Case Studies in Case Studies in Value-Based Benefit Design –Value-Based Benefit Design –

Results and Lessons LearnedResults and Lessons Learned

Jerry Reeves MDJerry Reeves MD

HEREIU Welfare FundsHEREIU Welfare Funds

Health InnovationsHealth Innovations

Value-Based Benefit DesignValue-Based Benefit Design

VBBD is a strategy that minimizes or eliminates out-of-pocket VBBD is a strategy that minimizes or eliminates out-of-pocket costs for high-value services in defined patient populationscosts for high-value services in defined patient populations High-value services are identified through scientific evidenceHigh-value services are identified through scientific evidence The more The more clinically beneficialclinically beneficial and and cost-effectivecost-effective the therapy is the therapy is

for a patient group, the lower the out-of-pocket costsfor a patient group, the lower the out-of-pocket costs Lowering out-of-pocket costs for high-value servicesLowering out-of-pocket costs for high-value services has been has been

found to improve access to and use of those servicesfound to improve access to and use of those services More effective use of high-value services may positively impact More effective use of high-value services may positively impact

the health of the targeted populationthe health of the targeted population Preventable adverse health consequences reducedPreventable adverse health consequences reduced Related high-cost health care services avoided Related high-cost health care services avoided

Chernew ME et al. Health Aff (Millwood). 2008;27:103-112; Fendrick AM et al. Am J Manag Care. 2001;7:861-867; Fendrick AM, Chernew ME. Am J Manag Care. 2006;12 (special issue):SP5-SP10.

Value Based Intervention StrategiesValue Based Intervention Strategies

Identify Top RisksIdentify Top Risks Cost and Use OutliersCost and Use Outliers Chronic Disease DriversChronic Disease Drivers

• Diabetes, Blood VesselsDiabetes, Blood Vessels

• Depression/AnxietyDepression/Anxiety

• Lung Disease, Smoking, Lung Disease, Smoking, CancerCancer

• Sedentary, MusculoskeletalSedentary, Musculoskeletal Structured InterventionsStructured Interventions

HRA, Screen Tests, MeasuresHRA, Screen Tests, Measures Tobacco Cessation, Tobacco Cessation,

Medication AdherenceMedication Adherence Preventive Services CampaignPreventive Services Campaign Steer to Best Value ProvidersSteer to Best Value Providers Steer to Best Value ServicesSteer to Best Value Services

• Ofc visits vs. ER, HospitalOfc visits vs. ER, Hospital Medical Home (Top Docs)Medical Home (Top Docs)

Engage the Patients & Engage the Patients & ProvidersProviders

Multiple Touches- Multiple Touches- • Face to Face if PossibleFace to Face if Possible

IncentivesIncentives Know Their NumbersKnow Their Numbers Wellness ProgramsWellness Programs

• Walking- Steps per WeekWalking- Steps per Week• Weight and WaistWeight and Waist• EAP/ Substance AbuseEAP/ Substance Abuse

Coordinate the PartnersCoordinate the Partners ““Connect the Dots”Connect the Dots”

Measure / Report ResultsMeasure / Report Results Prescribing Patterns, Prescribing Patterns,

Provider ProfilesProvider Profiles Care opportunities takenCare opportunities taken

ImproveImprove

Cost and Use Outliers - 50,000 Feet ViewCost and Use Outliers - 50,000 Feet ViewImportance IndexImportance Index

Small Plans   Mid Size Plans  

N (% Change)Importance

Index*  N (% Change)Importance

Index* 

Lives 3,709 ( - 8.2%)   31,152 ( - 0.5%)  

Patients 1,631 ( +5.8%)   27,292 ( + 6.9%)  

Paid (000s) $6,389 ( +13.3%)   $91,577 ( + 8.5%)  

Patients/1000 440 ( +14.6%)   876 ( + 7.4%)  

Physician $pmpm $447 ( +24%) 107*  $383 ( +10.6%) 42* 

OP Facility $ pmpm $304 ( +37.3%) 112*  $304 ( +19.6%) 61* 

IP Facility $ pmpm $332 ( +3.0%) 10*  $269 ( - 2.8%) -8* 

Drugs $ pmpm $122 ( +10%) 12*  $208 ( + 8.0%) 17* 

All Medical $ pmpm $1257 ( +18%) 1150**  $1225 ( + 9.0%) 2803** 

•* Importance Index by Service Category = $ pmpm times the % Change•** For All Medical, it is % Change times the total paid in 000s

