120424 masstlc sarah iselin, bcbsma foundation presentation

HEALTH REFORM 2.0: FROM COVERAGE TO COSTS AND THE ROLE OF TECHNOLOGY

SARAH ISELINMass Technology Leadership CouncilApril 24, 2012

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION


Series1

5.9%6.7%

7.4%6.4%

5.7%

2.6% 2.7%1.9%

13.1%13.9%

14.9% 15.2% 14.7% 14.9%16.1% 16.3%

Massachusetts Now Has the Lowest Rate of Uninsurance in the Country

2

PERCENT UNINSURED, 2000–2010, ALL AGES

2000 2002 2004 2006 2007 2008 2009 2010

U.S.AVERAGE

NOTE: The Massachusetts-specific results are from a state-funded survey, the Massachusetts Health Insurance Survey (MHIS), which estimated that 372,000 Massachusetts residents were uninsured in 2006, or 6.4 percent of the state's population. Using a different methodology, researchers at the Urban Institute estimated that 507,000 Massachusetts residents were uninsured in 2005, or approximately 8.1 percent of the total population. Starting in 2008, the MHIS sampling methodology and survey questionnaire were enhanced. These changes may affect comparability of the 2008 and later results to prior years. The national comparison presented here utilizes a different survey methodology, the Current Population Survey, which is known to undercount Medicaid enrollment in some states.

SOURCES: Urban Institute, Health Insurance Coverage and the Uninsured in Massachusetts: An Update Based on 2005 Current Population Survey Data In Massachusetts , 2007; Massachusetts Division of Health Care Finance and Policy, Massachusetts Health Insurance Survey 2000, 2002, 2004, 2006, 2007, 2008, 2009, 2010; U.S. Census Bureau, Current Population Survey 2010.

MASS.


But the Highest Per Person Health Care Spending…

3

PER CAPITA PERSONAL HEALTH CARE EXPENDITURES, 2009

NOTE: District of Columbia is not included.SOURCE: Centers for Medicare & Medicaid Services, Health Expenditures by State of Residence, CMS, 2011.

UT AZ GA ID NV TX CO AR CA AL VA SC TN NC OK MS OR KY MI MT NM IN IL KS WA LA HI IA MO WY NE SD OH FL WI MN MD NJ VT WV PA ND NH RI NY DE ME CT AK MA$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

State

NATIONAL AVERAGE

BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 4

Though Health Reform Helped, Costs Are Still a Problem for Many Massachusetts Residents

SOURCES: Massachusetts Health Reform Survey, 2010

Had Out-of-Pocket Spending at or Above 10% Family Income

Had Problems Paying Medical Bills Had Medical Debt

10%

19% 19%

6%

18%

20%

2006 2010


Overall Spending Will Double Between 2009 and 2020

ACTUAL AND PROJECTED MASSACHUSETTS TOTAL PERSONAL HEALTH CARE EXPENDITURES, 1991-2020(BILLIONS OF DOLLARS)

SOURCES: Centers for Medicare & Medicaid Services, Health Expenditures by State of Residence, CMS, 2011; Massachusetts Division of Health Care Finance and Policy, “Massachusetts Health Care Cost Trends, Historical (1991-2004) and Projected (2004-2020),” November 2009.

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$20 $21 $23 $24 $25 $27 $28 $30 $31 $33$36

$39$42

$45$48

$52$56 $58

$6168

7277

8186

9297

103109

116123ACTUAL PROJECTED

Year


$0

$2

$4

$6

$8

$10

$12

$14

$16

The More We Spend on Health Care, the Less We Have for Other Things

6

STATE BUDGET FY 2001 VS. FY 2011 (BILLIONS OF DOLLARS)

PublicHealth

MentalHealth

Education Infra/Housing

HumanServices

LocalAid

PublicSafety

HealthCoverage

+$5.1 B (+59%)

-38% -33%

-15%

-23%

-13%

-50%

FY2001 FY2011

-$4.0 Billion (-20%)

STATE EMPL.

MEDICAID/HCR

STATE EMPL.+40%

MEDICAID/HCR+61% -11%

SOURCE: Data extracted from Massachusetts Budget and Policy Center’s Budget Browser


July 7, 2010

The Massachusetts

Health Care ‘Train Wreck’

The future of ObamaCare is unfolding

here: runaway spending, price controls,

even limits on care and medical

licensing.

