November 29, 2012 Community Dialogue: Health Care Waste, Overuse, High Costs

2 Minnesota Health Action Group (formerly Buyers Health Care Action Group)  Resource for all private and public purchasers  Represent interests of those who pay – employers and consumers  Health care, and only health care  Key strategies –Innovation: Driving meaningful change in Minnesota’s health care system –Collaboration: Sharing information, ideas and resources to improve health and health outcomes –Engagement: Engaging and educating employees/consumers in informed decision-making to create more affordable health care

3 IOM Report – The Health Care Imperative: Lowering Cost and Improving Outcomes  $2.5 trillion 2009 U.S. health care spend  $765 billion in estimated waste –30% of spend  Over the decade from –Salaries have increased by 38% –While health care premiums have increased by 131%  If other prices had grown as quickly as health care costs since 1945: –A dozen eggs would cost $55 –A gallon of milk would cost $48 –A dozen oranges would cost $134

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6 IOM Findings Applied to 2010 MN Health Care Spend of $37.7B Recreated from Doug Wood presentation to MN Health Care Reform Taskforce on November 1, 2012

7 Purchasers  Not waiting for delivery system reforms – they are taking action now  E.g., Movement to High Deductible Plans –Biggest year over year increase in CDHP offerings by large employers – 23% (2010) to 32% (2011) 1 – 65% of large employers likely to offer by –Most reasonable strategy to avoid “Cadillac tax” in 2018 Individual premium of $10,200 Family premium of $27,500  E.g., Private Health Insurance Exchanges –Serious consideration of defined contribution while offering access to a private exchange - 58% 2 1 Mercer Presentation to NBCH Health Leadership Council Forum, June, HR Policy Association CHRO Survey Results Presentation to NBCH Health Leadership Council Forum, June, 2012

8 Purchasers  Changes in contracting –E.g., Walmart Announcement October 2012 Expanded concept of Centers of Excellence beyond organ transplants to surgeries o Heart: Cleveland Clinic, Geisinger, Scott & White, Virginia Mason o Spine: Mercy Hospital Springfield, Scott & White, Virginia Mason Employee Incentive: No out of pocket cost at all, plus travel, lodging, and food for patient and a caregiver –E.g., Reference Pricing Reasonable alternative to high-cost providers while not compromising quality Standard price for a drug, procedure, service or bundle of services set by purchaser Employee pays any allowed charges beyond standard price, in addition to deductible, coinsurance, etc.

9 Minnesota Health Action Group – Initiatives to Address Waste and Overuse  Minnesota Bridges to Excellence (MNBTE) –Implemented in 2006 –P4P for chronic care – diabetes, vascular disease, depression –Rewards funded by eleven private and public purchasers  Expanded focus introduced in 2011 –Improving the efficiency and quality of care for high cost conditions Reduction of overuse and waste; outcomes measurement –Systems of Excellence – identifying the “best of the best” First for back pain and surgery Other conditions of purchaser interest: knees and hips; maternity care; cancer

10 Minnesota Health Action Group – Initiatives to Address Waste and Overuse  Increased price and quality transparency –Consumers need access to information that is actionable Measure and report on price, cost and quality Increase awareness of provider differences –Support Catalyst for Payment Reform (CPR) Statement on Price and Quality Transparency in Health Care released early November Expectation by 2014 o Providers remove any restrictions on health plans from making price and quality information available for use in transparency tools o Health plans allow self-insured customers full use of own claims data including giving it to a third-party vendor to develop transparency tools

11 Minnesota Health Action Group – Initiatives to Address Waste and Overuse  Choosing Wisely –ABIM Foundation initiative; focus on specific tests/procedures commonly used but not always necessary –Nine specialty societies each identified lists of “Five Things Physicians and Patients Should Question”; additional societies in February 2013 –Supported by Consumer Reports and multiple consumer- oriented organizations and coalitions –Official Consumer Reports partner in Minnesota; Community Dialogue in March 2013  Total Cost of Care Contracts –Purchasers supportive, but Concern that shift from FFS to Shared Savings and Risk is too slow Will “savings” accrue to people who write the checks for health care – purchasers and consumers