Impacts of Surgery and Anesthesia - 5 Plans

Paid (000s) PMPM

Yr to Yr Change

InPt Facility-Med/Surg   17,901 239 -4%

Outpt Surg Facility   6,378 85 16%

IP Surgeon   1,541 21 15%

Outpt Surgeon   2,003 27 11%

Office Surgeon   2,340 31 10%

IP Anesthesia   587 8 -6%

OP Anesthesia   1,494 20 28%

Total 32,244 431 10%

Surgery and anesthesia = 35% of total medical spend

MD Cost Variation; Same OutcomeMD Cost Variation; Same Outcome

SpecialtySpecialty ConditionCondition LowLow AverageAverage HighHigh

FPFP

Otitis mediaOtitis media $46$46 $109 (+137%)$109 (+137%) $412 (+796%)$412 (+796%)

BronchitisBronchitis $89$89 $150 (+69%)$150 (+69%) $771 (+766%)$771 (+766%)

IMIM

UTIUTI $81$81 $140 (+73%)$140 (+73%) $778 (+860%)$778 (+860%)

AnginaAngina $86$86 $297 (+245%)$297 (+245%) $743 (+764%)$743 (+764%)

CardiologyCardiology

AnginaAngina $241$241 $611 (+154%)$611 (+154%) $1389 (+476%)$1389 (+476%)

OrthopedicsOrthopedics

Knee surg.Knee surg. $2,727$2,727 $4,473 (+64%)$4,473 (+64%) $9,383 (+244%)$9,383 (+244%)

Site of Care Matters –Site of Care Matters –5 Plan Units5 Plan Units

Hospital – cost per admit = Hospital – cost per admit = $9,363$9,363 Emergency Room – cost per visit = Emergency Room – cost per visit = $737 $737 Urgent Care – cost per visit = Urgent Care – cost per visit = $64 $64 Office Visit – cost per visit = Office Visit – cost per visit = $69 $69

Doctors receive 6 times as much payment to Doctors receive 6 times as much payment to administer chemotherapy and specialty drugs in an administer chemotherapy and specialty drugs in an outpatient facility compared to in their office.outpatient facility compared to in their office.

Data Based InterventionsData Based Interventions Focus scheduled meetings with UM partners and PPO network partners

on action plans• Avoidable non value added surgery and imaging - action plans• Require “expected impact on management” in prior auth for imaging studies• Require independent radiologist evaluation of abused imaging studies• Informed consent and patient education on alternatives as part of the prior

authorization process• Retrospective medical record reviews of medical necessity and impacts on

subsequent treatments Consider higher co-pays or co-insurance for non value added imaging,

ER visits and elective surgeries Consider contracting radiology sub-network and/or radiology benefit

management company Consider contracts with Centers of Excellence (“medical tourism”) and

oncology management company Steer to “Infusion Centers”, free standing surgery centers for better rates

and service Consider investigations of suspected churning and upcoding Consider implementing “Tel-A-Doc”, phone nurses, “Doctor Tomorrow” &

self-care guides to reduce unnecessary ER visits. Incentives to use retail clinics & doctor offices instead of ERs.

5

Priorities for Lowering I llness Burden

$225No self-care book being used (not “engaged”)

$339Walk < 30 minutes per week

$390BP above 139 systolic or 89 diastolic

$398More than 14 drinks per week

$428High cholesterol (>239)

$447Current smoker

$690Overweight by BMI (>27.3 women, >27.8 men)

$1,150High blood sugar (diabetes)

$1,313Poor life or job satisfaction (reaction to stress)

$1,435Have high stress (reaction to stress)

$2,326Feel depressed (reaction to stress)

$3,530Believe health is fair or poor (reaction to stress)

Added Cost per YearHealth Risk Measure

From: University of Michigan Health Management Research Center and Wellness, Inc.- 2005

Focus for Lower Costs and Better OutcomesFocus for Lower Costs and Better Outcomes

Health Improvement Health Improvement OpportunitiesOpportunities

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Q_12 Q_9 Q_6 Q_3 Q0 Q3 Q6 Q9 Q12

