NAIC Public Hearing On Health Care Costs Health Innovations Working Group John M. Colmers Secretary Maryland Department of Health and Mental Hygiene May 30, 2008

Key Problems High uninsured Health care unaffordable Mediocre quality Access Cost Quality

Cumulative Percent Change in Maryland Per Capita Health Care Spending and Wages since 1997 From 1997 to 2005 per capita health care spending nearly doubled while wages increased by only about 40%. Source: Maryland Health Care Commission, State Expenditure Analyses Health Costs Growing Faster than Wages

Medicaid 101 Joint Federal/State Program –Sometimes Medicaid is similar to a carrier and sometimes similar to a first party payer Populations Covered –Low income families –Low income children –Disabled –Aged Limitations in Cost Containment –Private sector - focus on PMPM –Medicaid - focus on total costs Significant limitation on cost sharing arrangements Modest opportunities for benefit changes (DRA)

Maryland Medicaid Techniques Sophisticated Rate Setting/Risk Adjustment for MCOs –Can build in assumed savings/control for complexity Disease Management Prescription drug programs - PDL Collective purchase of evidence base –DERP - Systematic reviews Value-based purchasing –+/-0.5% adjustment for HEDIS/other measures –Report cards to assist enrollment Intensive Case Management –R.E.M.program for rare and expensive cases

Maryland Broader Techniques

All Payer Rate Setting Hospital rate system in effect since 7/1/77 All payers participate including Medicare and Medicaid –Made possible by waiver §1814b SSA –Eliminates cost shifting Has generally constrained payment per admission Finances hospital uncompensated care

Health Care Quality Council Problem –High cost, mediocre quality –In Maryland, public and private health care quality improvement initiatives are disparate and uncoordinated Goal –Leverage Maryland’s leadership in health care delivery to improve quality and affordability of health care for all Marylanders Solution – Health Care Quality Council –Inventory public and private quality initiatives, prioritize and focus initiatives –Develop statewide plan for better management and prevention of chronic disease –Coordinate with other efforts to assure Health IT used effectively

Adoption of Health IT Convene major health providers and payers –Engagement by Governor –State approved planning grants for regional exchanges ($250K pilots) –Commitment to fund building best model within a year ($10 million through hospital rates) State government – leading by example –Medicaid, State Employees Plan, Reimbursement TF – reimbursement strategies to encourage provider adoption of IT –Modernize major state health information systems –Medicaid (MMIS) and State Hospitals –Electronic standards-based lab reporting to public health –Use IT to better manage client information between agencies – (first step – common clients in DHMH & DJS)

Transparency Public reporting of health system performance for all payers First HMO Report Cards Other Report Cards –Nursing Homes –Hospitals –Ambulatory surgery Financial/Case Mix Data –Hospital audited reports and detailed cost data –Hospital inpatient and outpatient data –Total expenditure estimates

Lessons Learned Accurate and timely data –Essential for rate setting, performance measurement –Don’t be afraid to use the data Transparency –Creates default position of release Collaboration/all payer –Avoid working at cross purposes –Engage providers and other payers –Create opportunities for win-win solutions Leadership

NAIC Public Hearing On Health Care Costs Health Innovations Working Group John M. Colmers Secretary Maryland Department of Health and Mental Hygiene May 30, 2008