic growth and accelerated health care spending Congressional Budget Office Report 2008

7 General State of Affairs Maine

8 Where is Maine on Cost Reasonably efficient re: Medicare spending (one of the best in the country) One of the highest commercial spends in the country S f th hi h t M di id i th Some of the highest Medicaid use in the country

9 Maine Health Care Spending Average Single Family Employee Insurance Cost Coverage Coverage Plus One Maine $4910 $13102 $9107 US $4386 $12298 $8535 Measure Actual US Rank Annual Spend / $10M GDP $ Annual Spend / 100 people $ Average Annual Growth in Spending 8.3% 4 Average Annual Growth / Capita 7.8% 1 Source: Kaiser Family Foundation State Health Facts

10 Maine Innovation Maine is an innovation laboratory for health care reform First All Payers Paid Claims Database Highly engage Maine Health Management Coalition Public reporting on quality Payment reform Robert Wood Johnson Foundation Aligning Forces for Quality Site Strong Philanthropic efforts (e.g. MeHAF) State Government efforts at reform (e.g. MQF) Strong health data analysis organizations OnPoint Health Health Dialog Analytic Solutions

11 Efforts in Maine Health Action Collaborative Payment Reform Demonstration ti Projects BIW PCP Initiative MHMC/MQF/QC Patient Centered Medical Home MaineHealth Global l Cap CMMC Accountable Care Organization Advanced Imaging Guidelines Quality Reporting MHMC MQF Health Care Providers Care Coordination/Integration MeHAF MaineHealth

12 Insurance: Brief History United States

13 Short History of Insurance Prior to insurance to cover medical expenses Fee for Service Late 19 th century Early 20 th century Sickness (disability) 1920 s Baylor model Blue Cross Pre-pay for services with providers Health co-ops pre-buy for all care Advent of managing health risk for profit Beginning of health insurance as we know it today

14 Modern Medical Insurance Primarily sickness insurance Built on fee for service contracting Focused on predicting and managing risk Recent shift from absorbing avoiding risk to active risk reduction and health service delivery Wellness programs Support programs

15 Modern Employer Provided Medical Insurance Not so distant past: Get best quote for insurance Plan dictates plan design Plans establish networks and prices Plan runs and employer pays Recent Shifts Employers and employees recognize health care cost impact on issues like wage growth Employers actively shopping for plan design and adjunct services Employers/employees partnering with plans on marketplace initiatives Employers more actively engage in network and contracting issues Employers rolling out risk mitigation programs Wellness Support groups, etc. Employers working with plans to form direct service relationships with providers Employers talking with provider groups as potential insurers in new partnerships

16 Some Issues You Will Encounter Community rating Cost shifting Anti-trust t t issues Perverse market place Limited economies of scale

17 Health Care Quality Critical Issues for Maine Businesses

18 Health Care Quality in Maine Core Messages for Employers and Employees Quality of Care Varies Quality of Care Matters You have the right to know provider outcomes You have the responsibility to act on that knowledge Purchasing health care should include issues of quality

19 Responsive to individual needs Institute of Medicine Domains of Health Care Quality Safe patients should not be harmed Timely no unnecessary waits or harmful delays Effective care based on sound science Efficient care should not be wasteful Equitable quality should not vary by region/person

20 Institute of Medicine Domains of Health Care Quality Safe Timely Effective Efficient Equitable Patients should not be harmed No unnecessary waits/harmful delays Care based on sound science Waste removed from the system Quality should not vary by region, etc. Patient Centered Responsive to individual needs

21 Health Care Cost Critical Issues for Maine Businesses

22 Core Issues Around Cost The way we pay for care ensures that we get exactly what we are getting Perverse market place offers revenue for care that is unnecessary, potentially harmful, and in some cases the result of medical errors Payment risk is carried by insurers and sponsors (employers) Payments system does not support the type of health care delivery system desired Employers are sinking cost into delivering the care strategies focused on health improvement and maintenance

23 Multiple Approaches to Reform Need to center attention on cost of care and direction of the spend rather than on the cost of insurance Three key areas of interest Effective Care: want more pay more Preference Sensitive: shared decision making Supply Sensitive: i need to choke the supply