7


PLEASE TELL ME IF YOU CONSIDER IT TO BE A CRISIS, A MAJOR PROBLEM, A MINOR PROBLEM, OR NOT A PROBLEM IN THE STATE OF MASSACHUSETTS.

5%

11%

14%

25%

26%

22%

32%

53%High cost of health care

Limited ability to get needed health care

Low quality of health care services

Long wait time for medical appointments

Crisis Major problem

78%

46%

33%

31%

QA

Costs Are Now the Most ImportantHealth Care Issue for the Public

8

SOURCE: Blendon, R.J. et al., 2011. “Public Perceptions of Health Care Costs in Massachusetts.”


HOW IMPORTANT IS IT FOR THE STATE GOVERNMENT OF MASSACHUSETTS TOTAKE SOME MAJOR ACTION TO ADDRESS RISING HEALTH CARE COSTS IN THE STATE?

6%

1%

3%

14%

74%Very Important

Somewhat Important

Not Very Important

Not At All Important

MA State Government should not try to address rising costs in state

88%

QA

And the Public Is Ready for Major Actionby the State Government

9

SOURCE: Blendon, R.J. et al., 2011. “Public Perceptions of Health Care Costs in Massachusetts.”


Key Affordability/Cost-Related Developments in Massachusetts

Health reform passes (Ch. 58)– Begins path

to near universal coverage

Much of Chapter 58 enacted, e.g.:– MassHealth

expansion– Commonwealth

Care– Consumer

affordability schedule

– New health plan options for young adults

– Employer Fair Share

Cost Containment Part 1 (Ch. 305) passes– Increased

transparency about cost drivers

– Reports on health insurer and hospital “reserves”

Special Commission on Payment Reform– Recommends

move to global payment

Government reports and hearings on cost drivers

Governor rejects small group premiums

Cost Containment Part 2 (Ch. 288) passes– Aims to

control premiums for small business, individuals

Governor Patrick files payment reform legislation

Special Commission on Provider Price Reform

Cost Containment Part 3?

2006 2007 2008 2009 2010 2011 2012


SOURCE: Smith S, Newhouse JP, Freeland, MS. “Income, Insurance, and Technology: Why Does Health Spending Outpace Economic Growth? Health Affairs 2009; 28(5): 1276-1284.

Technological Advances in Care Have Been a Major Driver of Health Care Spending GrowthCONTRIBUTION TO GROWTH IN SPENDING 1960 – 2007 OECD COUNTRIES Using data from

developed countries around the world, economists estimate that advances in medical technology explain up to about half of the total increases in real spending between 1960 and 2007; this is split evenly between straight technological advances in care, and the fact that as income grows, consumers demand proportionally more high tech care.

26%

27%

11%

7%

5%

29%Income Effects

Medical Price Inflation

Population Aging

Increased Insurance Coverage

Technology-Income Interaction

Technology


Much of the Increased Spending on Medical Technology Has Bought Increased Health Value

SOURCE: Cutler, D.M. and M. McClellan, 2001. “Is Technological Change in Medicine Worth It?” Health Affairs, 20 (5): 11-29.

Technological advances in care have dramatically increased the costs of medical treatments. In one study, economists found that the cost to treat a heart attack rose $10,000 between 1984 and 1998. But the improvement in care created $70,000 “worth” of health over the same period, measured as the dollar value of additional years of life gained by a patient undergoing the more advanced treatments.Heart Attack Treatment 1984 - 1998

Increase in Treatment Cost $10,000

Additional Health Value $70,000 Net Benefit of

Additional Cost of

Treating Heart At-

tacks

$60,000


But Certainly Not All of It

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Health Care Technology – Especially Information Technology – Can Be a Major Health Care Cost-Saver

14

$80 Billion in potential savings

SOURCE: Hillestad, R et al. 2005. “Can Electronic Medical Record Systems Transform Health Care? Potential Health? Potential Health Benefits, Savings and Costs” Health Affairs, 24 (5): 1103-1117.


But Mere Installation of Technological Tools Will Not Yield Cost Savings Alone

15


Increased HIT Adoption Could Be Cost-Saving or Cost-Additive in Massachusetts

16

SOURCE: RAND. “Controlling Healthcare Spending in Massachusetts: An Analysis of Options.” 2009.

