bcbsma final report

Blue Cross Blue Shield of Massachusetts is an Independent Licensee of the Blue Cross and Blue Shield Association.

The Impact Statement of

on the CommonwealthBlue Cross Blue Shield of Massachusetts

Impact of Blue Cross Blue Shield of Massachusetts Final Report

Table of Contents Page Introduction ...............................................................................................................................3

Executive Summary ...................................................................................................................4

Organizational Impacts of BCBSMA (2008) ...............................................................................6

Community Benefits (2008).....................................................................................................10

Impact of Policy Work Completed by Blue Cross Blue Shield of Massachusetts (2008) ........18

Conclusions ..............................................................................................................................21

Appendix A: Time Line of Research for the Roadmap to Coverage .......................................22

Appendix B: Research Methodology ......................................................................................23

Appendix C: Glossary of Terms ...............................................................................................26

Appendix D: Tripp Umbach – Qualifications...........................................................................27

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® Registered Marks of the Blue Cross and Blue Shield Association. © 2009 Blue Cross and Blue Shield of Massachusetts, Inc., and Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. Printed at Blue Cross and Blue Shield of Massachusetts, Inc. #93440M (9/09)


Introduction Blue Cross Blue Shield of Massachusetts (BCBSMA)1 secured the services of Tripp Umbach, a Pittsburgh based consulting firm, to complete an economic impact study that measures the statewide impact of Blue Cross Blue Shield of Massachusetts in 2008. Tripp Umbach is the nation’s leading provider of economic impact analysis, having completed similar studies for 50 of the nation’s top 100 healthcare organizations, other Blue Cross Blue Shield affiliates, and for many of the nation’s largest corporations, universities and charitable foundations. In order to measure this impact, Tripp Umbach’s study focused on three topic areas:

• Impact of the Blue Cross Blue Shield of Massachusetts Organization

The first section of the report quantifies the annual economic, employment, and government revenue impacts related to the operations of the Blue Cross Blue Shield of Massachusetts organization. Impacts were measured on the Commonwealth of Massachusetts for the year 2008.

• Community Benefits of Blue Cross Blue Shield of Massachusetts

The second section of the report presents the community benefits of BCBSMA in the year of 2008. Impacts measured by Tripp Umbach include the value of volunteerism, impacts on the local community organizations, corporate sponsorship and partnerships, and spending by event organizers.

• Impact of Policy Work Completed by Blue Cross Blue Shield of Massachusetts

The third section presents the impacts of the health care policy work completed by organizations developed by the Blue Cross Blue Shield of Massachusetts organization as well as the foundation. This includes the work for payment reform, healthcare reform and the quality initiative.

1 For the purposes of this report all references of Blue Cross Blue Shield of Massachusetts (BCBSMA) includes Blue Cross and Blue Shield of Massachusetts HMO Blue (BCBSHMO).

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Executive Summary

Blue Cross Blue Shield of Massachusetts (BCBSMA), headquartered in Boston, is the leading health insurer in the Commonwealth of Massachusetts and is a unique asset to the state. Blue Cross Blue Shield of Massachusetts and its affiliates serve more than 3 million individuals both locally and nationally. BCBSMA has offered healthcare products and services since its inception in 1937. The organization is consistently recognized for standards of service excellence that are among the highest in the nation. Blue Cross Blue Shield of Massachusetts is an independent licensee of the Blue Cross Blue Shield Association.

To enhance their ability to provide affordable, quality health care, BCBSMA transferred the insured HMO line of business to a separate, not‐for‐profit subsidiary in January of 2005. The subsidiary, Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., offers existing insured HMO plans:

• HMO Blue® (including non‐group plans), • HMO Blue New England, Blue Choice® (in‐network), • Blue Choice New England (in‐network), Access BlueTM, • Managed Blue for SeniorsTM, and • Medicare Advantage.

BCBSMA deepened its benefit (impact) to (on) the state and its people in 2001 when it created the Blue Cross Blue Shield of Massachusetts Foundation with an initial endowment of $55 million. The Foundation is committed to expanding access to high‐quality health care to the underserved residents of Massachusetts. The Foundation has made a significant contribution to both the policy work and other initiatives to improve the healthcare delivery system in both the Commonwealth of Massachusetts and the nation. Key Findings:

• BCBSMA has a substantial annual economic impact on the economy in Massachusetts; in 2008 this impact was nearly $1.6 billion.

• In 2008, BCBSMA supported more than 5,856 total full time jobs directly or indirectly

in the Commonwealth of Massachusetts (3,670 direct employees and 2,186 indirect).

• In 2008, BCBSMA generated nearly $216.9 million in total revenue for the state treasury:

o $33.1 million directly, o $84.0 million indirectly,

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o $79.9 million to the Health Safety Net Trust Fund, formerly known as the Uncompensated Care Pool, and

o $19.9 million resulting from a surplus assessment of health insurers to assist with the cost of health care reform efforts on the Commonwealth.

• In 2008, BCBSMA employees contributed more than $7.4 million in donations and

volunteer services to charitable organizations.

• BCBSMA commits more than $2 million to programs such as external leadership development programs, community diversity development and intern programs.

• In 2008, Blue Cross Blue Shield of Massachusetts donated more than $5.2 million to local organizations.

• BCBSMA has invested time and manpower, as well as funds, into much of the policy work that has put Massachusetts in the forefront of healthcare reform.

• BCBSMA has endowed one of the largest private health philanthropies in the state.

