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The Pursuit of Coverageand
Quality Health Care
The Pursuit of Coverageand
Quality Health Care
Presented byLynn Zehnder
Director, Benefits StrategySears, Roebuck and Co.
June, 2004
2
Employer – Based Health Care Initiatives
Employer – Based Health Care Initiatives
Affordable Solutions CoalitionSears has joined forces with more than 50 Fortune 500 Companies to create an easier entry point to a range of health plans for their combined uninsured populations. Individuals will be responsible for paying their own premiums, but the Coalition aims to provide lower cost coverage than is available to an individual
Care Focused PurchasingSears and 28 other large employers are working to provide consumers with quality and efficiency data for individual hospitals and physicians to help them make better decisions when choosing providers
The employer-based system seems inherently more promising than a government alternative -or so our employees tell us
3
12.9%
5.3%
8.2%
10.9%
12.0%
8.5%
0.8%
13.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
1988 1993 1996 1999 2000 2001 2002 2003
Health Insurance Premiums Medical CPI Overall Inflation Workers' Earnings
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits; 2003. Dental work by Dr. Milstein.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.
Why Do We Care?The Shark’s Jaws Open
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Why Do We Care?Another Year of Double Digit Health Care Cost
Increases
Why Do We Care?Another Year of Double Digit Health Care Cost
Increases
6.9%
18.6%
17.1%
12.1%
10.1%
8.0%
2.1% 2.5%
0.2%
6.1%7.3%
8.1%
11.2%
14.7%
10.1%
13.0%
16.7%
-1.1%
-5%
0%
5%
10%
15%
20%
PR
OJE
CT
ED
5
Why Do We Care?Employers Can Gain From Insuring the
Uninsured
Why Do We Care?Employers Can Gain From Insuring the
Uninsured
Reduction of Uncompensated Care Cost Shifting $3B - $16B
Reduction in Turnover $3.8B - $8.6B
Reduction of Absenteeism $1B - 1.2B
Productivity Gains $87B - $126B
Total $95.1B - $151.8B
Source: Employment Policy Foundation Estimates
Care Focused PurchasingCare Focused Purchasing
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Care Focused PurchasingConcept, Purpose, and
Participation
Care Focused PurchasingConcept, Purpose, and
Participation ConceptConcept:
Acting together, employers – can make a market that rewards better physicians, better hospitals, and better treatment options
Standardized information on provider quality and efficiency will create performance sensitive buyers of care
This will result in a more transparent, rational market for health care
PurposePurpose: Speed up underlying marketplace trends
Yield significant reductions in cost trend and improvements in quality and patient safety
Current participationCurrent participation: 28 national employers
Collectively represent more than 2 million enrolled health plan members
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Participating CFP EmployersParticipating CFP Employers
3M Company Adecco Analog Devices, Inc. Assurant (formerly Fortis, Inc.) BellSouth Corporation The Boeing Company Capital One Financial
Corporation Corning Incorporated Edward Jones Hannaford Bros. Co. J.C. Penney Company, Inc. Lowe’s Companies, Inc. Marsh & McLennan Companies,
Inc
The McGraw-Hill Companies Morgan Stanley The Pepsi Bottling Group, Inc. PepsiCo Inc. The Procter & Gamble Company Sears, Roebuck & Co. Sprint Corporation Texas Instruments Incorporated VNU, Inc. Weyerhaeuser Company WPP Group USA, Inc. Xerox Corporation
(plus three additional employers that cannot be named publicly)
9
Activating the VisionActivating the Vision
Governance Structure addressesGovernance Structure addresses: Governance and leadership CFP Charter Guiding Principles Framework for Data Stewardship Process for member input and decision-making
Technical StreamsTechnical Streams: Performance, Cost, and Quality Measures Data Disclosure and Management Program Design, Pricing, and Management Public Policy Communications
Data Stewardship and ManagementData Stewardship and Management
Outreach to Other InitiativesOutreach to Other Initiatives
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CFP Data Management Roles
CFP Data Management Roles
Key Candidates: Independent of carriers and
consulting firms Confidence of carriers,
employers, and other parties Experience and scalability Affordability
*Mercer Human Resource Consulting provides operational oversight and project management support
CFP Employers*
Key Criteria: Independent Not-for-profit Confidence of carriers,
employers, and other parties
Credibility
CFP Governance Stream
Data Steward Data Aggregator
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Data StewardData Steward
CFP Data ManagementProcess Flow
CFP Data ManagementProcess Flow
CFP Carrier Book-of-Business data
Medicare and otherdata as required
conv
ert i
nto
CFP
-def
ined
data
layo
ut
CFP UniversalData Warehouse
CFP UniversalData Warehouse
• Apply Provider-linkage methodology
Apply all measures foreach SA market area
Deliver all indicatedassets to all CFPstakeholders
CFP Employer self-insured data
12
Activating the VisionIntegrating CFP with Other Initiatives
Activating the VisionIntegrating CFP with Other Initiatives
Care Focused Purchasing
Regional/National Employer Healthcare NBGH PBGH MWBGH BHCAG Other Central Florida Healthcare Coalition Gateway Purchasers for Health
Groups Benefits Related Employer Groups ABC Conference Board Council on EE Benefits ERIC EBRI HR Policy Association Other
Other Quality Organizations National Quality Forum NCQA JCAHO Other
Other Employer Quality Initiatives Disclosure Project Leapfrog Bridges to Excellence V8 Other
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Activating the VisionTechnical Stream Objectives
Activating the VisionTechnical Stream Objectives
MeasuresMeasures: Develop a standardized set of quality and efficiency measures that will be used to create scorecards for physician and hospital performance.
