Why Value Based Purchasing for Small to Mid-Sized Employers?

Andrew Webber, President and CEONational Business Coalition on Health

Michigan Purchasers Health Alliance March 25, 2011

Presentation Overview

“Houston, We Have a Problem” “Imagine”Getting Started Final Thought

National Business Coalition on Health Identity: National, non-

profit membership association of 54 business and health coalitions. Network of 7,000 employers and 30 million covered lives

Vision: Better health, better care, lower cost, community by community

Mission: Helping member coalitions be leaders in their communities

The Driving Principles of the Coalition Movement: All health and health care is local! There are limitations to what a

single employer can do to drive meaningful, sustainable, change

Even a small number of employers working together can have a powerful and amplifying effect!

“Houston, We Have a Problem.”

James Lovell

Apollo 13

Poor Health:

Why does the United States

rank 37th in population

health status among

industrial countries?

US Obesity Epidemic

1985 2003

1995

No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

Prevalence of Obesity Among U.S. Adults

Source: Behavioral Risk Factor Surveillance System, CDC

Uneven Health Care:

Safety - Tens of thousands die due to medical errors (IOM, 99)

Effectiveness - 50/50 chance of getting appropriate care (McGlynn, 03)

Costs of Poor Quality – 30% of direct expenditures due to overuse/misuse/waste (Juran & MBGH, 03)

Unexplained Medical Practice Variation - (Wennberg, 1973 - present)

Fragmented Care Delivery and Acute Care Focus Absence of HIT (Brailer, 05)

High Costs

Why does the United States spend twice as much per

citizen on health care than the next closest country?

Health Costs Far Exceed General Inflation

SOURCE: Mercer and InflationData.com

-1.1

%19

94

With Negative Consequences for Employers

On the Outcomes All Employers (of any size) Want Most:

Improved workforce health and productivity

Control over employer costs

Both Impact Competitiveness and the Bottom Line in a Global Economy!

But with Employers to Blame!For Stressful Worksites and Unhealthy Products

For a Toxic Payment System that Pays for: Volume rather than outcomes Individual units of care rather than episodes of illness Acute care not prevention Medical errors and “do overs” With no performance based payment

And for a Consumer Entitlement Mentality: That insulates individuals from cost sensitivity because of 3rd party

payment

And with Employers (of all sizes) to the Rescue? As influencer of all the key determinants of

health:- individual behavior - socio-economic- environmental- health care system

As purchaser of health care – After Government, largest health care purchaser - 1 trillion dollar spend,170 million covered lives

“Imagine”

John Lennon

Let’s Imagine

Where families, schools, worksites, communities create a culture and better conditions for health.

Where providers are free to compete, based on the published value of the services they provide, and rewarded for high performance.

Where patients, as consumers, are free to choose their providers, are sensitive to the value of the services they consume, and engaged in better managing their health.

Value Based Purchasing:Measure, Report and Reward

Four Pillars:

1. Performance Measurement

2. Transparency and Public Reporting

3. Payment Reform

4. Informed Consumer Choice/Engagement

Accelerating the Pace to the Ultimate Goal: Health and Health Care Improvement

VBP Strategies

PerformanceMeasurement

andReporting

Consumer Behavior Plan/Provider Behavior

Consumer Incentives

SelectiveContracting

Payment ReformValue Based

Benefits

Disease Management

HRAs

A Few VBP Pillar Sound Bites

Standardized Measurement: The foundation of VBP Need to measure both effectiveness

of medical services and performance of providers

Need to measure clinical quality, patient care experience, health status outcomes, and efficiency

Transparency & Public Reporting

Public reporting leads to improvement! Translation of performance and price

information for consumers a challenge Public reporting alone has not led to

significant market shift to high performance services and providers

Payment Reform

Transition away from fee-for-service Pay for performance New payment methodologies needed in

direction of global/bundled payments Greater balance between primary care vs.

specialty care

Informed Consumer Choice

The Goal: To influence the individual consumer to make informed choices at many levels:

to live a healthy lifestyle; to seek preventive services and care when sick; to share in, and make the best, treatment decisions; to comply with treatment regimen and self-manage,

particularly chronic disease; to select a high value plan, hospital, physician.

Informed Consumer Choice Area of greatest influence for employers; Establish a principle of self-responsibility

but with robust support; Strategies to include creative mix of:

supportive worksite culture, benefit designfinancial incentives in benefit designs, timely information, coaching and counseling

Getting Started (as a small-mid employer)

Small and Mid-sized Employers - Constraints and Advantages

Constraints Advantages- Limited HR resources - No corporate - Small risk pool bureaucracy- Fully insured - Leadership - Broker dependency engagement- Single plan option - Worksite culture

Relevance of HCR Legislation

Tax credits for small employers to help defray costs of employee HI coverage

Establishment of state health insurance exchanges

Participate in State Policy Development!

Getting Started

Top Five Recommendations: Diagnostics: profile workforce population health and

total cost burden C-Suite/Leadership Recruitment Health and Productivity Strategy Development,

targeted to employer’s workforce characteristics Value Based Health Plan Selection. Search for

innovation (e.g. embedding consumer incentives in plan design, high performance provider networks, health risk assessments)

Purchaser/employer coalition membership

http://www.nbch.org/vbpguide

eValue8 2010 Annual Report

Employer Health Asset Management

Tailoring Health Care Benefits to Your Employees

Final Thought

A Closing Thought

No single stakeholder is better positioned to influence and benefit from improved health and health care and the promise of cost control than the employer community.

Therefore, employers must lead if we are to realize meaningful and sustainable change!

But will they?

Contact Information:

Andrew Webber, awebber@nbch.org

www.nbch.org