This foundation allows BCBSMA to build upon its commitment to give back to the local and statewide community.

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Organizational Impacts of BCBSMA (2008) Business Volume Impact BCBSMA’s total business volume impact is the sum of direct and indirect impacts. The direct impact stems from the in‐area spending of the following principal groups: expenditures for capital improvements, and goods and services; spending by staff; and the spending by out‐of‐area visitors. The indirect impacts are derived from these direct, first‐round expenditures, which are received as income by businesses and individuals in the study area and re‐circulated through the economy in successive rounds of re‐spending. Commonwealth of Massachusetts

• During 2008, BCBSMA had an economic impact on the Commonwealth of Massachusetts of nearly $1.6 billion ($682.9 million direct and $887.0 million indirect).

Figure 1: BCBSMA’s Economic Impact on the Commonwealth of Massachusetts

$682.9

$887.0

$0.00

$1,000.00

$2,000.00

Business Volume Impact (in millions)

IndirectDirect

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Employment Impact Blue Cross Blue Shield of Massachusetts is a statewide employer and provides employment to a diverse group of workers who pay taxes to state and local governments. The economic expansion created by BCBSMA brings about demand for additional employment in the economy. The company’s impact on employment is derived from employees who work directly for BCBSMA and the total number of employees who work for other businesses that supply BCBSMA with goods and services. Commonwealth of Massachusetts

• In 2008, BCBSMA supported more than 5,856 total full time (FTE) jobs in Massachusetts (3,670 Direct FTEs and 2,186 Indirect FTEs).

Figure 2: BCBSMA’s Employment Impact on the Commonwealth of Massachusetts

3,670

2,186

0

2,000

4,000

6,000

Employment Impact (FTEs)

5,856 Total FTEs

IndirectDirect

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Government Revenue Impact Blue Cross Blue Shield of Massachusetts generates a substantial amount of revenue for the state government. Tripp Umbach models calculate the indirect government revenue2 accruing to the various areas based on the business volume generated by the spending of BCBSMA populations. The direct government revenue is the amount paid by BCBSMA directly to the Commonwealth of Massachusetts in business taxes; this does not include any taxes paid to the federal government.3

In addition to these direct and indirect revenues, in 2008, BCBSMA paid over $79.9 million into the Commonwealth’s Health Safety Net Trust Fund. The amount BCBSMA pays into this pool make up 48% of the amount paid by all of the health plans. BCBSMA also paid $19.9 million to the Commonwealth of Massachusetts for the health insurer reserve assessment to assist with healthcare reform efforts, which is 60% of the revenue the Commonwealth collected for this assessment. Commonwealth of Massachusetts

• In 2008, BCBSMA generated over $216.9 million in total revenue for the State of Massachusetts ($33.1 million in direct taxes and $84.0 million through indirect taxes as well as an additional $99.8 million in direct payments to the state4).

Figure 3: BCBSMA’s Government Revenue Impact on the Commonwealth of

Massachusetts $200.00 Indirect $84.0

Additional $100.00 $99.8 Payments

Direct $33.1 $ -

Government Revenue Impact (in millions)

2 Total government revenue equals direct revenue plus indirect revenue. Indirect tax revenue is the sum of state taxes paid by BCBSMA‐related businesses and populations. Indirect taxes calculate the relationship between BCBSMA‐related business volumes, the business volume calculated for the overall state based on sales receipts and the overall amount of tax collected by the state as tax revenue. 3 In 2008, BCBSMA paid $39.2 million in federal taxes. This consists of $19.5 million in federal income taxes and $19.7 million in FICA tax. 4 This amount includes the $79.9 million BCBSMA pays to the state for the Health Safety Net Trust Fund as well as the $19.9 payment to the state to offset the costs of the state’s health care reform efforts.

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Subsidiary Business in the Commonwealth In order to provide its members services beyond health insurance, Blue Cross Blue Shield of Massachusetts created a subsidiary company which would allow employers the ability to do more “one stop shopping” for other forms of insurance to cover their employees. BCBSMA believes that the employees are the greatest assets to its employers and it’s more important than ever to offer them a strong sense of security that will keep local businesses strong. Indigo Insurance Services, LLC was created as a subsidiary of BCBSMA and specializes in affordable life and disability insurance plans for Massachusetts businesses. The broad product portfolio features plans and competitive rates that fit just about any business model, from the small closely held companies to large multi‐site employers. The one‐stop shopping experience makes it easier for local companies to add life and disability plans with the highest level of security and reliability. The additional options included for local companies through this organization are:

• Group and Voluntary Group Term Life • Group and Voluntary Accidental Death & Dismemberment (AD &D) • Dependent Life • Group and Voluntary Short‐Term Disability • Group and Voluntary Long‐Term Disability

The BCBSMA Foundation In 2001, BCBSMA created a new charitable organization ‐ Blue Cross Blue Shield of Massachusetts Foundation ‐ as a contemporary expression of its historic commitment to those in need of dependable access to health care. The company initially committed an endowment of $55 million, plus a guaranteed investment return of $8 million, to the Foundation and has continued to contribute to the Foundation with additional donations of $13 million, $13.5 million, $11.1 million, $10.4 million and $2.1 million in 2004, 2005, 2006, 2006, 2007 and 2008 respectively. The Foundation's endowment assets totaled $75 million as of December 31, 2008, representing a decrease of $26 million from the 2007 balance of $101 million. This decrease takes into consideration contributions, grants and expenses, as well as, the change in unrealized investment gains (losses). The Foundation operates separately from the company and is governed by its own 18‐member Board of Directors. It is one of the largest private health philanthropies in the state. The mission of Blue Cross Blue Shield of Massachusetts Foundation is to expand access to health care. Through grants and policy initiatives, the Foundation works with public and private organizations to broaden health coverage and reduce barriers to care. The Foundation focuses on developing measurable and sustainable solutions that benefit uninsured, vulnerable and low‐income individuals and families in the Commonwealth.