DataData: Create a consumer data repository by combining data from several sources (self-insured employers, carrier book of business, Medicare). The repository will be used to generate standardized provider scorecards.
DesignDesign: Develop an overall program design that integrates the key features of the “End State.” The design will address both the ultimate End State and an interim structure for 2005. Once the program design is established, we will identify and negotiate with suppliers who will align service offerings with CFP principles.
Public PolicyPublic Policy: Create and advance a public policy agenda that supports the vision of the CFP, especially making valid provider performance information more available. A specific objective is liberation of physician identifiers in Medicare data.
CommunicationsCommunications: Develop, deliver, and implement a strategy for communication of CFP vision, actions, and results to key constituents, including a series of concise messages for management, employees, providers, vendors, other employers, and the public/media.
Affordable SolutionsAffordable Solutions
15
Affordable Solutions – ObjectiveAffordable Solutions – Objective
Reduce the number of uninsured by providing access to affordable health care for ineligible actives and retirees
Ineligible part-time employees or employees in waiting period
Contract workers
Pre-65 retirees
Terminated employees or those coming off COBRA
Ineligible dependents
16
Affordable – Concept OverviewAffordable – Concept Overview
Develop unsubsidized, separately administered health care and benefit options with:
open enrollment
national focus
exclusive contracting
limited first dollar coverage
standardized designs with variations in limited areas
interactive selection tools including provider
lower administration fees
reduced commissions
economics of scale
17
Affordable Solutions – Coverage Options
Affordable Solutions – Coverage Options
Discounted network
Moderate Deductible and OOP Plan
Critical illness payments
Catastrophic Coverage* with fewer limitations―Open Network―LT Maximums
Catastrophic Coverage* with significant limitations
―Closed network―Annual/LT maximums
―Mandatory medical management and Center of Excellence
Scheduled hospital and outpatientservice benefit
Modified Guarantee Issue (e.g. Health Risk Appraisal, mandatory disease management, short-form underwriting)
Guarantee Issue
Hospital indemnity
Level VII
Level VI
Level V
Level IV
Level III
Level II
Level I
*HSA opportunity
18
Participating CompaniesAn estimated 4,000,000 eligible
Participating CompaniesAn estimated 4,000,000 eligible
ACS Ford Motor Corporation McDonald’s Corporation
Aerojet FPL Group Inc. Motorola, Inc
ALCOA Inc. Gap Inc. Parker Hannifin
Corporation
Allstate Insurance Company General Dynamics
Payless Shoe Source
Anheuser-Busch General Electric Company Prudential Financial
Avon Products, Inc. General Mills Sears, Roebuck and
Company
Caterpillar Inc. The Home Depot Starbucks Corporation
Church Pension Group Honeywell Starwood Hotels and
Resorts
Circuit City Stores, Inc. IBM Corporation SYSCO
Cox Enterprises, Inc. International Paper Target, Inc.
DTE Energy Company Johnson Controls, Inc. Temple-Inland
Eaton Corporation Limited Brands Textron Inc.
EMC Corporation Lockheed Martin Corporation Toys “R” Us, Inc.
Emerson Electric Company Maersk United Parcel Service
The Episcopal Church Manpower Incorporated United Technologies
Federal-Mogul Corporation Marathon Ashland Verizon Communications
First Data Corporation Marriott Verizon Wireless
19
Creating a New Health Care Marketplace
Creating a New Health Care Marketplace
Imagine a health care marketplace in which Consumers are free to choose providers, but are sensitive
to cost and quality, and are engaged in their health
Doctors and hospitals compete based on the cost and quality of services and are rewarded for better performance
Purchasers reward plans for their ability to create innovative plan designs that align provider-patient-purchaser incentives and are supported by cutting edge tools, resources and technology
Affordable Solutions and Care Focused Purchasing, while two separate initiatives with distinctly different goals, have the potential to positively impact the current health care delivery model
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Why Do We Care?