PROJECTED SAVINGS AS A SHARE OF SPENDING 2010–2020

-7% -6% -5% -4% -3% -2% -1% 0% 1% 2%

-5.9%

-4.0%

-2.7%

-1.8%

-1.8%

-1.3%

-1.3%

-0.9%

-0.9%

-0.2%

-0.2%

-0.1%

-0.1%

0.0%

-0.2%

-1.1%

0.6%

-0.1%

-0.6%

0.0%

0.4%

-0.1%

0.2%

1.0%

Utilize bundled payment

Institute hospital all-payer rate setting

Institute regulation for academic medical centers

Eliminate payment for adverse hospital events

Increase adoption of HIT

Institute reference pricing for academic medical centers

Expand scope of practice for NPs and PAs

Promote growth of retail clinics

Create medical homes

Decrease resource use at end of life

Encourage value-based insurance design

Increase use of disease management


It’s All About Incentives

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The current payment system, called fee-for-service (FFS), rewards doctors and hospitals for doing more.

This is doubly true for new medical technologies, as newer, high-tech services tend to garner higher payments.

Providers also face few incentives to invest in information technology that could help reduce unnecessary use of health care.


PATIENT-CENTERED GLOBALPAYMENT SYSTEM

THE SOLUTIONGlobal payments made to a group of providers for all care. Providers are not rewarded for delivering more care, but for delivering the right care to meet patient’s needs.

PRIMARY CARE

HOSPITAL

SPECIALIST

HOME HEALTH

$

CURRENT FEE-FOR-SERVICE PAYMENT SYSTEM

THE PROBLEMCare is fragmented instead of coordinated. Each provider is paid for doing work in isolation, and no one is responsible for coordinating care. Quality can suffer, costs rise and there is little accountability for either.

SPECIALIST PRIMARYCARE

HOMEHEALTH

HOSPITAL

GOVERNMENT, PAYERS AND PROVIDERS WILL SHARE RESPONSIBILITY FOR PROVIDINGINFRASTRUCTURE, LEGAL AND TECHNICAL SUPPORT TO PROVIDERS IN MAKING THIS TRANSITION.

Special Commission on the Health Care Payment System’s Recommendation

$ $ $ $$

18


Information Technology Will Be Key for the Success of Payment Reform

19

Under global payments, providers will face greater incentives to invest in innovative technologies that help manage and coordinate care across settings.

Provider groups accepting global payments will need tools and IT to help “divide the pie.”

Insurers and providers will also need innovative ways to engage consumers in selecting high-value care.


But How Much We Pay – Prices – Is Just as Important as the Way We Pay for Care

NOTES: 1) Reflects fully-insured commercial trend2) “Unit price” reflects increases in provider rates. “Provider Mix and Service Mix” reflect changes in the location of care (shift to more expensive providers) and the intensity of services provided. “Utilization” reflects increases in the number of services provided.SOURCE: Office of Attorney General Martha Coakley, March 2010, “Investigation of Health Care Cost Trends and Drivers.”

BCBSMA COST DRIVERS FROM 2004-2008PERCENT OR INCREASE IN COSTS DUE TO CHANGE IN PRICE VS. PROVIDER/SERVICE MIX VS. UTILIZATION

2004 2005 2006 2007 20080%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

33.1%

53.3%58.0%

54.8% 53.8%

UNIT PRICE(amount providers get paid)

PROVIDER MIX AND SERVICE MIX

UTILIZATION(number of visits)


The Crux of the Current Political Debate Centers on the Appropriate Role for Government and the Market

21


Stay Tuned…

Massachusetts has made health care “universally accessible, but not yet universally affordable…Massachusetts led the nation on health care reform and is poised to lead again on cost containment.” -Governor Deval Patrick

“…I think more immediately the issues of the health care debate and the budget really are going to require our attention” -House Speaker Robert A. DeLeo

“A careful, phased-in transition of this system-wide reform [removing fee-for-service within 5 years] is achievable. But we need to take the first step this year.” -Senate President Therese Murray

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120424 masstlc sarah iselin, bcbsma foundation presentation

Health & Medicine

health care

academic medical

health care

medicaid services

health care

health expenditures

services provided

provider mix