24 4 Pillars of Value-based Purchasing Standardized Performance Measurement Transparency and Public Reporting Pathways to Excellence Transparent Cost Reporting Payment Reform Refer to payment slides Informed Choice Patient decision support Primary care support using outcomes Engaged specialist

25 Payment reforms to address unwarranted variations

26 Payment reforms to address unwarranted variations

27 First Rule of Politics (AND of Payment Reform): Follow the Money Funds Flow 2006: $2,105.5 Billion 27 Pacific Business Group on Health, 2009

28 A No One Size Fits All Approach Pay-for-Performance Performance Fee-For- Service Episode/ Condition- Based Payment Population- Based Payment Each strategy can include additional rewards and/or penalties against desired quality goals, including process, structure, and outcome metrics Reforms will vary based on market conditions Provider organization Delivery system infrastructure Active payment initiatives 28

29 Inpatient admission rates by Hospital Service Areas for individuals with chronic disease Commercial Payers All-Payer Analysis of Variation in Healthcare in Maine. On behalf of Dirigo Health Agency s Maine Quality Forum & The Advisory Council on Health Systems Development Health Dialog Analytic Solutions, 2009.

30 Payment model and benefit design implications of unwarranted variation* UV CATEGORY PROVIDER INCENTIVES PATIENT INCENTIVES Supply Sensitive Global l budget High co-pays Care (SSC) Preference Pay for informed, Low co-pays with Sensitive Care evidence-based Shared Decision- (PSC) choice Making (SDM) Effective and Safe Care Pay for outcomes / incentives for results * Maine Health Management Coalition s working model No cost barriers / incentives for compliance

31 ACalltoAction Action What Business Leaders Must Do

32 What s Wrong With This Picture Delivery of services designed to promote, improve, and maintain health occur through employers and health insurance companies Health care service delivery is paid when employees health fails Those least trained and most poorly positioned to deliver health promotion are the very ones delivering the services to try and avoid the ever escalating costs associated with services delivered when the efforts fail. Efforts to apply pooled market forces met with anti-trust t t issues

33 Maine Health Management Coalition i Who are we? Employer-led multi-stakeholder coalition focused on improving the value of health care services delivered to members employees and dependents What do we do? Measure and report on quality and cost Engage employees/dependents re: quality and cost Promote adoption of value-based benefit design and purchasing of services Foster collaboration with providers and insurers Promote urgency for reform to improve quality and cost Ways to be involved? Become a member Attend Pathways to Excellence and Aligning Forces meetings Use MHMC information with employees and dependents Use value-based principles when purchasing insurance or care

34 Health Action Roundtable (HeART) The Health Action Round Table (HeART Group) is comprised of Maine employers and unions, all of whom are members of the Maine Health Management Coalition. HeART has officially set the following goals for the healthcare community in Maine: Increase healthcare quality to the 90th percentile nationally Reduce healthcare spend to national average per capita costs Drive out waste and inefficiency in medical services Measurably improve the health behaviors of families In 2009/2010 The HeART Group will be focusing efforts on: Transparency Payment Reform Local Care Management The HeART Group is releasing an RFI to health insurers and health systems with the p g y intent of gathering information to be used by members in future RFP s.

35 Where s the cost? The conversation should not be sickness insurance costs too much. h Rather, it should be Sickness care costs too much Shows no signs of reducing cost growth Has anywhere from 25% to 60% waste in the system Has a perverse payment structures with incentives to maintain waste and cost growth Is designed to generate revenue when people are sick rather than keep them healthy Is the one industry where technological advancements lead to more inefficiency, and Therefore It costs too much to purchase sickness insurance

36 What to do? Demand transparency in health care quality Demand transparency in health care cost Work with willing gproviders who are high quality and efficient providers of care Demand that your insurer is a partner in these efforts Demand that policy makers address issues that t avoid placing additional cost burden on the backs of employers Join the Maine Health Management Coalition

37 How Can We Help Sharing of best practices and program design Partnering with local small and medium businesses in community efforts Generating shared messages to policy makers Power of the Coalition

38 Don t Wait for a Federal Answer There is no one-size-fits-all solution to healthcare transformation; each region will need to actually make it happen in its own unique environment The best federal policy will support regional action; Medicare should participate in regionally-defined payment reform demonstrations The regions that successfully create the highest-value healthcare systems can use that to attract employers and residents Regional Health Improvement Collaboratives are the key CPU needed to make the transformation