Case Studies in Value-Based Benefit Design

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Case Studies in Value-Based Benefit Design
Results and Lessons Learned

• Jerry Reeves MD
• HEREIU Welfare Funds
• Health Innovations

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Value-Based Benefit Design

• VBBD is a strategy that minimizes or eliminates
  out-of-pocket costs for high-value services in
  defined patient populations
• High-value services are identified through
  scientific evidence
• The more clinically beneficial and cost-effective
  the therapy is for a patient group, the lower
  the out-of-pocket costs
• Lowering out-of-pocket costs for high-value
  services has been found to improve access to and
  use of those services
• More effective use of high-value services may
  positively impact the health of the targeted
  population
• Preventable adverse health consequences reduced
• Related high-cost health care services avoided

Chernew ME et al. Health Aff (Millwood).
200827103-112 Fendrick AM et al. Am J Manag
Care. 20017861-867 Fendrick AM, Chernew ME. Am
J Manag Care. 200612 (special issue)SP5-SP10.
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Value Based Intervention Strategies

• Engage the Patients Providers
• Multiple Touches-
• Face to Face if Possible
• Incentives
• Know Their Numbers
• Wellness Programs
• Walking- Steps per Week
• Weight and Waist
• EAP/ Substance Abuse
• Coordinate the Partners
• Connect the Dots
• Measure / Report Results
• Prescribing Patterns, Provider Profiles
• Care opportunities taken
• Improve

• Identify Top Risks
• Cost and Use Outliers
• Chronic Disease Drivers
• Diabetes, Blood Vessels
• Depression/Anxiety
• Lung Disease, Smoking, Cancer
• Sedentary, Musculoskeletal
• Structured Interventions
• HRA, Screen Tests, Measures
• Tobacco Cessation, Medication Adherence
• Preventive Services Campaign
• Steer to Best Value Providers
• Steer to Best Value Services
• Ofc visits vs. ER, Hospital
• Medical Home (Top Docs)

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Cost and Use Outliers - 50,000 Feet
ViewImportance 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

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Impacts of Surgery and Anesthesia - 5 Plans Impacts of Surgery and Anesthesia - 5 Plans Impacts of Surgery and Anesthesia - 5 Plans Impacts of Surgery and Anesthesia - 5 Plans 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
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MD Cost Variation Same Outcome
Specialty Condition Low Average High
FP
Otitis media 46 109 (137) 412 (796)
Bronchitis 89 150 (69) 771 (766)
IM
UTI 81 140 (73) 778 (860)
Angina 86 297 (245) 743 (764)
Cardiology
Angina 241 611 (154) 1389 (476)
Orthopedics
Knee surg. 2,727 4,473 (64) 9,383 (244)
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Site of Care Matters 5 Plan Units

• Hospital cost per admit 9,363
• Emergency Room cost per visit 737
• Urgent Care cost per visit 64
• Office Visit cost per visit 69
• Doctors receive 6 times as much payment to
  administer chemotherapy and specialty drugs in an
  outpatient facility compared to in their office.

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Data 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.

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Focus for Lower Costs and Better Outcomes
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Health Improvement Opportunities
Acute Illness Opportunity
Chronic Condition Opportunity
Prevention/ Fitness Opportunity
Medical and Drug Costs only
From Dee Edington, University of Michigan
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Many At Risk Are Unaware/Undiagnosed
CONDITION UNAWARE/ UNDIAGNOSED
Hypertension (Adults) 37
Diabetes (Adults) 29
Pre-Diabetes (Ages 40-74) gt 50
High Blood Lipids (LDL above 129 mg/dl) 41
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From Metabolic Syndrome and Employer Sponsored
Medical Benefits An Actuarial Analysis K Fitch,
B Pyenson, K Iwasaki Milliman Consultants and
Actuaries, March 2006.
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Lower rates of medication adherence lead to
higher total medical costs in patients with
diabetes

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

Cost ()

• Similar findings were reported for hypertension
  and hyperlipidemia

• Patients who were most adherent were less likely
  to be hospitalized than patients with lower
  adherence levels (Plt.05)