Serious disease

Minor Disease

No Disease

Prevention/ Fitness Opportunity

Chronic Condition Opportunity

Acute Illness Opportunity

Medical and Drug Costs only From Dee Edington, University of Michigan

Many At Risk Are Many At Risk Are Unaware/UndiagnosedUnaware/Undiagnosed

CONDITIONCONDITION % UNAWARE/ % UNAWARE/ UNDIAGNOSEDUNDIAGNOSED

Hypertension (Adults)Hypertension (Adults) 37%37%

Diabetes (Adults)Diabetes (Adults) 29%29%

Pre-Diabetes Pre-Diabetes

(Ages 40-74)(Ages 40-74)

> 50%> 50%

High Blood LipidsHigh Blood Lipids

(LDL above 129 mg/dl)(LDL above 129 mg/dl)

41%41%

From: “Metabolic Syndrome and Employer Sponsored Medical Benefits: An Actuarial Analysis’K Fitch, B Pyenson, K Iwasaki; Milliman Consultants and Actuaries, March 2006.

1111

Patients who were Patients who were most adherent had most adherent had total costs 49% total costs 49% lower than patients lower than patients who who were least were least adherentadherent

Lower rates of medication adherence lead to Lower rates of medication adherence lead to higher total medical costs in patients with diabeteshigher total medical costs in patients with diabetes

Similar findings Similar findings were reported for were reported for hypertension and hypertension and hyperlipidemiahyperlipidemia

*P<.05 compared with medical costs for most adherent.Retrospective cohort study of sample of 137,277 patients aged <65 years.Adapted from Sokol MC et al. Med Care. 2005;43:521-550.

182 259 419 599 1801

Mean medical and drug costs by adherence-rate category over 12 months (patients with diabetes)

18,000$16,498

$15,186*

$1312

$13,077 $12,976

$11,484

$8887

$11,200* $11,008*$9363*

$6377

$1877 $1970 $2121 $2510

16,000

14,000

12,000

10,000

8000

6000

4000

2000

0n=182

LeastAdherent

Less Medium More MostAdherent

Medical Costs

Drug Costs

n=259 n=419 n=599 n=1801Patients who were most adherent were less likely to be hospitalized than patients with lower adherence levels (P<.05)

Cos

t ($)

Obesity Trends in the U.S.Obesity Trends in the U.S.

Pulmonary diseasePulmonary diseaseabnormal functionabnormal functionobstructive sleep apneaobstructive sleep apneahypoventilation syndromehypoventilation syndrome

Nonalcoholic fatty liver Nonalcoholic fatty liver diseasediseasesteatosissteatosissteatohepatitissteatohepatitiscirrhosiscirrhosis

Coronary heart diseaseCoronary heart disease

DiabetesDiabetes

DyslipidemiaDyslipidemia

HypertensionHypertension

Gynecologic abnormalitiesGynecologic abnormalitiesabnormal mensesabnormal mensesinfertilityinfertilitypolycystic ovarian syndromepolycystic ovarian syndrome

OsteoarthritisOsteoarthritis

SkinSkin

Gall bladder diseaseGall bladder disease

CancerCancerbreast, uterus, cervixbreast, uterus, cervixcolon, esophagus, pancreascolon, esophagus, pancreaskidney, prostatekidney, prostate

PhlebitisPhlebitisvenous stasisvenous stasis

GoutGout

Medical Complications of ObesityMedical Complications of Obesity

Idiopathic intracranial Idiopathic intracranial hypertensionhypertension

StrokeStroke

CataractsCataracts

Severe pancreatitisSevere pancreatitis

MEDICAL COST INCREASESMEDICAL COST INCREASESBY BMI STRATA (US)BY BMI STRATA (US)

BMIBMI

25-29.925-29.9

BMIBMI

30-34.930-34.9

BMIBMI

35-39.935-39.9

BMIBMI

>40>40

3,915 3,915 MENMEN +17%+17% +21%+21% +58%+58% +105%+105%

3,999 3,999 WOMENWOMEN +9%+9% +27%+27% +43%+43% +112%+112%

From: Bachman K. Obesity, Weight Management, and Health Care Costs-A Primer. Disease Management 2007; 10:129-137

Impacts of Chronic Disease – 5 PlansImpacts of Chronic Disease – 5 Plans

LIVES% OFALL

LIVESPAID/PATIENT

(YEAR)

RATIO TO AVERAGE PATIENT

TOTAL PAID

(MILLIONS)

ALL LIVES IN 5 PLANS

31,152 100% $3,355 1.00 $91.6 M

DIABETES 2,206 7.1% $7,337 2.19 $17.9 M

ASTHMA 1,656 5.3% $5,149 1.53 $8.1 M

CAD 1,166 3.7% $10,230 3.05 $12.0 M

COPD 464 1.5% $12,182 3.63 $5.9 M

CHF 472 1.5% $13,941 4.16 $6.9 M

ONE OR MORE

4,580 14.7% $6,609 1.97 $31.5 M

CHANGE VS PRIOR YR.

