Presenter: Tom Simmer M.D.

Chief Medical Officer

Blue Cross Blue Shield of Michigan

Taming the Healthcare Beast:

A Plan for Michigan

March 31, 2009

Federal Reserve Bank

2

Overview• A few facts about health status, healthcare costs, and personal

income in Michigan.

• The Goal: Improve the competitive position of the state of Michigan for business while supporting access to needed medical services.

• Provider Partnership Programs improve healthcare delivery through population based, collaborative initiatives, often connected with performance-based payment.

• A quick look at results.

3

Michigan Personal Income Falling Relative to U.S.

0.85

0.9

0.95

1

1.05

1.1

1.15

1.2

1.25

Source: Department of Treasury calculations from Bureau of Economic Analysis data

Michigan per Capita Income as a Percent of U.S. Per Capita Income

89%93%

122%

4

Source: “Michigan’s Health Care Safety Net: In Jeopardy,” A MHA Special Report

5

Older, fatter, smokier, sicker

2007 Data Michigan

U.S.

Average

% Change of U.S. Average

Median age in years 37.5 36.6 2.5

Obesity prevalence among adults 28.2% 26.3% 7.2

Diabetes prevalence among adults

8.8% 8.1% 8.6

Smoking prevalence among adults

21.1% 19.7% 7.1

2008 Michigan Health Plan Costs*

State: $8,812

Regional: $7,557

National: $7,327

State: $6,152

Regional: $4,904

National: $4,117

State: $2,660

Regional: $2,653

National: $3,210

Average Annual Cost to Employer Per Employee

Employer Share Employee Share

2008 health plan costs according to the annual United Benefit Advisors Health Plan Survey. The survey included 18,019 employers nationally, 5,283 in a four-state region and 828 in Michigan. United Benefits Advisors is a national alliance of independent insurance agencies that includes The Campbell Group in Grand Rapids, BenePro Inc. in Royal Oak, Pappas Financial in Farmington Hills, Saginaw Bay Underwriters in Saginaw and Employee Benefits Agency in Marquette.

7

Why haven’t we succeeded in healthcare?

• Lack of Population focus – fee for service / third party payment system drives increased delivery of services.

• Cottage industry: Physician practices lack capacity to build information infrastructure and implement lean processes that are key to improving performance.

• Health plan, rather than delivery system, focus introduces process variation and re-work, not clinical process improvement.

• Weak primary care foundation misses opportunities for care coordination and lower cost approaches.

• BCBSM programs are unique in rewarding population-based improvements in care, strengthening primary care, investing in infrastructure through large physician organizations, and reducing variation through lean process improvement across the delivery systems and across payers.

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BCBSM MembersBCBSM Members

Effective ProvidersEffective Providers

Car

eR

elat

ions

hip

Basics -Precertification-Utilization Review

Michigan

BCBSM Clinical Programs

Support

Wellness & Care Management

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Physicians Hospitals

HospitalIncentive Program

(in ParticipatingHospital

Agreement)

Current Partnering for Value Programs

CQIs: CollaborativeQuality Initiatives

BMC2: BCBSM Cardiovascular ConsortiumAngioplasty Collaborative Quality Initiative

Michigan SurgicalQuality Collaborative

Michigan Bariatric SurgeryCollaborative

Etc.

Michigan Society of Thoracic SurgeonsCardiac Surgery

Collaborative Quality Initiative

PGIP:Physician Group

Incentive Program

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Iron

Gogebic

Ontonagon

Houghton

Baraga

Dickinson

Men

omin

ee

MarquetteAlger

Schoolcraft

Delta

LuceChippewa

Mackinac

BerrienCass Hillsdale

BranchSt. Joseph

Monroe

Lenawee

Van Buren CalhounWashtenaw

JacksonKalamazoo

Livingston

InghamEaton

BarryAllegan

Oakland

Montcalm

Ottawa KentIonia

Oceana

Muskegon

Mecosta

New

aygo

OsceolaLakeMason

Gratiot

Clinton

LapeerGenesee

Shiawassee

Sanilac

Huron

Arenac

Bay

SaginawTuscola

Clare

Isabella

Midland

OgemawIosco

Gladwin

WexfordMissaukee

Roscommon

Benzie

Manistee

Leelanau

GrandTraverse

Kalkaska

CrawfordOscoda

Alcona

PresqueIsleCheboygan

Emmet

Antrim

Charlevoix

Montmorency

Otsego Alpena

Keweenaw

Washtenaw County: Huron Valley Physicians

Association (245), Integrated Health Associates (109), U-M Health System Faculty

Group Practice (387)

Oakland County: Medical Network One (303), Oakland Physician Network Services (144),

Oakland Southfield Physicians (204), Oncology Physician Resource (64), Quality Partners of

MI (34), St. John Medical Group (223), United Physicians (560)

Kalamazoo County: Bronson Medical Group (50) and ProMed

Healthcare (83)

Genesee County: Genesys Integrated Group Physicians(87), Hurley PHO (116),

McLaren Medical Management (95)

Kent County: Advantage Health Physicians (146), Michigan Medical, PC (MMPC) (90), Regional Delivery Network of West MI (136), West Michigan Physicians Network (227)

Calhoun County: Integrated Health Partners (69)

Macomb County: DMC Primary Care Physicians (115), St. John HealthPartners (417)Muskegon County:

Hackley PHO (79)

Ingham County: Consortium of Independent Physician Associations

(1,230), MSU Health Team (104), Sparrow Family Medical Services (45)

St. Clair County: Mercy~ Physician Community PHO (38), Physician Healthcare Network (26)

Saginaw County: Primary Healthcare Partners (57)

Marquette County: Upper Peninsula Health Plan (176)PGIP Participants (June 2008)PGIP Participants (June 2008)• 35 groups35 groups• 6,471 physicians 6,471 physicians • 1,700,0001,700,000 membersmembers

Ottawa County: Principal Health PHO (35)

Jackson County: Jackson Physician Alliance (70)

Wayne

Macomb

Wayne County: Henry Ford Medical Group (328), Olympia Medical Services (127), UOP, LLC (252)

St. Clair

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ValuePartnerships: Leveraging Provider Relationships and Market Share to transform healthcare delivery.

CurrentState

Next-Generation PPO• Stronger role for primary care (medical home, not gatekeeper)• Strong link between performance

and payment

Partnering for Value

Incremental Savings and Improvement

Short-TermValue

Foundation for Future

Preparations

• Build effective physician organizations.

• Care commitment to a defined population

• Facilitated practice improvement and technology dissemination.

• Substantial improvement in healthcare delivery

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Programs to Improve Hospital Care: MHA Keystone: Hospital-Associated Infection (HAI)

The Challenge:• 5-10% of hospital inpatients develop infections each year,

resulting in 90,000 deaths nationally• $5 billion to $6 billion in national health care costs

The Response:• Launched in 2007 to eliminate Hospital Associated Infections • Hand hygiene compliance nearly 80% (U.S. average is 40%)• Eliminating nonessential catheters• 112 participating hospitals in MHA Keystone: HAI

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Keystone Results in Michigan

• Lives Saved – 1,729*

• Patient Days Saved – in excess of 127,000*

• Dollars Saved – 0ver $246 Million*

• Culture of Safety improved 28%

• Teamwork improved 15%

* Based on the Johns Hopkins Opportunity Calculator

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Improving Cardiac Interventions – Participating Centers – 2009

15

Comparison of Outcomes for 2002-2008*

0

5

10

15

20

Death KidneyFailure

Transfusion VascularComplications

All CABG Revasc

2002

2008

18%

40%

22%

1.5%

25% 26%

Percen

t

16

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Improving Performance to the Population: Evidence Based Care Measures

2008 Measures (scored in 2008)• Diabetes

– Comprehensive Diabetes Care - HbA1c Testing– Comprehensive Diabetes Care - LDL-C Screening– Comprehensive Diabetes Care - Monitoring

Nephropathy– Lipid Lowering Drug Rate– Statin Therapy for Persons with Diabetes– ACE/ARB Use with Comorbidity CHF– ACE/ARB Use with Comorbidity Nephropathy– ACE/ARB Use with Comorbidity Hypertension

• Asthma– Use of Appropriate Medications for People with

Asthma – Combined• Congestive Heart Failure (CHF)

– LDL-C Screening– Beta Blocker Prescription over Last 12 Months– Rate of ACE/ARB

• Coronary Artery Disease (CAD)– Beta Blocker Treatment After a Heart Attack– Cholesterol Management for Patients with

Cardiovascular Conditions - Screening– Lipid Lowering Drug Rate– Statin Use

• Additional Measures– Appropriate Treatment for Children with an Upper

Respiratory Infection– Avoidance of Antibiotic Treatment in Adults with

Acute Bronchitis

New Measures for 2008 (scored in 2009)• Adult Prevention

– Breast Cancer Screening – Cervical Cancer Screening

• Child/Adolescent Prevention/Treatment– Adolescent Well Care Visit– Adolescent Immunization Status – Combo

2– Childhood Immunization Status – Combo 3– Well Child Visits in First 15 Months of Life– Well Child Visits in 3, 4, 5, 6 Years of Life

• Chronic Obstructive Pulmonary Disease (COPD)– Use of Spirometry in Assessment and

Diagnosis • Congestive Heart Failure (CHF)

– ACE/ARB Continuation/Persistence• Coronary Artery Disease (CAD)

– Persistence of Beta Blocker Treatment After AMI

• Low Back Pain– Imaging Studies for Low Back Pain

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EBCR Performance Trend

PGIP Improvement in Evidence Based Care Measures: PGIP Overall EBCR Score by Measurement Period

68%

71%

69%

72%

75%

76%

60%

65%

70%

75%

80%

2006 2Q06-1Q07 3Q06-2Q07 4Q06-3Q07 2007 2Q07-1Q08

Measurement Period

Ov

era

ll E

BC

R S

co

re

ABC Benchmark

78%

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1Q 2008 EBCR Performance1Q 2008 Overall EBCR Score by Physician Organization

83%83%

81%80%

79%79%79%79%78%

77%77%77%77%77%77%76%76%76%76%76%75%75%75%75%74%74%74%

73%73%73%73%

70%

76%

60%

65%

70%

75%

80%

85%

Overa

ll E

BC

R S

co

re (

Ori

gin

al 18 M

easu

res)

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Increasing Generic UsePGIP Generic Dispensing Rate Improvement

49%50%

51%52%

53%

55%56%

57%

59%

61%

64% 64%

48%49% 49%

50%51%

52%

54%54%

55%56%

59%60%

30%

35%

40%

45%

50%

55%

60%

65%

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08

Quarter

Gen

eri

c D

isp

en

sin

g R

ate

PGIP

Control

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Overall PMPM PGIP vs. Control by Year

$95.40

$85.89

$96.20 $97.81

$76.73$77.77$80.43

$90.56

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

2005 2006 2007 2008

PM

PM Control

PGIP

PMPM by Year

Initial PMPM Difference=

$4.84

Final Difference=$21.08

Savings=$16.24 PMPM

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Improving Primary Care Performance

• Performance assessment is based on attributed population rates.– PC-MH practice characteristics, based on national

criteria– Performance on Quality metrics – “Evidence-Based

Care Report”– Resource management

• Generic dispensing rate

• High tech imaging

• Low tech imaging

• Rate of use of ER for non-emergent care

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Building the Primary Care Foundation: Patient Centered Medical Home

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP

PCP

PCP

PCPPCP

PCPPCP

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP PCP

PCP

PCP PCPPCP

PCP

PCP

PCP

PCPPCP

PCP

PCP

PCP

PCP

PC-MH

PC-MH

PC-MHPGIP Phys Org A

PGIP Phys Org B

PGIP Phys Org C“ControlGroup”

PC-MHNominee

PC-MHNominee

PC-MHNominee

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Summary• Michigan has unfavorable health status and medical costs

compared to regional and national benchmarks.• BCBSM is working to make Michigan a more competitive state

to attract business and job growth, while improving medical care.

• Health Plan-based Wellness and Care Management programs are cost-effective and act as a safety net for failure of the primary clinical process, but they do not change healthcare delivery and do not significantly affect health benefit costs.

• Population-based collaborative programs improve key clinical processes and achieve substantial savings.

• PCP’s are actively transforming their practices by implementing the Patient-Centered Medical Home model, creating a lower cost model of care.