1. The Alliance — Madison, Wisconsin Maintaining Employer Leverage: The Emerging Policy and Market Landscape Christopher Queram, CEO The Alliance

2. The Alliance — Madison, Wisconsin Health Care Market  2004 Cost trend is still too high, although there are some success stories Increased attention is being focused on quality and patient safety and their link to costs Consumer engagement strategies are being demagogued as “cost shifts” The uninsured will be a major national issue in 2004 The search for a “silver bullet” solution continues…

3. The Alliance — Madison, Wisconsin Brownian Motion… or Potential Breakthrough? Reform proposals – AFL-CIO (The Newby Plan) – WEA (The New Wisconsin Idea) – ABC for Health – Rep. Mark Miller Study Commissions – Mayor Norquist – Greater Madison Chamber of Commerce – UW Economic Summit

4. The Alliance — Madison, Wisconsin Areas of Broad Agreement Employers need a clear strategy in dealing with health care costs… …and the patience to give it time to work While specifics will vary, the ideal strategy should include: – Increased information – Incentives for selecting “high-value” providers – Consumer engagement

5. The Alliance — Madison, Wisconsin Transparency (“Easily understood, clear, open, frank”) Public reporting of nationally standardized measures of safety, timeliness, equity, effectiveness, efficiency, and patient- centeredness Public/private sector purchasers need to collaborate so as to maximize leverage in the adoption of standard measures

6. The Alliance — Madison, Wisconsin Public Reporting Holds Much Promise… WHA “Check Point” Wisconsin Collaborative for Healthcare Quality Leapfrog Alliance “QualityCounts”

7. The Alliance — Madison, Wisconsin Rewarding Quality Pay-for-performance – Contractual incentives for quality improvement – Use of performance information in establishing tiered networks, “centers of excellence” Consumer incentives – Variable contributions/out-of-pocket expenses based on provider choice

8. The Alliance — Madison, Wisconsin Initial Steps Toward Making “Quality Count” Payor collaboration on a common strategy Alliance provider agreements as a lever for change

9. The Alliance — Madison, Wisconsin The “Business Case” for Incentives to Improve Quality ReadmissionsNumber% of All AdmitsCost Network readmissions; initial admit in 2002 66712.2%$7.2M Network readmissions within 30 days 3406.2%$3.8M

10. The Alliance — Madison, Wisconsin Engaging Consumers Consumer education – Cost of health insurance – Comparative cost/quality information – Health promotion/wellness/lifestyle choices Focused strategies – “Consumer-centered” health plans (Definity) – Disease management programs

11. The Alliance — Madison, Wisconsin The “Business Case” for Disease Management In any given year, ~20% of the population incurs no health care costs About 70% of the population accounts for only 10% of the cost… …while 5% use over 50% of the cost In other words, benefit changes targeted at the 70% will cut costs by 1%

12. The Alliance — Madison, Wisconsin Disease Management “System of coordinated interventions/ communication for people with chronic conditions” Significant emphasis on employee/patient self-care so as to: – Avoid complications – Provide optimal and efficient care

13. The Alliance — Madison, Wisconsin The Alliance Quality Forum Workplace-focused Diabetes Project – Goal: Reduce the burden of Type 2 diabetes through workplace-focused early detection efforts, education, and improved self-management by helping employees with diabetes or at-risk better understand and manage their disease

14. The Alliance — Madison, Wisconsin Putting It All Together Value-based purchasing – Creating/cultivating a cadre of true believers – “Quality” glossary – Linking quality to consumer incentives