4.4%   2.5%    

Recommendations: Implement “Chronicare” Programs; Integrate health management outreach for primary and secondary prevention of chronic disease; Implement obesity management programs for moderate and severe obesity.

Chronic Disease InterventionsChronic Disease Interventions

High Cost Claimant Care CoordinationHigh Cost Claimant Care CoordinationExample Employee # 1Example Employee # 1 Total Cost: $16,305 (6 months)Total Cost: $16,305 (6 months)

Heart DiseaseHeart Disease Pulmonary / Respiratory IssuesPulmonary / Respiratory Issues Esophageal IssuesEsophageal Issues High Blood PressureHigh Blood Pressure High CholesterolHigh Cholesterol Joint PainJoint Pain

5 PCPs5 PCPs3 Cardiologists3 Cardiologists 1 Pulmonologist1 Pulmonologist

Example Employee # 2Example Employee # 2 Total Cost: $27,215 (6 months)Total Cost: $27,215 (6 months)

COPD/RespiratoryCOPD/RespiratoryHypertensionHypertension High CholesterolHigh CholesterolDepressionDepressionSeizures / Grand MalSeizures / Grand Mal

4 PCPs4 PCPs 2 Pulmonologists2 Pulmonologists 2 Cardiologists2 Cardiologists

Example Employee # 3Example Employee # 3 Total Cost: $93,244 (6 months)Total Cost: $93,244 (6 months)

Heart DiseaseHeart Disease HypertensionHypertension High CholesterolHigh Cholesterol

4 PCPs4 PCPs2 Physician’s Assistants2 Physician’s Assistants 2 Cardiologists2 Cardiologists

Findings – High cost patientsFindings – High cost patients Obesity, chronic diseases, cancer, kidney failure (dialysis), serious heart Obesity, chronic diseases, cancer, kidney failure (dialysis), serious heart

disease, and surgery complications drive the most costs.disease, and surgery complications drive the most costs. Chronic disease patients who take their medications have lower costs. Chronic disease patients who take their medications have lower costs.

Generic drugs cost $130 less / Rx / moGeneric drugs cost $130 less / Rx / mo Discontinuous care exaggerates complications and costsDiscontinuous care exaggerates complications and costs

InterventionsInterventions Steerage and incentives to use “Blue Distinction” and other Centers of Steerage and incentives to use “Blue Distinction” and other Centers of

ExcellenceExcellence• Cardiac, Surgery, Cancer, Bariatric, Kidney Cardiac, Surgery, Cancer, Bariatric, Kidney

Integrate health management- primary and secondary prevention of Integrate health management- primary and secondary prevention of diabetes (obesity), cancer (smoking cessation, cancer screening), heart diabetes (obesity), cancer (smoking cessation, cancer screening), heart disease (fitness), “Connect the Dots” (PBM/ medication adherence, UM)disease (fitness), “Connect the Dots” (PBM/ medication adherence, UM)

Consider “Chronicare Program”, high touch disease managementConsider “Chronicare Program”, high touch disease management Value based benefit designValue based benefit design

• Lower out of pocket costs for higher value services (i.e. chronic Lower out of pocket costs for higher value services (i.e. chronic condition drugs, preventive services)condition drugs, preventive services)

• Higher out of pocket costs for lower value services (i.e. imaging)Higher out of pocket costs for lower value services (i.e. imaging)• Consider lower out of pocket costs for health age near chronologic Consider lower out of pocket costs for health age near chronologic

ageage

What We What We MustMust Do Do

Engage doctors and patients Engage doctors and patients through incentives and consequences through incentives and consequences in rational decisions aboutin rational decisions about Elective surgeryElective surgery Non value added imagingNon value added imaging Lifestyle choicesLifestyle choices Handling depressionHandling depression Diabetes self careDiabetes self care Cancer prevention/ early interventionCancer prevention/ early intervention Adherence to chronic medicationsAdherence to chronic medications

Connect the Dots -Connect the Dots -Engage the MembersEngage the Members

Participant

Doctors/ Clinics/ Pharmacies

Work Site Programs(Flyers, Lunch & Learns, HRA, Biometrics, Tests,)

