The Maine Experience In Pursuit of Value-Based Purchasing August 4, 2009

Background Self-insured POS plan of 34,000 (with additional 6,800 Medicare retirees) Largest employer-sponsored plan in Maine Governed by State Employee Health Commission, twenty-two member labor/management organization Slightly older working population Higher incidence of chronic illness

The Path to Value-Based Purchasing Founding member of Maine Health Management Coalition – multi-stakeholder organization of employers, hospitals, health plans, and physician groups External factors  Institute of Medicine reports  Juran Institute report for MBGH  NEJM study findings on treatment of chronic illness  Dartmouth Atlas

Commission Adopts Value-Based Purchasing Strategy Growth in plan expenses is unsustainable Resisted traditional cost shifting tactics in favor of value equation (quality, utilization, efficiency) – trying to change behavior Gaps in care and unwarranted variation cannot be adequately addressed without changes in benefits and reimbursement

Phase I – TDES (1/1/05) Telephonic Diabetes Education & Support program Improve participation in self-management program and improve adherence to prescribed treatment Partnership with TPA (Anthem) and non-profit Medical Care Development Adapted traditional education and self- management model to telephonic pilot

TDES Basic Design 1 st and 12 th sessions require face-to-face encounter with nurse educator for pre/post assessment & biometric measures Intervening 10 sessions are conducted via telephone at convenient times Plan waives Rx copays for diabetic medications and supplies for duration of member’s participation

Results of TDES Pilot Participants received recommended care evidenced by: physician visits, foot exams, retinal eye exams, HbA1c levels Members participating in TDES had statistically significant improvement in adherence to oral diabetes medications Compared to randomly selected control group TDES participants had an adjusted average cost $1,300 less than control group over 12-month follow-up

Phase II – Hospital Tiering (7/1/06) Goals & Objectives Encourage public disclosure of provider performance Establish attainable performance benchmarks to be incrementally adjusted Drive quality improvement Give members tools to make informed decisions Provide incentives to shape decision-making

Hospital Tiering Basic Design Completion of Leapfrog safe practices survey Performance on Maine Health Management Coalition medication survey indicating “has made good progress to implement recommended safe practices” Met or exceeded national average on CMS clinical core measures Services billed by “preferred hospital” exempt from annual deductible All hospitals remain in the network Over 60 sessions conducted statewide to inform members

What Happened? Only 14 of 36 acute care hospitals met the criteria for preferred hospital Members voiced concern to local hospital officials for failing to meet criteria By 1/1/07 all Maine hospitals had completed the Leapfrog safe practices survey and the MHMC medication safety survey Number of preferred hospitals jumped to 25 by 1/1/07

The Next Phase of Hospital Tiering Providers became more engaged in process Agreement to use MHMC as “trusted” source of measures and reporting State aligned with MHMC hospital ratings – blue ribbon designations (7/1/07) Financial incentives for members become more meaningful (10/1/08)

What Do We Know About Hospital Tiering? Design was quite benign and non-threatening but it produced results Incremental approach helped ensure members were not disenchanted Focus on quality and safety insulated initiative from provider complaints Anecdotally, hospital QI staff and pharmacists told us the initiative helped secure resources In first year there was 5% shift in outpatient services from non-preferred to preferred hospitals

What Have We Learned? There is strong evidence to support that initial objectives have been met Individually and collectively hospital quality performance has improved – at least for dimensions of care we measure Incentives do have some impact on both provider and enrollee behavior

What Do We Need To Know? Is there a link between higher-performing hospitals and efficiency? How do we design incentives to produce desired results? Can we adapt this model to specific high-volume or high-risk procedures? How do we demonstrate the continued effectiveness of this strategy?

Phase III – Primary Care Physician (PCP) Tiering Maine Health Management Coalition’s Pathways to Excellence (PTE) developed metrics to measure management of patients with chronic conditions Measures office systems, treatment of diabetes, treatment of heart disease, treatment of pediatric asthma and results of childhood immunizations

How Does PCP Tiering Work? Preferred practices must be awarded two or three blue ribbons Office visit copays to preferred practices are waived Services billed by preferred practices not subject to deductible

Developments in PCP Tiering From 2007 to % increase in the number of practices with 3 blue ribbons and 20% increase in number of practices with 2 blue ribbons By 2009 over 50% of the better than 400 primary care practices were preferred MHMC moving to national measures – Bridges to Excellence and NCQA

Phase IV Adapt TDES principle to asthma and congestive heart failure (7/1/09) Centers of Excellence for bariatric surgery (7/1/09) Health credit program (10/1/09)

Next Steps Minimally invasive surgery Introduction of efficiency measures (to include utilization) for PCPs, specialists and hospitals Shared decision-making for preference-sensitive services Regional medical tourism Payment reform