Plt.05 compared with medical costs for most
adherent. Retrospective cohort study of sample
of 137,277 patients aged lt65 years.
Adapted from Sokol MC et al. Med Care.
200543521-550.
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Obesity Trends in the U.S.
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Medical Complications of Obesity
Idiopathic intracranial hypertension
Pulmonary disease abnormal function obstructive
sleep apnea hypoventilation syndrome
Stroke
Cataracts
Nonalcoholic fatty liver disease steatosis steatoh
epatitis cirrhosis
Coronary heart disease Diabetes
Dyslipidemia Hypertension
Severe pancreatitis
Gall bladder disease
Cancer breast, uterus, cervix colon, esophagus,
pancreas kidney, prostate
Gynecologic abnormalities abnormal
menses infertility polycystic ovarian syndrome
Osteoarthritis
Phlebitis venous stasis
Skin
Gout
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MEDICAL COST INCREASESBY BMI STRATA (US)
BMI 25-29.9 BMI 30-34.9 BMI 35-39.9 BMI gt40
3,915 MEN 17 21 58 105
3,999 WOMEN 9 27 43 112
From Bachman K. Obesity, Weight Management, and
Health Care Costs- A Primer. Disease Management
2007 10129-137
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Impacts of Chronic Disease 5 Plans
LIVES OF ALL LIVES PAID/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.
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Chronic Disease Interventions
High Cost Claimant Care Coordination High Cost Claimant Care Coordination
Example Employee 1 Total Cost 16,305 (6 months)
Heart Disease Pulmonary / Respiratory Issues Esophageal Issues High Blood Pressure High Cholesterol Joint Pain 5 PCPs 3 Cardiologists 1 Pulmonologist
Example Employee 2 Total Cost 27,215 (6 months)
COPD/Respiratory Hypertension High Cholesterol Depression Seizures / Grand Mal 4 PCPs 2 Pulmonologists 2 Cardiologists
Example Employee 3 Total Cost 93,244 (6 months)
Heart Disease Hypertension High Cholesterol 4 PCPs 2 Physicians Assistants 2 Cardiologists
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• Findings High cost patients
• Obesity, chronic diseases, cancer, kidney failure
  (dialysis), serious heart disease, and surgery
  complications drive the most costs.
• Chronic disease patients who take their
  medications have lower costs. Generic drugs cost
  130 less / Rx / mo
• Discontinuous care exaggerates complications and
  costs
• Interventions
• Steerage and incentives to use Blue Distinction
  and other Centers of Excellence
• Cardiac, Surgery, Cancer, Bariatric, Kidney
• Integrate health management- primary and
  secondary prevention of diabetes (obesity),
  cancer (smoking cessation, cancer screening),
  heart disease (fitness), Connect the Dots (PBM/
  medication adherence, UM)
• Consider Chronicare Program, high touch disease
  management
• Value based benefit design
• Lower out of pocket costs for higher value
  services (i.e. chronic condition drugs,
  preventive services)
• Higher out of pocket costs for lower value
  services (i.e. imaging)
• Consider lower out of pocket costs for health age
  near chronologic age

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What We Must Do

• Engage doctors and patients through incentives
  and consequences in rational decisions about
• Elective surgery
• Non value added imaging
• Lifestyle choices
• Handling depression
• Diabetes self care
• Cancer prevention/ early intervention
• Adherence to chronic medications

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Connect the Dots -Engage the Members
Welfare Fund/ Health Plan (Claims Analysis,
Benefit Design, Customer Service)
PBM (Care Tracking, Med Adherence)
Work Site Programs (Flyers, Lunch Learns, HRA,
Biometrics, Tests,)
Hospitals/ Education Centers
Doctors/ Clinics/ Pharmacies
Dieticians
Fitness Center
Participant
Case Managers, UM
Weight Watchers
Employee Cafeteria Meals/ Snacks
EAP, Mental Health
Tobacco Cessation Program
Health Coaches
Phone Nurses
Laboratories
Pharma Companies
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Case Studies

• Lessons Learned

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VBBD Case Study
West Virginia 1340 Employees Avg. Age 44
HEREIU Welfare Fund
PROBLEM VALUE BASED DESIGN VALUE BASED DESIGN VALUE BASED DESIGN RESULTS
14.5 Annual Medical Cost Trend   Enrollment requires coaching calls   Saved 2 million first year
for 8 years running   Generic drug co-pays waived   3 Year Annual Cost Trend lt4
Overweight 75   Free self-care book   (Rest of WV Cost Trends 12)
High BP 41   Free tobacco cessation program   Drug Cost Trend Negative 9
Use Tobacco 31   On site clinic   Generic fill rate Increased 18
Diabetes 29   Cost transparency   60 Know Their Numbers
Didn't Know Their Numbers   Prescribing transparency   Average Cholesterol 8 lower
Outpt hosp pmpm 88 higher   Co-insurance incentives   Quit Tobacco 6 in first year
Radiology 85 higher   Outpatient facility   Good nutrition 50 increase
Ofc visits 66 higher   CT scans   Good cholesterol 29 increase
Drugs 48 higher   Steer to better value providers   Good exercise 25 increase
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Physician Prescribing Transparency
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DTC Generic Alternatives Campaign
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Aurora Units Drug Trends - Successes
DRUG CLASS DIFFERENCE CLAIMS/1000 DIFFERENCE CLAIMS/1000
Antidiabetics 5.9 12.5
Antilipemics 7.5 13.8
Blood Pressure 7.6 12.0
Asthma 1.9 8.1
Antidepressants 1.9 7.5
Cardiovascular 1.4 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.
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Chronicare Program Flow SheetsDiabetes,
Hypertension, Lipids
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Summary

• Improvements in health and medical cost trends
  can be achieved through integrated health
  management interventions.
• Value based benefit designs and care management
  engagement
• Incentives and consequences for patients and
  providers aligned with desired behaviors.
• Challenges remain in moving health choices from
  being externally motivated to becoming internally
  driven.