PBM(Care Tracking, Med Adherence)

Welfare Fund/ Health Plan(Claims Analysis, Benefit Design, Customer Service)

EAP, Mental Health

Case Managers, UM

Hospitals/ Education Centers

Tobacco Cessation Program

Fitness Center Dieticians

Employee CafeteriaMeals/ Snacks

Weight Watchers

Health Coaches

Phone Nurses Laboratories

Pharma Companies

Case StudiesCase Studies

Lessons LearnedLessons Learned

VBBD Case StudyVBBD Case StudyHEREIU Welfare Fund

West Virginia1340 Employees

Avg. Age= 44

PROBLEMPROBLEM VALUE BASED DESIGNVALUE BASED DESIGN RESULTSRESULTS

14.5% Annual Medical Cost 14.5% Annual Medical Cost Trend Trend   

Enrollment requires coaching Enrollment requires coaching callscalls    Saved $2 million first yearSaved $2 million first year

for 8 years runningfor 8 years running    Generic drug co-pays waivedGeneric drug co-pays waived    3 Year Annual Cost Trend <4%3 Year Annual Cost Trend <4%

Overweight: 75%Overweight: 75%    Free self-care bookFree self-care book    (Rest of WV Cost Trends (Rest of WV Cost Trends

+12%)+12%)

High BP: 41%High BP: 41%    Free tobacco cessation Free tobacco cessation

programprogram    Drug Cost Trend: Negative 9%Drug Cost Trend: Negative 9%

Use Tobacco: 31%Use Tobacco: 31%    On site clinicOn site clinic    Generic fill rate: Increased 18% Generic fill rate: Increased 18%

Diabetes: 29%Diabetes: 29%    Cost transparencyCost transparency    60% + Know Their Numbers60% + Know Their Numbers

Didn't Know Their NumbersDidn't Know Their Numbers    Prescribing transparencyPrescribing transparency    Average Cholesterol: 8% lowerAverage Cholesterol: 8% lower

Outpt hosp pmpm: 88% Outpt hosp pmpm: 88% higherhigher    Co-insurance incentivesCo-insurance incentives   

Quit Tobacco: 6% in first Quit Tobacco: 6% in first yearyear

Radiology: 85% Radiology: 85% higherhigher    Outpatient facilityOutpatient facility   

Good nutrition: 50% Good nutrition: 50% increase increase

Ofc visits: 66% Ofc visits: 66% higherhigher    CT scansCT scans   

Good cholesterol: 29% Good cholesterol: 29% increaseincrease

Drugs: 48% higherDrugs: 48% higher    Steer to better value providersSteer to better value providers   Good exercise: 25% Good exercise: 25%

increaseincrease

Physician Prescribing Transparency

DTC Generic Alternatives CampaignDTC Generic Alternatives Campaign

DRUG CLASSDRUG CLASS DIFFERENCEDIFFERENCE

CLAIMS/1000CLAIMS/1000

% DIFFERENCE% DIFFERENCE

CLAIMS/1000CLAIMS/1000AntidiabeticsAntidiabetics +5.9+5.9 +12.5%+12.5%

AntilipemicsAntilipemics +7.5+7.5 +13.8%+13.8%

Blood PressureBlood Pressure +7.6+7.6 +12.0%+12.0%

AsthmaAsthma +1.9+1.9 +8.1%+8.1%

AntidepressantsAntidepressants +1.9+1.9 +7.5%+7.5%

CardiovascularCardiovascular +1.4+1.4 +44.4%+44.4%

As medication adherence increased, inpatient med/surg dropped 4%.For 5 plans, drugs increased $1.1 M, IP med/surg dropped $0.8 M.

Aurora Units Drug Trends - SuccessesAurora Units Drug Trends - Successes

Chronicare Program Flow SheetsChronicare Program Flow SheetsDiabetes, Hypertension, LipidsDiabetes, Hypertension, Lipids

SummarySummary

Improvements in health and medical cost Improvements in health and medical cost trends can be achieved through integrated trends can be achieved through integrated health management interventions.health management interventions. Value based benefit designs and care Value based benefit designs and care

management engagementmanagement engagement Incentives and consequences for patients and Incentives and consequences for patients and

providers aligned with desired behaviors.providers aligned with desired behaviors. Challenges remain in moving health Challenges remain in moving health

choices from being externally motivated to choices from being externally motivated to becoming internally driven.becoming internally driven.