1 Building on Evidence: Oregon’s Efforts on Value-Based Benefit Design Jeanene Smith MD, MPH Office for Oregon Health Policy and Research Oregon Health Authority October 2011

2 Oregon’s Value-Based Benefit Design Development State originally directed by legislature in 2007 to “develop recommendations for defining a set of essential health services that would be available to all Oregonians under a comprehensive reform plan.” Focus on using value-based benefit approach in setting levels of cost sharing and use in state purchased plans of OHA (20-30% of lives in most parts of Oregon). Also considering how to offer in the Exchange and fit inside set cost sharing limits/income levels & Essential Benefits Underlying methodology based on Oregon’s Prioritized List

3 Oregon Has Long History With Evidence-Based Benefit Design Prioritized List of Health Services – uses evidence for defining Oregon Health Plan benefits since 1994 –Developed and maintained by the Health Services Commission (HSC) –Services are prioritized according to impact on individual and population health, based on best available evidence –Services necessary to determine a diagnosis are covered; list is used to determine coverage of treatments/follow-up visits –Ancillary services such a prescription drugs and durable medical equipment are covered for conditions in the funded region –Legislature determines funding level (about 3/4 of lines are covered)

Current Prioritization Methodology: Step 1: Categories of Care 1) Maternity/Newborn Care (100) 2) Primary & Secondary Prevention (95) 3) Chronic Disease Management (75) 4) Reproductive Services (70) 5) Comfort Care (65) 6) Fatal Conditions – Disease Modification/Cure (40) 7) Nonfatal Conditions – Disease Modification/Cure (20) 8) Self-limited Conditions (5) 9) Inconsequential Care (1) 4

Current Prioritization Methodology: Step 2: Individual/ Population Impact Measures Impact on Health Life Years (+ 0 to 10) Impact on Suffering (+ 0 to 5) Population Effects (+ 0 to 5) Vulnerability of Population Affected (+ 0 to 5) Tertiary Prevention (+ 0 to 5) Effectiveness (x 0 to 5) Need for Medical Services (x 0 to 100%) Net Cost (0 to 5) 5

Prioritized List: Example of Line Item Scoring Type II Diabetes Mellitus Impact on Healthy Life Years: 7 Impact on Suffering: 2 Effects on Population: 0 Vulnerability of Population Affected: 2 Effectiveness: 4 Need for Service: 1 Category 3 (Chronic Dz Management) Weight: 75 Net Cost: 4 Total Score: 3300  Line: 33 6

Oregon’s Prioritized List of Health Services Line NumberExamples of ServicesCoverage Maternity care Treatment of moderate to severe head injury Medical therapy for acute pancreatitis Treatment for rheumatic heart disease Laser therapy to prevent retinal tear Treatment for benign breast disorders Covered Treatment for plantar fasciitis Treatment for acute viral conjunctivitis Not Covered 7

8 Maintenance of the Prioritized List Biennial review of list –Review of new evidence on existing treatments o New information on effectiveness my be used to move service up/down the list o Must have evidence of harm or ineffectiveness to take off list Interim modifications –Correct errors –Add appropriate pairings of codes –Delete inappropriate pairings of codes –Incorporate new medical codes o Review of evidence for new treatments, must be more effective or as effective but lower cost to add to list –Incorporate/revise guidelines

9 Oregon’s Value-Based Benefits Design Little or no cost sharing for: –Value-based services –Basic diagnostic services –Comfort care Tiered coinsurance/copays for other services –Four tiers based on evidence methodology of Prioritized List –Lower cost sharing for primary care outpatient services Use of an evidence-based drug formulary also suggested Some excluded services as in commercial plans

Oregon’s Value-Based Benefits Package Service TierExamples of ServicesCost Sharing Value-Based Routine vaccinations, prenatal care, chronic illness management, smoking cessation treatment 0-5% Tier 1 (Lines 1-112) Highly effective care for severe chronic disease and life- threatening illness & injury (e.g., rheumatoid arthritis, heart attack, low birth weight) Low Tier 2 (Lines ) Effective care of other chronic disease and life-threatening illness & injury (e.g., glaucoma, breast cancer, ADHD) Moderate Tier 3 (Lines ) Effective care for non-life-threatening illness & injury (e.g., ear/sinus infections, herniated disk, reflux, dentures) High Tier 4 (Lines ) Less effective care and care for self-limited illness and minor illness & injury (e.g., chronic low back pain, viral sore throat, seasonal allergies, acne) Highest 10

