Putting It All Together and Driving Quality: GM’s Value-Based Purchasing Strategy Tricia Marine Barrett Managed Care Consultant GM Health Care Initiatives MichPHA Fall Kick-off Ann Arbor, Michigan September 21, 2006

The Big Picture General Motors is the largest private purchaser of health care in the United States 1.1 million employees, retirees & dependents 30 percent in fully insured HMOs Older population with more than three retirees/surviving spouses for each active worker Total 2005 health care expenditure - $5.3 billion ~$1.2 billion in HMOs HMO Portfolio Over 120 Plans administered by ~35 carriers nationwide

GM U.S. Health Care Total Cash Expenditures

U.S. Health Care Trends In Double Digits Per Watson Wyatt Worldwide Growing Utilization and Increasing Prices Driving Health Care Inflation To Unsustainable Levels 13.5% 3.3%

Responsible Healthcare Purchasing “The current cost crisis is inextricably linked to quality and the perverse payment structures that discourage quality while driving up costs.” (IOM Crossing the Quality Chasm, chapter 8).

Purchaser Health Plan Hold Accountable Consumer Expect to Meet Needs Provide Quality Leadership Hold Delivery System Accountable for Value Provide Delivery System With - Information- Coordination - Support- Communication Selection and Contracting Delivery System Primary Care PhysicianHospitalPharmacy Centers of Excellence Specialty Physician Diagnostic Services Home Health Care Other Therapeutic Services Behavioral Health Health Plan Role

Value Based Purchasing QUALITY _______________________ COST = VALUE

General Motors Value Purchasing Strategy GM’s 3-Pronged Strategy Health Plan Accountability Annual quality assessment through eValue8 RFI, NCQA accreditation and HEDIS/CAHPS scores (CARS Project) Motivate migration of enrollees to higher value health plans Compare quality and cost of HMOs 4 performance bands Salaried monthly contribution is tied to HMO performance Requires significant communication with employees Aggressive Supplier Development Best practice sharing among Plans eValue8 is an integral part of each prong

Accountability: Coordinated Autos Reporting System (CARS) Partnership with Ford, GM, Delphi and the State of Michigan (DaimlerChrysler participated until 2006) Purchasers contract with NCQA to conduct the analysis NCQA uses CAHPS and HEDIS performance to assign 1-5 stars in four categories: Getting Better/Living with Illness Staying Healthy Access and Service Doctor Communication and Service Methodology consistent with NCQA/US News & World Report health plan report card

Accountability: National Business Coalition on Health eValue8 RFI Common RFI sets expectations and assesses performance of HMOs and PPOs Plan Profile Health Information Technology Consumer Engagement Provider Measurement, Incentives and Rewards Primary Prevention and Health Promotion Chronic Disease Management Behavioral Health Pharmaceutical Management

Key Objectives of Common RFI Create and Implement Standardized Performance Expectations Reduce Redundancy by Consolidating Purchaser Requests Promote Health Plan Accountability & Transparency Recognition of the Importance of Health on Productivity and the Bottom Line Foster Market Reform Sustained Movement to Higher Value = Fn(Quality/Price)

Why GM uses the eValue8 RFI The eValue8 RFI tool enables GM to: Measure health plan quality and monitor improvements Differentiate among health plans Support rate negotiations Inform and target supplier development activities

Motivate Migration: 2006 Salaried Flex Pricing Health Plan Scoring Table HMO A HMO B HMO C HMO D eValue8 RFI Results Raw Score Flex Score (25) HEDIS / CAHPS (CARS evaluation) Raw Score Flex Score (20) NCQA Accreditation Raw Score Flex Score (5) National Rate Rankings Relationships of rates to Local Indemnity Total Cost Score (50) Total Quality + Cost (100) Commendable 2 Total Quality Score (50) Avg Benchmark Strong Good Rating Sample Employee Contribution Accredited $200 $100 $150 $180 Excellent 5 Excellent 5

Changes to Quality Score Methodology for 2007 Enrollment Increased score for eValue8 from 25 to 30 points Relative performance evaluation completed for each eValue8 section rather than by total score Removed points dedicated to NCQA accreditation Accreditation is required 90% of GM HMOs have Excellent accreditation Subtract points for HMOs with less than Excellent rating Bring these points back when Quality Plus elements have been fully integrated and new rating system developed Subtract 4 points from the CARS ‘stars’ (minimum score) Add 4 points for ‘Partnership” rating

2005 Top HMOs Cost/Quality Comparison Low Cost High Cost Low Quality High Quality Based on Salaried Banding Study – 2005 B-Band ∎ C-Band + D-Band ▬ E- Band ∗ F-Band X G-Band ▲ Improve Quality H & S Members = 0 Improve Cost H & S Members = 86,752 Well Performing H & S Members = 101,318 Improve Quality & Cost H & S Members = 24,689

$ 0$100$150$180$200 Strong HMO Good HMO Benchmark HMO Average HMO Monthly Employee Contribution (Family) HSA PPO EMP PPO $ $ 0$45 $70-$85$85$110 $145 -$190 Motivate Migration: Salaried Health Care Monthly Contributions

Employees/ Retirees can compare Plan options on aggregate quality performance Motivate Migration

Results of annual CARS analysis: Values represent the number of “Stars” earned Motivate Migration

Employees/Retirees can also use the Asparity Plan Finder tool to compare performance on individual measures of interest to them. Motivate Migration

Motivate Migration

Salaried HMO Migration % of HMO Members By Band BenchmarkStrongGoodAverage Total Number Of Plans By Band Migration Results

Aggressive Supplier Development Using eValue8: Driving HMO Collaboration for Quality Improvement Quarterly Meetings with High Volume HMOs Monitor Work Plans in areas of poor performance Monthly Conference Calls (Accelerating Improvement in Managed Care)

Accountability for Quality motivates improvement Premium adjustment and performance transparency effectively migrates members to higher performing health plans GM believes the way to reduce health care cost is to improve quality…and provide people with the information to make smart health care decisions Summary

Parting Thoughts... “We’ve concluded that the quality of care cannot improve until physicians and hospitals [and health plans] nationwide are held accountable to common measures of performance.” McGlynn and Brook, Rand Institute, “Full Disclosure: Time for the Naked Truth About Healthcare” RAND Review, Summer 2001