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Community Benefits (2008) While the business, employment and tax impacts of BCBSMA in the Commonwealth of Massachusetts are substantial, so too are the contributions of the organization in caring for the community at large. BCBSMA is more than a business; it is also a responsible corporate citizen that works with many community organizations that focus on meeting the communities’ health care and non‐health care related needs. Because of BCBSMA’s commitment to the community, they are at the epicenter of many outreach programs that span across the Commonwealth. Initiative for a New Economy

Blue Cross Blue Shield of Massachusetts is proud of its legacy of community investment. In addition to contributing to a variety of charitable organizations, the company has engaged in strategic business partnerships that promote economic development. One of the most notable endeavors has been BCBSMA’s leadership role in helping to grow small businesses.

A focus of BCBSMA has been influencing the economic issues that affect Massachusetts, including ensuring diversity among businesses in the communities where its members live and work. Along with 16 other corporations, institutions, and government agencies, BCBSMA funded a first of its kind study that revealed the status of minority business development in the Boston area. The study showed that although minority‐owned enterprises were the fastest growing segment of the business community, they were typically small companies with less than five employees and unable to grow to scale. The research also indicated that most minority‐owned business enterprises (MBEs) could not count large Boston area corporations among their client base. The result was the creation of a new organization ‐‐ Initiative for a New Economy (INE) ‐‐ to address the challenges faced by all small businesses, as well as issues unique to MBEs. With additional funding from the companies that commissioned the study, INE was launched in 2006 to work with MBEs on business development, financial and organizational management, and board development. The objective has been to build capacity and better position MBEs to be viable candidates for contracts with larger corporations, thereby enhancing economic development in the Commonwealth. Supplier Diversity Program In addition to its leadership role in creating INE, BCBSMA maintains its own Supplier Diversity program. The program represents BCBSMA’s commitment to create business relationships as diverse and dynamic as the communities and members it serves. BCBSMA believes that minority‐ and women‐owned business enterprises (M/WBEs) play a vital role in the overall economic health of Massachusetts. Through Supplier Diversity, BCBSMA builds

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mutually beneficial business relationships with M/WBEs that generate innovation, employment and competition that ultimately benefits its members. Since 2005, BCBSMA‘s spending with M/WBEs has averaged 4.5% of the company’s discretionary costs, ranging between $19 million and $43 million annually during that period. This spending is the result of extensive efforts to identify qualified and competitive M/WBEs who can meet BCBSMA’s business needs, and facilitating strategic alliances and subcontracting relationships with larger suppliers. Not only has BCBSMA focused on corporate spending with M/WBEs, but the company has shared key resources to further grow these businesses. BCBSMA has contributed both finances and management consulting services to help promising M/WBEs develop their work force and build capacity. Through partnerships with other corporations, consultants, third party certification agencies, academic institutions, and business trade associations, BCBSMA strives to provide M/WBEs with the knowledge and tools necessary to in a highly competitive environment. BlueCrew BlueCrew was developed to nurture a spirit of community service among BCBSMA associates with remarkable success. Wearing bright blue T‐shirts with BlueCrew logos, the Blue Cross Blue Shield of Massachusetts volunteer corps is a familiar sight, with over 2,000 associate volunteers and a decade‐long history. The BlueCrew program offers associates the unique opportunity to perform valuable community services during both work and non‐work hours. With their leader's approval, associates can take paid time to volunteer for corporate‐sponsored or corporate‐approved community activities. The BlueCrew has built a Habitat for Humanity house, planted sea grass to preserve the dunes on Spectacle Island, helped a community health center hold a women's health summit, assisted with the Massachusetts Senior Games, provided mentoring services for the Blue Scholars program, decorated Elder Care residences, and has given their time and energy to countless other organizations that build stronger communities. Tripp Umbach estimates that BCBSMA employees donated, in the form of their time spent doing community work and direct contributions to local charities, over $7.4 million5 in 2008. The volunteer time donated totals more than $1.7 million, while employee donations add

5 Tripp Umbach calculated this number based on a few basic assumptions from Tripp Umbach databases based on surveys conducted at various institutions on volunteerism and charitable giving. These assumptions take into account that there are various types of donations of time, from the SLC donating time to local boards and the average employee donating time at the local library, since these tasks would have varying values and benefits to the charities they are measured on different levels. Tripp Umbach models are based on both internal databases regarding typical volunteerism and data from the Points of Light Foundation.

