Achieving Affordable and Effective Health Care Reform

Karen Ignagni

President & CEO

April 27, 2009

National Expectations:What does the public want?

Increased affordability, especially for working families and small businesses

Guaranteed access to coverage, especially for those with pre-existing conditions

Improved quality, safety and effectiveness

Committing to Reform:What health plans have proposed

Bending the cost curve

Covering everyone

Keeping everyone covered

Providing predictability,

security, and transparency

Improving quality and value

• Establish goal of reducing future trend by 1.5 percentage points per year

• Blueprint for meaningful change established by stakeholder group

• Series of reforms to promote value & affordability

• Guarantee issue (Eliminate pre-existing condition exclusions)

• Eliminate medical underwriting (No health status rating)

• Personal coverage requirement

• Portability

• Continuity of coverage

• Expand safety net programs

• Targeted assistance to low and moderate income individuals, families and small businesses

•Essential benefits plan available nationwide for individuals and small businesses

•Create a standard platform for consumers in each state to compare coverage options

• Build on health plans’ strategies to reward value not volume

• Ensure patients get the right care at the right time in the right setting

• Promote consumer decision making w/ clear concise information about safety and effectiveness

• Administrative simplification

Determining Which Architecture Meets the Public’s Objectives

What is the best blend of public and private sector responsibilities?

Can comprehensive market reforms and consumer protections solve the problem?

What can we learn from FEHBP?

What can we learn from European models?

What are true administrative costs?

Comparing Design Choices

Government-run plan added to the

offerings

Market reforms and fundamental

regulatory changes

? ?

Impact of a government-run plan

Employer provided coverage (small and

large)

120 million people moved into

government-run plan

Providers?

Federal Budget?

Families/ Individuals

?

100 million + people moved

Individual market

Assessing the Potential to Achieve 21st Century Reforms

Public Sector Today

•Administered pricing•Fee-for-service platform•Volume vs. value•Rejection of SGR cap•Political aspect to demos, and difficulty moving to market adoption•Political impact on coverage decisions•Inability to assess high risk patients and target supportive programs

Private Sector Today

•Infrastructure to identify health risk, coordinate outreach and track outcomes•Encourage healthy behaviors: health coaching/wellness, smoking cessation, physical fitness•Access to health information & performance transparency•Nurse call lines – trouble shooting, respond with timely information•Flexibility to tailor DM programs to meet individual needs

Nurse case managers to monitor patient adherence, complications and provide tools and support to manage care

Use information technology to improve care coordination (PHRs, registries)

Hi-touch tools: phone/web based innovations, state of the art interactive voice response to support self management

Assess/reduce social and home factors that contribute to poor health care

Alerts to physicians and patients, re: drug interactions and missed opportunities

•Training in cultural competency and translation services•High quality service facilities (e.g. radiology) and Centers of Excellence •Payment models that incentivize value not volume•“At-risk” and “pay for performance” type arrangements with manufacturers and providers of specialty services

Assessing Private-Sector PerformanceMA HMO Performance Relative to FFS

Data from 2006All Hospitals'

AdmitsDiabetes Patients

Heart Disease Patients

Inpatient Hospital Days -34% -40% -34%Re-Admissions, Same Quarter, Same DRG

-17% -23% -16%

13 "Potentially Avoidable" Admissions (AHRQ definitions)

-4% -9% -3%

Source: AHIP analysis of AHRQ data for discharges from all hospitals in California in 2006.

Assessing Private-Sector PerformanceMA HMO Performance Relative to FFS

Aggregated Data from 2005 and 2006

All EnrolleesDiabetes Patients

Heart Disease Patients

Inpatient Hospital Days -18% -21% -14% Hospital Admissions -10% -13% -7%Outpatient ER Visits -32% -35% -31% Outpatient Visits -3% -3% -1% Office Visits 33% 27% 25%Re-Admissions, Same Quarter, Same DRG

-41% -45% -38%

13 "Potentially Avoidable" Admissions (AHRQ definitions)

-12% -15% -8%

Source: AHIP analysis of FFS 5% sample claims files and data from 7 regional MA plans.

True Administrative CostsIf a government-run plan were to perform functions of health plans…

$?

Cost ContainmentPotential associated with bending the cost curve

Cost ContainmentPotential associated with bending the cost curve

Achieving Affordable and Effective Health Care Reform

Karen Ignagni

President & CEO

April 27, 2009