COMPARATIVE EFFECTIVENESS RESEARCH AND THE CALIFORNIA MEDI-CAL PROGRAM Len Finocchio, Dr.P.H Associate Director California Department of Health Care Services 1

BACKGROUND 2

Beneficiary Profile 3 California HealthCare Foundation. Medi-Cal Facts & Figures. September 2009

Income Limits for Eligibility 4 California HealthCare Foundation. Medi-Cal Facts & Figures. September 2009

Scope of Benefits ± - Covered for those under 21 and in nursing homes 5 California HealthCare Foundation. Medi-Cal Facts & Figures. September 2009

Managed Care & Fee-for-Service 6

$45 billion Total Expenditures 7 California HealthCare Foundation. Medi-Cal Facts & Figures. September 2009

Highest Expenditures 8 California HealthCare Foundation. Medi-Cal Facts & Figures. September 2009

Managing Medi-Cal Expenditures Better delivery of existing services Care coordination & management, focus on prevention Reduce the number of beneficiaries Scale back income eligibility thresholds Reduce scope of benefits Curtail or eliminate optional benefits (e.g. dental, chiropractic) Reduce provider reimbursements Value-based purchasing Delegate financial risk & measure performance Non-payment for health care-acquired conditions Evidence-based service design 9

Proposed Reductions FY Health & Human Services CalWorks$946.2 Medi-Cal$842.3 In-Home Supportive Services$163.8 Other HHS Programs$ 86.9 Education Prop 98$544.4 Child Care$446.9 Cal Grants$301.7 Other Education$ 28.0 All Other Reductions State Mandates$828.3 Other Reductions$27.3 Total Expenditure Reductions$4, Governor’s Proposed Budget. Health & Human Services.

Cost Saving Proposals in Budget Improved care coordination for senior & disabled beneficiaries Federally Qualified Health Center payment reform Managed care expansion to rural areas Align open enrollment with commercial plan policies Value-based service design 11

Reasons for Better Purchasing Buy better value with limited public resources State budget shortfalls: $26 billion last year & $9 billion this year “Bend the cost curve” Improve quality of care & health of beneficiaries Maintain income eligibility and benefit levels Prepare for large program expansion in

VALUE-BASED SERVICE DESIGN 13

Key Issues & Questions Medical interventions often adopted without rigorous evidence New interventions are more effective than the previous standard of practice Can we perform technology assessment retrospectively? Can we selectively purchase health services using evidence? Can we selectively purchase health services in a systematic & transparent, not haphazard, way? 14

Value-Based Service Design Assure beneficiary access to necessary health care services Identify and reduce services that: Do not improve health outcomes May cause harm to patients Are overused & should only be provided under limited conditions. Not synonymous with addition or removal of benefits covered under the State Plan. 15

Systematic Evidence Review Evidence-based treatment guidelines from organizations whose primary mission is to conduct objective analyses of the effectiveness of medical interventions: National Institute for Health and Clinical Excellence (NICE) Agency for Healthcare Research and Quality US Preventive Services Task Force Patient-Centered Outcomes Research Institute Individual studies in peer reviewed literature Clinical practice guidelines published by medical and scientific societies. 16

Ranking Interventions Hazardous High-volume Expensive Effective High-volume Cost-saving Questionable effectiveness Moderate-volume Moderate expense UNDESIRABLE DESIRABLE 17

Examples of Candidates Where evidence shows little or questionable value: Vertebroplasty Implantable cardioverter difibrillators Arthroscopic surgery for knee osteoarthritis Exercise electrocardiogram for angina Lumbar imaging for lower back pain 18

Determine Costs & Feasibility Determine potential costs and savings from modifying, curtailing or eliminating targeted services. Determine feasibility of implementation: Evaluate the cost and timeframe for computer system changes Staffing & expertise needed to craft policies that effectively limit inappropriate use of a service without interfering with appropriate (i.e., scientifically justified) use of that same service Ability to use utilization management staff to effectively manage the targeted services Identify services requiring prior authorization for any particular beneficiary 19

Transparency & Stakeholder Engagement Consult with stakeholders Including health professionals, Medi-Cal providers, and consumer advocacy organizations prior to modifications to targeted services Notification about proposed changes To targeted services, rate methodologies and payment policies Receive, review and respond to written input Regarding changes and provide a public stakeholder meetings Provide for an appropriate and meaningful response Notify the legislature Of the action taken and reasons for the action. 20

Issues with Implementation Systematizing evidence review Consumer preferences, fear, knowledge Managing stakeholder engagement Lobbying by professional and advocacy groups Push me – Pull You of expanding coverage while contracting services/benefits 21

For Research Community Build body of related research – comparative effectiveness of services and: Consumer perceptions Practitioner behaviors Deepen working relationships with major payers Communicate effectively and strategically about findings Take the long view 22

THANKS Len Finocchio, DrPH