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up to $5.7 million. For an organization with 3,670 FTEs, this is a dramatic amount of giving that makes a difference in the cities and towns of the Commonwealth. William C. Van Faasen Sabbatical Program BCBSMA combines its commitment to community service and dedication to associate development with the William C. Van Faasen Community Service Sabbatical Program. Named after a former CEO who advocated service, the program allows one associate per year a paid leave of absence to work for a charitable organization for a period of three to six months. This sabbatical is competitive and is awarded to an associate whose proposal shows the opportunity to make a sustainable change within the community their organization serves. This program is also seen as an excellent development opportunity for BCBSMA associates, earning the employee growth and knowledge that they would be able to utilize when they return to their position. In addition to allowing an employee to leave his or her position with pay and benefits, the company also makes arrangements with the individual’s business unit to be sure that his or her work is handled during this leave. Often this means paying another associate to come in and take care of the duties, resulting in an additional 520 to 1,040 hours of time donated to community organizations by the BCBSMA. Senior Leadership Council Board Seats In addition to the opportunities provided within BCBSMA, employees are encouraged to participate in local organizations during their personal time. Members of the Senior Leadership Council (SLC) are encouraged to sit on boards and use their personal expertise to benefit the community at large. SLC members occupy a total of 88 board seats; nearly half of all members of the SLC currently volunteer their time to community organizations through participation on at least one board. Disaster Readiness Blue Cross Blue Shield of Massachusetts is committed to excellence in health care, providing coverage to 3 million members as the leading health insurer in the state. The organization takes this responsibility very seriously, which is why BCBSMA takes a proactive approach to disaster readiness, including preparations to administer proper coverage of care and facilitate access to care during a disaster, while supporting employees, business partners, and the community. Blue Cross Blue Shield of Massachusetts plans to play a critical role in the event of a disaster as both a health plan and a community leader. BCBSMA has invested significantly in efforts toward preparing for responding to potential large scale disasters.

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In addition to all of those benefits, there are many other programs geared at health care and improving quality as well as addressing the manner in which health care is approached. LEAD Program In 2007, BCBSMA created the two‐year Leading Edge Acceleration of Delivery and Design (LEAD) Program as a forum for a small number of provider CEOs to work on the quest for quality improvement. There is a true effort to raise the expectations of quality in the hospitals and across Massachusetts. Participating organizations were:

o Atrius/ Harvard Vanguard Medical Associates o Beth Israel Deaconess Medical Center o Cooley Dickinson Hospital o Mount Auburn Hospital o New England Baptist Hospital

The LEAD program combined a significant personal commitment by each CEO to directing their quality focus to clinical outcomes, and intense organizational focus on rapid and sustained improvement. Trustee Education Program BCBSMA believes hospital boards have a special responsibility to address the issue of quality and patient safety. With the Massachusetts Hospital Association, an education program for hospital trustees to generate quality improvements in their organizations. Blue Cross also offers a best practice speaker’s series for trustees, bringing the nation’s leading hospital experts to Massachusetts. Leadership Programs Blue Cross Blue Shield of Massachusetts takes part in several other programs for health care and community leaders, regulators and other stakeholders both in and outside of Massachusetts. This commitment of effort and investment is a testament to the dedication BCBSMA has to the future of health care, health insurance and the communities the company serves. In 2008 BCBSMA gave more than $330,000 to this mission. That figure does not include the personal time many executives and other staff from BCBSMA dedicated to these programs, which include:

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• AHIP – Executive Leadership Program: The program designed exclusively for health insurance plan executives concentrating on mentoring and strategic management techniques needed to lead tomorrow’s health insurance plans.

• AHIP – Minority Management Development Program: Strengthens executive leadership through recruitment and training of talented middle‐managers who reflect the ethnic diversity of the communities they serve.

• Babson Fast Track MBA Program: Offers state of the art curriculum that combines web‐based and classroom learning specifically designed to meet the needs of working professionals.

• Bentley’s Women’s Leadership Institute – Conference: Annual professional development conference for junior professional women.

• Executive Leadership Council Mid‐level Building the Pipeline: Provides corporate leaders an opportunity to gain substantial knowledge from the ELC Council faculty.

• The Partnership, Inc. Associates Program: The emphasis is to build a foundation of skills and resources for professionals of color in the formative stages of their careers.

• UMASS – Emerging Leaders Program: Executive training program for professionals in the Greater Boston area. Focuses on individual leadership skills and how to work effectively with other leaders toward specific goals.

• Greater Boston Chamber of Commerce – Boston’s Future Leader Program: Supports the Greater Boston Chamber’s commitment to drive economic growth and to build a more inclusive business community.

• Greater Boston Chamber of Commerce – Executive Program: The Executive Leadership Institute is for the most senior level executives within an organization. Consists of 4 sessions with faculty at the MIT Sloan School of Management and 2 closed door, intimate sessions with government leaders.

• Northeastern Executive MBA Program: Next Generation Executive program provides professionals of color with the skills necessary to reach the C‐Suite6 and thrive once there. Program is co‐sponsored by Harvard Business School.

• The Partnership, Inc. Fellows Program: Establishes framework to enhance leadership capacity among mid‐senior‐level professors of color.

6 A phrase used to describe the senior executives at company headquarters, or those who have the word ‘Chief’ in their title.

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Charitable Giving Information In 2008, Blue Cross Blue Shield of Massachusetts’ charitable contributions in the Commonwealth totaled approximately $5.2 million. These cash contributions are often in the form of sponsorships of charitable events and activities. Requests for sponsorships are received from more than one thousand organizations of all sizes. Each request is reviewed by the corporate contributions committee. Thoughtful funding decisions are based upon business and community priorities and BCBSMA’s overall mission, “To provide access to high quality health insurance, associated products, and medical services for our members.” Many sponsorship requests are driven by the company’s sales department to build potential or existing relationships; others support community partnerships that have developed over the years. In 2008, BCBSMA made contributions to over 470 organizations in cities and towns across Massachusetts and throughout the region. The majority of organizations that benefit from Blue Cross Blue Shield of Massachusetts’ charitable giving receive in the range of $2,000 ‐ $10,000 per contribution. A smaller percentage of the company’s giving is in amounts of $100,000 or greater. Recent beneficiaries include; Greater Boston Food Bank, Edward M. Kennedy Institute for the U.S. Senate, Health Care for All, John F. Kennedy Library Foundation, Massachusetts Health Policy Forum, Project Bread, and United Way of Massachusetts Bay and Merrimack Valley. In addition to cash contributions, Blue Cross Blue Shield of Massachusetts has donated print services, office space, and other assets when appropriate to support community partners. Children’s Health Initiative From 1995 to 1996, Blue Cross Blue Shield of Massachusetts met with community leaders and school officials to hear directly from organizations across the state about unmet health care needs in their communities. Through this assessment process, the message was clear: “help us meet the growing challenge of childhood obesity.” In 1996, the Centers for Disease Control (CDC) identified childhood obesity as a leading public health concern. The unprecedented rise in Type 2 diabetes among children is a direct result of obesity and threatens the health status of an entire generation. In 1998, as a response to the growing childhood obesity trend, BCBSMA established Jump Up & Go! (JUG). JUG is a statewide program that works with schools, families and clinicians to promote habits necessary for a healthy lifestyle. In the years since, the innovative and award winning program has expanded significantly and is emulated nationally. In 2008, the JUG program contributed more than $350,000 to support youth programs that encourage healthy eating and active living, as well as programs specifically focused on childhood obesity prevention. Since the program's inception, BCBSMA has invested nearly $12 million. However, in recent years, the state has taken the lead on childhood obesity,

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and in 2008, BCBSMA contributed $100,000 to the Department of Public Health’s Obesity Initiative. The concern BCBSMA has for children in Massachusetts runs deep. School partnerships, like the one Blue Cross Blue Shield of Massachusetts has with Madison Park Technical Vocational High School and the Ventures program at Fenway High School, provide student internships, training programs, career preparation seminars, job‐shadowing opportunities, and renewable college scholarships to deserving students every year. Awards Received For Charitable Work In 2008, and for the second year in a row, Blue Cross Blue Shield of Massachusetts was recognized by the Boston Business Journal for being the second highest corporate charitable contributor in the Commonwealth of Massachusetts. BCBSMA was also ranked second in the companies with the largest contributions to corporate foundations.

In 2007, The Council on Foundations, which believes that philanthropy is a powerful tool for creating and sustaining societal benefit, bestowed its most prestigious award for public policy to the Blue Cross Blue Shield of Massachusetts Foundation for its Roadmap to Coverage project. The Ylvisaker Award is given to a foundation that has demonstrated excellence in affecting public policy by using creative and effective strategies to help "set the agenda for public consideration and debate."

The National Business Group on Health, a national non‐profit organization of 279 large employers, honored Blue Cross Blue Shield of Massachusetts for their commitment and dedication to combating obesity and promoting a healthy lifestyle for their employees.

BCBSMA was among 41 employers who received the Best Employers for Healthy Lifestyles award at the Leadership Summit sponsored by the Business Group's Institute on the Costs and Health Effects of Obesity. BCBSMA received a Gold Award for their Healthy Directions program, which is designed to help participants at all levels manage and improve their health by providing them with the tools they need to reach customized and realistic goals; such tools include onsite, online, and interactive activities, as well as effective incentives. This approach yielded impressive results, with a first year average return on investment of $1.12 saved for every $1 spent.

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Be Healthy

Additionally, Blue Cross Blue Shield of Massachusetts was honored for collaborating with the Bay State Banner, the state’s leading Newspaper for people of color, in the production of the Be Healthy, a monthly insert that provides health information and draws attention to racial disparities in health care. Be Healthy was recently awarded the Sword of Hope Media Award by the American Cancer Society.

Be Healthy, which debuted in September of 2006, is a print and online campaign providing monthly information on a variety of health topics linked with racial disparities in health care. Along with Blue Cross Blue Shield of Massachusetts, the publication is produced in collaboration with Partners HealthCare System, Brigham and Women's Hospital, Massachusetts General Hospital, and the Boston Public Health Commission.

Other Benefits BCBSMA continues to remain focused on its mission, which is to provide the residents of Massachusetts with affordable and quality health care. To achieve this mission, BCBSMA strives to be a responsible corporate citizen. As a not‐for‐profit health plan, BCBSMA provides value to the community in ways that for‐profit insurers cannot. For example, the Massachusetts not‐for‐profit health plans have medical care ratios that are significantly higher than their for‐profit competitors. This means that not‐for‐profit plans spend more of each premium dollar to purchase care on behalf of their members. BCBSMA is an organization that is open to community partnerships, capacity building activities and is a generous sponsor of community activities. The company is a leading corporate citizen with a commitment to the all the people of the Commonwealth and the cities and towns where they live. Leaders at BCBSMA see their role as more than a responsible business and health insurer. They consider it an honor to be a non‐profit, community focused company. BCBSMA is equally dedicated to its associates and works to ensure a positive work environment. Recognized as a Massachusetts business that excels at "creating a dynamic, supportive, and inclusive workplace," BCBSMA was named to the 2008 Boston Globe's "Top 100 Places to Work" list. The only health plan to make the list, the company ranks 12th out of 25 in the "large employer" category and was named one of the top five ranked health care organizations. BCBSMA says its employees are the reason the company made the Globe's Top 100 Places to Work in Massachusetts.

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Impact of Policy Work Completed by Blue Cross Blue Shield of Massachusetts (2008) Over the past few years, Blue Cross Blue Shield of Massachusetts and Blue Cross Blue Shield of Massachusetts Foundation have invested in the collaborations, policy work and initiatives needed to extend access to health care while improving the quality and effectiveness of the healthcare delivery system, in Massachusetts and across the nation. Roadmap to Coverage One key initiative, Roadmap to Coverage, was produced by the Blue Cross Blue Shield of Massachusetts Foundation. The goal of the project was to provide comprehensive research on the uninsured in Massachusetts and to propose options to offer universal health care coverage. The Roadmap project was funded by BCBSMA with additional support from Partners HeathCare. The research showed that the problem of the uninsured in Massachusetts, as in most states, would likely grow. The ranks of the uninsured had been increasing in the years prior to this research because of the soaring costs of health care (see Appendix A for the timeline). The study found that in 2004, at least $1.1 billion in health care was provided to the uninsured in the Commonwealth of Massachusetts according to the study’s estimates7. The research contained in the Roadmap to Coverage study as well as additional policy work conducted by the BCBSMA Foundation became the foundation for Massachusetts’ landmark healthcare reform law which extends health care insurance to almost every resident of the state. Still a work in progress, Massachusetts’ efforts, and the Roadmap study that led to it have earned the interest of federal policy makers and the Obama administration. Members of the Roadmap team have been consulted as national leaders try again to reform health care. Transformation Initiative In an effort to make good on its promise “to always put our member’s health first,” Blue Cross Blue Shield of Massachusetts is focusing on the quality and effectiveness of delivered health care. The Transformation Initiative is an effort lead by BCBSMA to reduce clinical waste, the overuse, under use, and misuse of health care services, that some researchers say accounts for 30% of every dollar spent on health care. 7 John Holahan, Randall Bovbjerg, and Jack Hadley, “Caring for the Uninsured in Massachusetts: What does it Cost, Who Pays and What Would Full Coverage Add to Medical Spending,” Boston, MA: Blue Cross Blue Shield of Massachusetts Foundation, November 2004. http://www.roadmaptocoverage.org/pdfs/roadmapReport.pdf

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http://www.roadmaptocoverage.org/pdfs/roadmapReport.pdf


BCBSMA has taken on 7 identified areas or “levers” that will assist and move forward the system’s change.

1. Quality and Safety 2. Finance and Payment 3. Trustee Engagement 4. Legislation and Regulation 5. Public Engagement 6. Informational Technology 7. Organizational Development

BCBSMA has initiatives underway in each of these areas that are designed to improve the quality and effectiveness of health care, improve patient satisfaction, reduce waste and better manage the currently unsustainable rise in the cost of health care. Among the investments BCBSMA has made to date:

• $590 million in incentive payments to hospitals and physicians to improve the quality and effectiveness of care.

• $60 million in community initiatives such as the Massachusetts eHealth

Collaborative, funding for Partnerships for Healthcare Excellence, demonstration programs in transforming hospital quality and safety, support for Massachusetts hospitals’ participation in the Institute for Healthcare Improvement’s 100,000 Lives Campaign and the creation of the Health Care Excellence Award.

• $9 million to collaborative efforts such as the Healthcare Administrative Solutions Inc, a non‐profit tasked with reducing administrative complexity in health care; the e‐Rx Collaborative, and Institute for Healthcare Improvement for their 100,000 Lives and 5 million Lives Campaigns, Eastern Massachusetts Healthcare Initiative, Massachusetts Coalition for the Prevention of Medical Errors and Massachusetts Health Quality Partners. These initiatives are all aimed at making health care more accessible and safer for the community members.

A Broad Impact Many of BCBSMA’s efforts are having a significant impact on the health care system at large and are benefiting communities well beyond Massachusetts borders. The eRx Collaborative, for example, was formed by BCBSMA, Tufts Health Plan, and Neighborhood Health Plan and technology partners DrFirst and ZixCorp to promote the use of electronic prescribing in Massachusetts.

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This collaboration assisted more than 5,600 prescribers to adopt e‐prescribing8 and enabled more than 17.8 million prescriptions to be transmitted electronically in the Commonwealth of Massachusetts since the start of the program in 2003. In 2008, as many as 82,600 prescriptions were changed due to alerts issued by eRx technology. The time saved by utilizing e‐prescribing is estimated to be 1‐2 hours each day by office staff. Due to the enhanced formulary compliance of this method, member savings were estimated to be nearly $800,000 in copayments alone. Alternative Quality Contract Blue Cross Blue Cross Blue Shield of Massachusetts believes that one of the best ways to improve the quality of health care is to change the way it pays for health care. Currently, doctors and hospitals are paid for the volume and intensity of services they provide. BCBSMA has developed an innovative payment model called the Alternative Quality Contract. BCBSMA pulled together a team of experts consisting of physicians, finance experts, and measurement scientists who worked for months and developed a model that would pay providers more based on the quality and effectiveness of delivered health care. The Alternative Quality Contract (AQC) combines two forms of payment: 1) a global or fixed payment per patient, adjusted for the health of patients and annual increases in line with inflation; and 2) substantial performance incentives tied to the latest nationally accepted measures of quality, effectiveness, and patient experience of care. Physician organizations currently participating in the AQC include:

Mt. Auburn Hospital/MACIPA Hampden County Physician Associates Tufts Medical Center/NEQCA Brockton Hospital and Signature Healthcare Lowell General Hospital and PHO Atrius Health

Architects of the Alternative Quality Contract from BCBSMA are consulting with state and national leaders as they consider payment reform as a significant approach to improving the quality and controlling the cost of health care.

8 e‐prescribing or electronic prescribing is the use of online, computerized tools to create, sign and send prescriptions. The technology warns the user if the drug being prescribed might cause an adverse drug event due to allergy or interaction withy other medications.

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Conclusions In conclusion, Blue Cross Blue Cross Blue Shield of Massachusetts has a significant impact on the Commonwealth of Massachusetts and its people. Unmatched by any organization of a similar size, it is also unmatched by any health insurance organization.

Table 1: BCBSMA’s Impact on the Commonwealth of Massachusetts (2008)

Type of Impact Value of Impact Operations of BCBSMA on MA $1.6 Billion Direct and Indirect Tax Impact to MA $117.1 Million Contribution to Health Safety Net Trust Fund $79.9 Million Health Insurer Reserve Assessment $19.9 Million Employment Impact on MA 5,856 FTE Employee Donations and Volunteerism $7.4 Million Local Statewide Charitable Donations by BCBSMA $5.2 Million Donations to the BCBSMA Foundation $2.1 Million Leadership Programs $2.1 Million

The chart above shows that BCBSMA has a substantial direct economic impact on the Commonwealth of Massachusetts. But the financial effect of the company is even more significant when one considers the philanthropy of the company and its associates. Through the generous donation of funds and volunteered time, Blue Cross Blue Shield of Massachusetts’ impact is unmatched by any organization of similar size and circumstance. Despite an economic environment which has challenged many corporations to maintain their philanthropy, BCBSMA strives to keep its commitment to the community and remain a responsible and generous corporate citizen. Massachusetts is recognized for its accomplishments in expanding access to health care and is looked to as a potential model for national health care reform. Yet the Commonwealth would not find itself in this leadership position were it not for Blue Cross Blue Shield of Massachusetts and its Foundation. The company continues to champion the kind of change needed to insure every citizen of the state, and the nation has access to high quality, effective and affordable health care.

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Appendix A: Time Line of Research for the Roadmap to Coverage

November 16, 2004 An analysis of the cost of medical care for the uninsured in Massachusetts. The first report of the Roadmap initiative was released at a summit featuring a luncheon address by Senate President Robert Travaglini. The Urban Institute report analyzed what is currently spent on care for the uninsured, who pays for it, and what full coverage would add to medical spending. Document can be found at http://roadmaptocoverage.org/pdfs/roadmapReport.pdf

June 21, 2005 An examination of options for expanding coverage. The Foundation convened Governor Romney, Governor Baldacci of Maine and health care leaders from other states to review and discuss the choices and tradeoffs associated with different coverage expansion options. Document can be found at http://roadmaptocoverage.org/pdfs/BCBSF_Roadmap2005.pdf and http://roadmaptocoverage.org/pdfs/BCBSRoadmap_01.pdf

October 7, 2005 Release of the final “Roadmap,” including a phased‐in implementation plan. This summit, Roadmap to Coverage: Reaching Common Ground featured a key note address by Speaker of the Massachusetts House of Representatives Salvatore F. DiMasi. Document can be found at http://www.roadmaptocoverage.org/pdfs/Roadmap_Implement.pdf

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http://roadmaptocoverage.org/pdfs/roadmapReport.pdf

http://roadmaptocoverage.org/pdfs/BCBSF_Roadmap2005.pdf

http://roadmaptocoverage.org/pdfs/BCBSRoadmap_01.pdf

http://www.roadmaptocoverage.org/pdfs/Roadmap_Implement.pdf


Appendix B: Research Methodology The methodology employed in the economic impact section of this report was derived from an original set of research tools and techniques developed for the American Council on Education (ACE)9. The ACE‐based methodology employs linear cash flow modeling to track the flow of institution‐originated funds through a delineated spatial area. Beginning in 1996, Tripp Umbach began a consulting relationship with the Association of American Medical Colleges and completed the first national study showing the economic impact of academic medical centers. For this study, the Tripp Umbach research team felt it important to distinguish the economic impact of the institutions that are attributable to funds brought into the state from out‐of‐state sources. The application of this "fresh dollar" model provides a first‐line measure of the initial direct expansion in the state economy caused by the academic health centers. The final model concept evolved into a hybrid model including a fresh‐dollar approach feeding into a traditional model which tracks hospital in‐state spending. Thus the final model used for this research (see Figure 9) measures funds brought into the state together with the ultimate flow of these funds through the Massachusetts economy and the effect on economic expansion, job growth and enterprise development. The final methodology closely matches the impact study methodology recommended for individual medical schools and teaching hospitals by the Association of American Medical Colleges.

9 Caffrey, John and Isaacs, Herbert, "Estimating the Impact of a College or University on the Local Economy,” American Council on Education, 1971.

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Economic Impact Model Inputs

Out-of-state patients and their insurers

Economic impact outcom efor traditional model. s

Separated into figures for total economic im ct & pa

state dollars impact allocable to out-of- Out-of-state Research funds

Visiting doct s or& faculty

Out-of-state Students

Out-of-state Visitor

(gain for state economy)

Out-of-state funds received Spending in the state (Start-point for t ditional ra

model)

Two principal sources of data were employed in performance of the research: 1. Institutional Data Supplied by BCBSMA

Study participants were asked to supply Tripp Umbach with individual data for their institution. Data supplied by the member institutions included funding received from various sources, capital expenditures, operating expenditures, and staff salary and benefits.

