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Oregon Public Employee Benefit BoardVision 2007Executive Briefing

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Is the state getting good value for its health care investment?

The PEBB Program, 2005 40,000 employees 110,000 covered lives Two medical care vendors:

Kaiser Permanente in Portland, Salem with 15,000 lives

Regence Blue Cross statewide with 90,000 lives

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Is the state getting good value?

Value = Quality/Cost

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Is the state getting good value: quality? Estimated 2,000 preventable hospital deaths

in Oregon Estimated 6,000 preventable outpatient

deaths in Oregon Performance for chronic disease at about 55%

of recommended care

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Is the state getting good value: cost? Annual expenses 2004 $377M; 2005

(projected) $435M Average annual increase 1999-2005: 10.5%

vs. average annual wage increase ss%; vs. non-medical inflation uu%

Proportion of total employee compensation now going to health benefits: vv%

Proportion of general fund: xx? Proportion in 2010: zz?

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National premiums compared with other national indicators

Data from Kaiser-HRET surveys, KPMG surveys. Premium for family of four.

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1998

2002

$386

$470

$586

2003

2000/2001

2004$706

$641

State of Oregon average monthly employer contribution

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PEBB Vision for 2007 – why now?

Current contracting arrangements not clearly containing costs or improving health - and trends are going in the wrong direction.

PEBB is stepping up to address problems.

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PEBB Vision for 2007 – why us?

Traditional PEBB role - negotiate with insurance plans for rates, services.

Insurance plans have failed to address quality or cost trends.

PEBB must make changes in plan design, define alternative service delivery model, and strengthen partnership with members.

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Others in the same boat...

CalPERS Mass. Group Purchasing Alliance Wisconsin Alliance Florida Healthcare Purchasing

Coalition Bridges to Excellence employers Leapfrog Group employers King County purchasing coalition

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What they’re doing... Strong economic incentives (“pay for

performance”) for both doctors and patients Evaluate and reward results, not volume of

services Demand (and incentivize) redesign of

health care delivery system Demand transparency of outcomes and cost Support patient engagement Form alliances with like-minded

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Who controls cost and quality of members’ health care?

Members Insurers? Hospitals and clinics? Doctors? Patients? Unions? State agencies?

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What’s the appropriate role for PEBB?

Be crystal clear about what we want Use purchasing tools to encourage

positive private sector response Educate all stakeholders about need for

change and opportunity for improvement Hold plans and providers accountable for

performance Help members succeed

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Developing the PEBB Vision

Long-term view: where should we be in 2007?

Review of literature, best practices

Extensive stakeholder input

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PEBB Vision for 2007

PEBB envisions a new state of health for its members statewide.

Key components of the PEBB program will include:

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Vision component

An innovative delivery system in communities statewide that provides evidence-based medicine to maximize health and utilize dollars wisely.

Delivery system: A community’s doctors, providers, hospitals, clinics, labs, insurance carriers, etc.

Evidence-based medicine: Medical ‘best practices’ determined by ongoing review of quality research results

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Vision component

A focus on improving quality and outcomes not just providing healthcare.

Providing healthcare – paying for services, not outcomes

Quality – not necessarily the most expensive; instead, the right care at the right time

Outcomes – not how many services provided but whether treatments achieve the desired results

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Vision component

The promotion of consumer education and informed choices.

Consumers know their health risks, clinical status, treatment options, expected outcomes and supporting evidence

Providers freely share knowledge with consumers Consumers have support in reducing health risks and

navigating the healthcare system

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Vision component

Appropriate market and consumer incentives that encourage the right care at the right time.

Consumer incentives to choose care based on the evidence

Market incentives for providers to align their practice with the evidence

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Vision component

System-wide transparency through explicit, available and understandable reports about costs, outcomes and other useful data

All stakeholders have information about health plans, hospitals and clinical practices to make decisions

Information includes safety, patient satisfaction, evidence-based practices, and quality & performance indicators.

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Vision component

Benefits affordable to the state and employees.

Recognize the impact of health care costs on total compensation provided to employees

Recognize the impact of increasing costs on state’s ability to fund services

Ensure that members use appropriate services and share commitment to control escalating costs

Recognize shared responsibility to protect against high burden falling on some.

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Vision for 2007 PEBB’s Vision for 2007 provides a

roadmap to addressing healthcare cost and quality issues

What are our goals? Stabilize cost trend

Improve health status of workforce

Assure value for state’s health care dollars

How do we get there?

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Overall approach Define a vision Translate vision into uniform, concrete criteria for

purchasing services and evaluating performance Implement some core strategies statewide Recognize that different models to achieve

criteria may be required in different parts of state Work closely with potential providers to launch

significant pilot projects Gradually extend pilots where appropriate

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Illustration ... We want community based, multidisciplinary chronic care for all

members with diabetes We establish contract criteria, including delivering key services,

achieving good blood sugar control and reporting it, achieving good ability to function day-to-day and high patient satisfaction

In an urban area, the criteria might be met by a large group practice, with group visits, email reminders, use of diabetes registry

In small community, the criteria might be met by solo practice physician with help from disease management company

In mid-size community, the criteria might be met by an IPA that hires care managers to support all area physicians and programs common protocols into a standard electronic medical record system

PEBB can verify quality of care and outcomes in all these settings

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Illustration ...

Add library of illustrations for use by speakers in different situations

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What’s been done so far to move towards the Vision?

Analysis of evidence-based medication list Experts compare effectiveness of all

drugs in a class Results determine if any work better

than others If all work equally well, low-cost

version is preferred, with lowest co-payment or co-insurance.

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Illustration: Statins to lower cholesterol

Studies show all are equally effective Wide, unexplained range of costs*

Zocor $120; Pravachol $113; Lipitor $89; Lovastatin $69; Lescol $63

Consider effectiveness and cost to determine lowest co-payment or co-insurance

*30-day supply as reported 4/21/04 by AARP

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What’s been done so far to move towards the Vision?

Offer chronic disease management program for asthma, diabetes, heart disease Engage member in managing illness Avoid risks of serious complications Manage complex medications Coordinate care – right services at

the right time

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What’s been done so far to move towards the Vision? Back pain decision-support

program 2003 PEBB claims for muscle-skeleton

problems = more than $20 million Oregon has more discretionary back surgery

than any other state Evidence does not show that surgery is

always the best treatment Decision-support tools will help members

choose treatment best suited to their needs

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What’s been done so far to move towards the Vision? Statewide Wellness Program

On-site health screenings around the state to assess health risks (blood pressure, cholesterol, glucose, body mass)

Online wellness tools to assess health status and risks

Outreach with education and information Healthcare system navigation with

individualized referral and follow-up Pilot walking program Pilot tobacco cessation program (2005)

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What’s been done so far to move towards the Vision? Healthcare flexible spending

account (FSA)—beginning 2005 Pre-tax deposits through payroll

deduction Reimburses many out-of-pocket costs

Co-payments & co-insurance Vision care costs above allowance Dental costs above plan limits OTC drugs

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What do stakeholders say about PEBB’s Vision?

Providers, carriers, policy makers, employee representatives A “real” opportunity, ambitious, doable Needs long-term commitment Collaborate, create partnerships Requires cultural changes Communicate, communicate,

communicate

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What will it take?

Strong executive leadership State speaks with one voice State allies with partners: labor,

advocates, purchasers Willing, creative private sector

partners Willing, engaged members

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What will it take?

Consistent state strategy Steady attention to monitoring and

refining tactics

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How you can help...

Depends on audience...