1. Can Employers Drive Value Based Purchasing? Andrew Webber, President & CEO National Business Coalition on Health Leonard Davis Institute of Health Economics February 27, 2004

2. Presentation Outline NBCH Introduction Imagine – Crossing the Quality Chasm We Have Met the Enemy Some Hopeful Signs

3. National Business Coalition on Health National, non-profit, 501 (c)(6), membership organization of employer- based health coalitions - 85 coalition members - 7,000 individual employer members of coalitions - Representing 30 million covered lives Not to be confused with the National Business Group on Health

4. National Business Coalition on Health Vision – Establishment of a value-based health care market in every community Value-based purchasing fundamentals: - Publicly report performance information - Reward health plan/provider performance - Leading to: an accelerated pace of health care delivery system reengineering

5. National Business Coalition on Health Mission – To provide superior membership service - Building the capacity of NBCH members to advance value-based purchasing - Identification and dissemination of best practices

6. Some Major NBCH Initiatives Sponsor of the Common RFI/eValue8 Product Leapfrog Partner – 75% of Regional Roll Outs led by NBCH Members Exploring Bridges to Excellence Initiative Active participant in National Quality Forum and Disclosure Group NBCH Summary: A Distribution Network for Best Practices in Value-based Purchasing

7. Imagine – Crossing the Quality Chasm

8. An Abundance of Opportunity 44,000 – 98,000 preventable hospital deaths Widespread variation in medical practice and health outcomes Fragmented delivery system Poor information technology infrastructure Lack of transparency and disclosure Toxic payment system Gap between what we know and do

10. The Opportunity Restated 50% Quality Defect Rate 40% Wasted Spending

11. The Demand Side Challenge: Misaligned Financial Incentives Health care is one of the only industries where a “do over” is a revenue source System pays for throughput rather than outcomes Consumer insulated from the cost consequences of their demand for services Supply-side induced demand for services Providers not rewarded to improve care

12. Market-Based Reform: A Path Forward Performance disclosure Pay for performance Consumer choice Desired Outcomes: Health Care System Reengineering Quality Up and Costs Down

13. Performance Disclosure Common set of metrics At plan, provider, physician level Also benefit/risk information at treatment level Publicly reported In ways that the public can understand Goal: To Embarrass the Delivery System into Improvement

14. Pay for Performance Differential payments to plans/providers based on understood and recognized performance metrics Question: what % of total reimbursement needs to be tied to performance to influence behavior change Goal: Financial Rewards to High Performers Motivating Improvement by Others

15. Consumer Choice Health benefit architecture designed to incentivize/reward employee selection of high performance plan/providers and evidence based medical treatments Question: What are the copayment thresholds that will influence consumer selection? Question: What is the ROI? Goal: Patient Volume Migration To High Performers

16. “We have met the enemy and they is us” Pogo Walt Kelly

17. Health System Reform Starts at Home with Employers/Purchasers Taking ownership and responsibility Particularly for the misaligned financial incentives And failure to incentivize and reward quality and efficiency

18. A Report Card on Employer Performance Investment in Human Capital, Employee Health & Worker Productivity 1. Provision of health insurance benefitsB- 2. Provision of worksite health promotion and prevention programsC 3. Investment in disease management programsC- 4. Employee education C 5. Demonstration of corporate leadership and trustC-

19. A Report Card on Employer Performance Track Record in Value-based Purchasing Support managed care during backlashC- Reward plan and provider performance through differential paymentsD Activate employees/consumers through innovative benefit architectureD Demand health plan engagement in I/RsC- Participate in coalitions and group purchasingC

20. Some Hopeful Signs

21. Public Reporting of Performance NCQA Health Plan Accreditation/HEDIS Leapfrog Hospital Survey State and Community Report Cards NCQA Physician Recognition Program CMS Voluntary Hospital Reporting Program Medicare Pay for Reporting Requirement

22. Pay for Performance Bridges to Excellence Integrated HealthCare Association – P4P Project CMS/Premier P4P Demonstration Medicare Drug Bill Payment Demos at Physician Level IOM and MedPAC Studies of suitable measures for P4P Health Plan Initiatives

23. Consumer Choice General Motors – Plan Selection Boeing – Hospital Selection Pitney Bowes – Pharmaceutical Selection Bridges to Excellence – Physician Selection

24. Can Employers Drive Value Based Purchasing? Yes, But – The pace is slow Corporate leadership is lacking Best practice models are needed Consumers, government purchasers, and health plans must all get on board

25. Summary Opportunities for improvement abound Employers have not done their part Market-based reform still best opportunity for accelerating the pace to a health care system that is: - Evidence-based - Patient-centered - System-minded - Safe and efficient