2. Secondary‐Source Data and Tripp Umbach Impact Study Data

Tripp Umbach supplied additional information as required to supplement the data provided by BCBSMA. Tripp Umbach used secondary research and the company’s national databases to generate business volume and employment statistics at the state level, visitor spending, employee and researcher spending patterns, and government revenue. Tripp Umbach also developed appropriate business and employment multipliers.

All economic impact findings presented in this report are based on data supplied by BCBSMA. Tripp Umbach utilized a forward‐linkage modeling methodology to measure the potential impact of related commercial spin‐offs. Traditional economic impact studies are

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based on direct spending and re‐spending within the economy (multiplier effect) driven from the institution itself. Forward‐linkage models measure the broader impacts that occur or may occur in the economy as a result of the research and development activities of an institution – beyond the traditional direct and indirect impacts. Examples of forward‐linkage impacts include new businesses based on academic research discoveries; academic intellectual property licensed to existing businesses for development, and sponsored research relationships. Original research conducted by Tripp Umbach for the Mayo Clinic and the University of Minnesota was used as a starting point for customized analysis of BCBSMA’s research impacts. The Mayo Clinic and University of Minnesota research involved the creation of a series of 36 customized economic impact models based upon numerous assumptions. The basic architecture of these models is the methodology most widely accepted within the industry. Due to the complexity of measuring the impact of biotechnology and medical research, Tripp Umbach researchers developed a series of customized economic impact models showing the economic, employment and government revenue impacts of both the recipient institutions and potential business spin‐offs. Economic impact projections were calculated for 2020 in two distinct scenarios: conservative and aggressive. The linear cash flow models developed for this project represent annual, point‐in‐time economic impact projections. Economic projections for each scenario are based upon a specific and detailed set of assumptions. Each assumption is based upon secondary data research, primary research and Tripp Umbach industry expertise10.

10 Tripp Umbach is confident in the model construction and projections presented herein; however, shifts in the overall economic climate in the state and nation and changes in state governmental policy toward biomedical science and medical research are not calculated or accounted for in this study. The projections presented in this study are based upon the state moving forward to make medical research and healthcare services an increasingly important industry sector in the Commonwealth.

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Appendix C: Glossary of Terms

Business Volume Model Calculates capital account, goods and service, staff, patient and visitor spending, as well as the value of business property.

Government Revenue Model Calculates the amount of tax (e.g., income, sales) received by the government from institutional‐related businesses and populations.

Total Business Volume Impact Direct impact multiplied by indirect impact multiplier.

Direct Business Volume Impact Sum of total expenditures for capital, and goods and services, and staff, patients and visitors spending.

Indirect Business Volume Impact

Standard multiplier as recommended by American Council on Education representing the re‐spending taking place in the study area (2.3 times direct impact).

Total Employment Direct employment multiplied by indirect employment multiplier.

Direct Employment Total FTEs contracted with or employed by the hospital.

Indirect Employment Multiplier Generally accepted, fairly conservative multiplier representing the indirect jobs created to service the product and service needs of the hospital and its related populations (1.8 times direct impact). Used by Association of American Medical Colleges.

Capital Account Expenditures A five‐year average of spending on equipment, buildings and land.

Goods, Services and Supplies Expenditures

Total non‐capital and non‐payroll spending for the 12‐month period of the study

Total Expenditures by Staff Sum of spending for rental housing and non‐housing items by those residing in the area and general spending in‐area by those not residing in the area.

State Model Calculates the impact on the entire state of Massachusetts.

Study Period The information is based on fiscal year 2008.

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Appendix D: Tripp Umbach – Qualifications Tripp Umbach is the national leader in providing economic impact analysis to leading health care organizations and academic health centers. We have completed more than 100 economic impact studies over the past 15 years for clients such as the Mayo Clinic Rochester, The Cleveland Clinic, University of Florida Shands HealthCare, Penn Medicine, and the Ohio state University Medical Center. Tripp Umbach is currently in the process of completing our fourth national economic impact study of all medical schools and teaching hospital affiliates for the Association of American Medical Colleges as well as studies for IBC, Highmark, Blue Cross Blue Shield of Tennessee and other Blue Cross Blue Shield Affiliates. Tripp Umbach has also completed economic impact studies for cancer centers and institutes such as the Dana‐Farber Cancer Center, Fox Chase Cancer Center, Hillman Cancer Center, the University of North Carolina’s Cancer Hospital, Ohio State University’s James Cancer Center and Solove Research Center, and for TGEN in Phoenix, Arizona. Additionally, Tripp Umbach has completed research to quantify the economic, employment and government revenue impacts for the Pennsylvania Cancer Alliance member institutions. In addition to the Cancer Research Impact experience that Tripp Umbach holds, there is experience that Tripp Umbach holds in conducting numerous economic impact studies in localities throughout the United States for events. Tripp Umbach has also completed economic impact studies for major sports venues and convention centers over the past 15 years.

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® Registered Marks of the Blue Cross and Blue Shield Association. © 2009 Blue Cross and Blue Shield of Massachusetts, Inc., and Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. Printed at Blue Cross and Blue Shield of Massachusetts, Inc. #93440M (9/09)

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