11 20 Sets of Value-Based Services in Oregon’s Value-Based Benefit Package Value-based services are medications, tests, or treatments that are highly effective, low cost, and have a lot of evidence supporting their use Most of these services should be provided via outpatient care – ideally in a patient-centered primary care home These services should be offered at NO cost to patients (no copays or coinsurance) in order to encourage use of these services given their high level of benefit Goal: Have these services used as much as possible

12 Remove Barriers to Care: Examples of Value-Based Services Diabetes Meds: Insulin, oral glucose lowering drugs Labs: Hba1c (blood test to check diabetes control) Other services: Eye exams Congestive Heart Failure (CHF) Meds: Generic blood pressure meds (beta-blocker, ACE inhibitor, diuretic) Labs: Annual blood count (CBC), metabolic panel (CMP), cholesterol/lipid profile, urine test; thyroid test (TSH), once Other tests: EKG, echocardiogram Other services: Nurse case management

13 Hypothetical Example—Silver Level Plan Robert is single, earns $20,000 per year He purchases insurance through an insurance exchange He will get tax credits to assist with his premium He chooses a VBBP with 10%/30%/50%/70% tiered coinsurance His deductible is $300; out-of-pocket max is $1,600 – amounts limited due to his income level Plan uses an evidence-based formulary for medications –$10 for generic, –$30 for preferred, –50% for nonpreferred

14 Robert Has Type 2 Diabetes –His insulin, eye exams, and diabetic labs/supplies are covered with little or no cost sharing since part of value-based services –His doctor finds a diabetic foot ulcer, and refers him to a surgeon and prescribes a generic antibiotic No cost sharing for preventive service visit For the antibiotic, Robert pays a $10 copay based on an evidence- based formulary –The surgeon treats the ulcer; cost: $2,000 This Tier I service has 10% coinsurance $300 applies to deductible, and Robert pays 10% of the remaining $1,700 for a total out-of-pocket cost of $470 Note: Today, in a typical commercial plan out-of pocket costs would be $810 plus exams, diabetic meds and supplies copays

15 Preliminary Actuarial Analysis: Expected Utilization Offset Due to Change in Cost Sharing –VBS – moderate increase (10-20%) –Tier I – modest increase (5-10%) –Tier II – None –Tier III – modest decrease –Tier IV – moderate decrease –Rx – moderate decrease –Diagnostic services – varies –Ambulance/ED – None* Overall initial savings estimated 3-5% using commercial data from Oregon Educators Board plan

16 Initial Value-Based Benefits Focus Group Findings Who: Insurers, agents/producers, providers, hospitals, large and small employers, consumers (insured and uninsured), and consumer advocates Key Points: Value-based/low or no cost-sharing services are appealing Wellness must have an even greater emphasis Levels and tiers are complicated Concern that benefit design is “one-size fits all” approach Amount of education and communication required to introduce this benefits design is daunting Concern about who decides what’s important and in what tiers Benefit design has some inherent inequities Premiums must be significantly lower to be attractive

17 In Summary – Oregon’s Value-Based Benefit Design Furthers Oregon’s Triple Aim by incenting the most effective services Furthers value-based design plans in use by health care purchasers now Oregon is intent on applying it to state-purchased lines of coverage now (state employees, school districts) and considering how to couple with payment reform Preliminary review shows that the Oregon’s VBBP cost sharing could be adjusted to fit federal reform limits Flexibility allowed through federal regulations on value- based benefit design would be helpful

18 For More Information: Background Documents : Oregon Health Services Commission (HSC) Cost Sharing Work Group Health Fund Board Benefits Committee Final Report Questions: Jeanene Smith: Darren Coffman, Director of HSC: