Crain’s Health Care Leadership Summit Electronic Prescribing Joe H. Hohner, Senior Vice President, Chief of Staff and Chief Information Officer Blue Cross Blue Shield of Michigan October 14, 2010

Table of Contents Michigan overview…Page 3 Michigan supporters…Page 4 Role of BCBSM…Page 5 BCBSM Impact DrFirst Pilot…Page 6 PGIP ePrescribing Initiative…Page 7 Value of ePrescribing…Page 8 Appendix…Page 9 10/14/2010

Michigan overview Rank second in the country for ePrescribing. One in five prescriptions were ordered electronically as of December 2009. One-third of Michigan doctors use ePrescribing, nearly double that of 2007. SEMI receives first annual 2010 HIT Innovation Award. Ranks second as the most active ePrescribing state in the country with nearly 5,600 enrolled prescribers from Surescripts. The Safe-Rx Awards celebrate leadership and exceptional commitment to advancing health care safety, efficiency and quality through the use of e-prescribing. One in five eligible prescriptions were ordered electronically as of December 2009, up from 9 percent in 2008. This does not include controlled substances, which account for about 7-10% of Rxs. One-third of Michigan doctors use eRx technology, nearly double that of 2007. BCBSM/DrFirst eRx pilot engaged around 1200 physicians. PGIP engaged about 3800 (300 of which are in our pilot) and has led to improved patient safety, increased system efficiencies, and prevents potentially dangerous drug interactions. Southeast Michigan ePrescribing Initiative (SEMI): Multi-stakeholder coalition launched in 2005 to improve pharmacy care quality for Michigan patients. Received first annual 2010 Health Information Technology Innovation Award from State HIT Commission. Michigan State Medical Society (MSMS) statewide online portal provides flexible and cost-effective way for physicians to integrate health information technology (HIT) into their medical practices. 10/14/2010

Michigan ePrescribing supporters Southeast Michigan ePrescribing Initiative (SEMI) Michigan Health Information Network (MiHIN) Health Information Technology (HIT) Commission Regional RHIOs (sub-state HIEs) Michigan health systems and hospitals

Role of BCBSM Launched ePrescribing pilot with DrFirst BCBSM/DrFirst pilot engaged more than 1,200 physicians. Value Partnerships accelerating the adoption and use of ePrescribing through the Blues PGIP program. 2005 Founding member of SEMI, one of the largest, employer-driven eRx initiatives to encourage adoption and use of eRx, and measure the impact of eRx on improving patient safety and reducing Rx costs. 2006 BCBSM, the Autos, Wayne and Oakland County Medical Societies, GDAHC, and Henry Ford, Oakwood, Trinity and St. John form SEMHIE to establish an interoperable HIE for the benefit of the residents, providers and other stakeholders in SE MI. 2007 – 2008 BCBSM launches eRx pilot with DrFirst. PGIP launches eRx incentive. 2009 – current MI receives the Safe-Rx Award for finishing 3rd among the top 10 e-prescribing states in the nation, rising from 5th place in 2008. Regional HIT Extension Effort, M-CEITA, is established. BCBSM serves on the Steering Committee. 10/14/2010

BCBSM Impact –DrFirst Pilot Enrolled 1,000 physicians in ePrescribing program in partnership with DrFirst Over 3 million prescriptions transmitted Over 800,000 safety alerts provided Doctors receive access to BCBSM’s ePrescribing management system for two years, training, POMIS interface and in some cases $500 towards needed hardware Since 2007 enrolled 1,000 physicians in ePrescribing program in partnership with DrFirst. Over 3 million prescriptions have been transmitted. Over 800,000 safety alerts provided of which about 1 in 5 were acted upon. Participating doctors receive access to BCBSM’s full-featured standalone eRx management system for two years, training, POMIS interface and in some cases $500 towards needed hardware. 10/14/2010

BCBSM Impact - PGIP Initiative Improve the safety, quality and cost-effectiveness of the prescribing process Performance improvement is evaluated by all PCPs in the practice unit having ePrescribing functionality Vendor meets Medicare requirement standards Vendor contractually guarantees at least 96% of up time As of March 2010, over 45% of PCPs have achieved functionality. In this initiative, Physician Organizations will adopt and implement e-prescribing (if not already in place). For those who already have e-prescribing in place, they will work to increase consistent use of e-prescribing by their participating physicians. Incentive Design – To improve the safety, quality and cost-effectiveness of the prescribing process, physicians are paid a flat fee for each physician using a qualified eRx system. Evaluation – Performance improvement is evaluated by all PCPs in the practice unit having eRx functionality and who use it for all of their patients. E-Prescribing functionality is defined as: Vendor meets Medicare requirement standards. Vendor contractually guarantees at least 96% of up time. For controlled substances, physicians are able to use eRx system to obtain decision support and complete medication history. As of July 2009, over 40% of PGIP PCP’s have achieved eRx functionality. As of January 2010, these programs included more than 100 groups of physicians across Michigan, with 8,148 PCPs and select specialists who provide care for about 1.8 million members. Participating physicians represent approximately 64 percent of active PCPs and 15 percent of specialty physicians. 10/14/2010

Value of ePrescribing Safety – Reduced risk of medication errors Cost savings* – eRx with formulary support can save ~$845,000 per 100,000 patients annually in drug spend, according to study Efficiency – Time managing refills cut in half Payers/PBMs – Enables delivery of information at the time of prescribing Pharmacy** – Reduces staff time by 27% for new prescriptions and 10% for renewals Security– Reduces fraud/tampering Medication safety – Reduced risk of medication errors, harmful drug interactions in real time at point of care. Cost savings – Electronic prescribing systems that enable physicians to choose less costly generic medications for their patients could generate at least $845,000 per 100,000 patients annually in savings, according to an Agency for Healthcare Research and Quality study. Allows prescribers to select lower cost or generic Rx saving $845,000 per 100,000 patients. Can reduce Rx spend by up to $3.9 million per 100,000 patients per year*. Universal adoption of eRx in the U.S. could save the health care system $27 billion annually.** Prescription security – Reduces the potential for fraud or tampering. Office efficiency – Average time per day spent managing Rx refills for both physicians and staff is cut in half once ePrescribing is implemented. Payers/PBMs – Enables delivery of formulary, benefits, pharmacy eligibility, and medication history information at the time of prescribing. Pharmacy – Reduces staff time needed to complete dispensing activities by 27% for new prescriptions and 10% for renewals (valued at $1.07 and $0.41 per prescription respectively). *Written testimony of the American College of Physicians. Presented to the National Committee on Vital and Health Statistics Subcommittee on Standards and Security, May 2004. Available at: http://www.acponline.org/advocacy/where_we_stand/health_information_technology/erxfin.pdf ** Fischer, Michael, MD, MS, Christine Vogeli, PhD, et al, “Effect of Electronic Prescribing with Formulary Decision Support on Medication Use and Cost.” Archives of Internal Medicine 168(22), pp.2433-2439. December 2008. *Fischer, Michael, MD, MS, Christine Vogeli, PhD, et al, “Effect of Electronic Prescribing with Formulary Decision Support on Medication Use and Cost.” Archives of Internal Medicine 168(22), pp.2433-2439. December 2008. **http://www.surescripts.com/about-e-prescribing/benefits-of-e-prescribing_for-pharmacies.aspx 10/14/2010

Appendix

Michigan ePrescribing Utilization 2007 2008 2009 Prescription Benefit Requests 3,787,578 8,332,081 20,273,495 Rate of Response to Benefit Requests at Year-End 72.86% 76.88% 74.88% Total Prescriptions Routed Electronically1 2,214,892 4,898,780 11,284,004 % of Total Prescriptions Represented by Renewal Response 9.28% 12.32% 13.37% Total Estimated Responses to Medication History Requests2 3,562,019 74.8% of requests to Surescripts for formulary and eligibility information provided a response. 2009 Safe-Rx calculations: Eligible prescriptions do not include controlled substances, which were not eligible for e-prescribing under 2009 DEA regulations, or preauthorized refills on existing prescription, because they do not require communication between a physician and a pharmacist. Total benefit transactions reflect adjustment of 15% to reflect the potential for duplicate coverages. Prescription/medication history data based on available data for Q4 2009 only. No seasonality is assumed. Method will adjust in future years as full-year data becomes available. 10/14/2010

% Patient Visits Involving a Prescription Benefit Request Source: http://www.surescripts.com/about-e-prescribing/progress-reports/state.aspx?state=mi 10/14/2010

% Eligible Prescriptions Routed Electronically Source: http://www.surescripts.com/about-e-prescribing/progress-reports/state.aspx?state=mi 10/14/2010

% Patient Visits Involving a Medication History Response Source: http://www.surescripts.com/about-e-prescribing/progress-reports/state.aspx?state=mi 10/14/2010

% Physicians Routing Prescriptions Electronically Source: http://www.surescripts.com/about-e-prescribing/progress-reports/state.aspx?state=mi 10/14/2010

% Patients with Available Prescription Benefit/History Information Source: http://www.surescripts.com/about-e-prescribing/progress-reports/state.aspx?state=mi 10/14/2010

% Community Pharmacies E-Prescribing Activated Source: http://www.surescripts.com/about-e-prescribing/progress-reports/state.aspx?state=mi 10/14/2010