ValueBased Designs: Investing in What Works in Medicine

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Value-Based DesignsInvesting in What Works in
Medicine

• Gregory Judd
• Center For Health Value Innovation
• March 3, 2008

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About the Center

• Non-profit expression of David Hom Jack Mahoney
  MDs work at Pitney Bowes
• Concept studio for identifying and developing
  metrics and messages for value-based innovation
• Center leaders have researched and qualified
  value-based innovations of 80 companies
• Recurring results identify strategies that work -
  and that employers readily grasp
• Innovating employers and executives are eager to
  exchange ideas, measures, and results

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What Is Value-Based Design

• Value-based design is a health management tool
  that
• 1 Uses data to
• 2 Invest in incentives that
• 3 Change behaviors to
• 4 Reduce financial and health risk (ROI)

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Pitney Bowes Timeline17 Years of Innovation
Using Plan Design to Change Behavior
Costs begin to come down
Value- Based Benefits Launch

• Algorithms
• Consumer- directed choice

EAP-Behavioral Health
EPO HCU
First free Rx Design
DATA Analysis
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Model Solution Rx Access Benefit Design
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Case StudyPitney Bowes
PB Investments Resulted in Improved Outcomes
SAVINGS OF 1 MILLION IN 1st -2nd YEAR

• Annual cost of care decreased for both conditions
  (asthma and diabetes)
• Pharmacy costs decreased
• Hospital admissions declined for people w/ asthma
• Increased for people w/ diabetes (still below
  benchmark)
• ER visits declined for people w/ diabetes
• Disability costs decreased by 50 diabetes
• Changes in medication/possession rates for both
  groups
• Improved adherence
• Types of medications (more controllers, less
  rescue)

SAVINGS OF 2.5 MILLION 3rd YEAR
SAVINGS OF 4 MILLION 4th YEAR
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Evidence of Financial Sustainability
PB trendfor 2006-7 3.5
5 year CAGR, Pitney Bowes v Benchmark 6.7 v
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Examination of Data Leads to Shift in Health
Investment...
Participants
Total
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From Uninvested to Effectively Invested
Participants
Total
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Center for Health Value Innovation
Mission We will share evidence that value-based
designs improve health and financial
sustainability

• Board of Directors
• Chair David Hom
• President Cyndy Nayer
• Caterpillar
• City of Springfield, OR
• Delphi-AIAG
• FPL
• Hannaford Brothers
• HEB
• H.E.R.E.I.U.
• IBM
• Johnson and Johnson
• Kellogg
• Pfizer
• Quad Graphics
• State of Colorado
• University of Colorado Health Sciences Center
• Wells Fargo
• Whirlpool

• Board of Advisors
• Chrysler
• Cisco
• Cleveland Clinic Health Plan
• Corporate Synergies
• Detroit Chamber of Commerce
• Dow Chemical Company
• GlaxoSmithKline
• Gulfstream
• Health Alliance Medical Plan
• Horizon BCBS
• Holmes Murphy
• Home Depot
• Humana
• Intercare Solutions
• Integrated Health Partners
• Johns Hopkins Health Care
• King County, Washington
• Mayo

• Industry Allies
• World Health Care Congress
• AIAG
• NBCH
• PBMI
• Interface EAP
• Colorado Business Group on Health
• Larry Boress and Cheryl Larson of the Midwest
  Business Group on Health
• New York Business Group on Health
• Resolution Health, Inc.
• Navigator MD

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Keys to Effective Value-Based Design
Innovationover 100 companies interviewed or
surveyed

• Gather and share evidence for the value of
  investing in health consistently over time
• Create models to test value-based concepts with
  segments of a population
• Identify highest risk
• Construct investment(s) to shift behaviors
• Most effective incentives include
• Metrics
• Messaging
• Re-evaluate results at predetermined intervals
• Data analysis drives quality improvement

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Large Association of Small Enterprises Develops
Value Based Health PlanMost companies are under
100 employees
Detroit Regional Chamber of Commerce
Significant market adoption after only
one-year. Launched October 2006 More than 60,000
members enrolled. Premiums discounts of more than
10 Dramatic increase in adoption of disease
management programs
Chamber health program for over 20,000 companies
faces escalating premium costs. Chamber called on
to dramatically lower premium costs without risk
selecting or slashing benefits
Provide incentives for healthy behaviors. Split
benefit design that rewards people for healthy
behaviors and lowers premium costs by more than
10.
Results
Problem
Value-Based Design
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Midwest Company Achieves Value-Based
Results16,000 employees
Quad Graphics-QuadMed
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Grocery Chain Achieves Value and Health
Improvement
Hannaford Brothers Co.
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Midwest Health Plan AchievesValue-Based Results
for Employees
Health Alliance Medical Plans
Reduce financial barriers to maintaining
health. Move all meds for diabetes and asthma to
Tier 1 of formulary to improve compliance
adherence.
Diabetes and Asthma show cost/benefit Rx
Utilization Diabetics 8.8. Asthmatics
6.9 Med Possession Ratio gt.8 Diabetics
10.6 Asthmatics 32.7 Monthly Rx
Costs Diabetics 19.5 Asthmatics
56.7 compared to control population
Carle Clinic medical costs for asthma and
diabetes were projected to reach more than 3
million in 2007. Total costs estimated at nearly
9 million.
Results
Problem
Value-Based Design
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Mid-Market Company in Southeast Achieves Results
with Value-Based Design6,000 employees
SCANA
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Global Multi-Site Company Assesses Risk
Safety350,000 employees
IBM
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Municipality Reduces Disability Days fully
insured450 employees
City of Springfield, OR
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What We Are Learning

• Employers, unions, brokers consultants, health
  plans, health systems are embracing Value-Based
  Design concepts - creating their own
  innovations
• Regional adoption across stakeholders, led by
  strong renegade, leads to action
• Innovators are finding VBD results are
  sustainable
• Innovators span health care stakeholders
• Preferred Health Systems/Wichita
• Great West Life/State of Co/ Intercare Solutions
  (CA)
• PIC/ Horizon BCBS/Quality Collaboration/State of
  NJ
• H.E.R.E.I.U. as model for Taft Hartley Plans
• Health Alliance Medical Plans plus 10-12 more
  regional and national health plans/PBMs have or
  will have models
• Prime Therapeutics has launched an Efficiency Rx
  Plan
• Aetna VB Rx is launched

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Key Concepts in a Culture of Health

• Health, and health management, is everyones
  responsibility
• Incentives reinforce positive behaviors
• Culture of health is part of the organizations
  fabric
• Value-Based Designs do not require
• Complicated intent
• Sophisticated data

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Whats in the Future?

• Communities of learning
• Worksite
• Community/geographic area
• Aggregators
• Focused on condition, goal, people like me
• Social/virtual
• Diverse
• Unpredictable
• Tied to incentives that propel change

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Evidence of the Ascent of Value-Based Design is
Emerging...in A Lot of Places
www.googlefight.com
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Questions/Contact

• Gregory Judd
• gjudd_at_vbhealth.org
• 203-231-1372