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Value Based Purchasing: From Theory to Practice


National Business Coalition on Health. Maine Health Management Coalition ... Guideline-driven care EHRs. Focus on high-cost patients Care coordination ... – PowerPoint PPT presentation

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Title: Value Based Purchasing: From Theory to Practice

Value Based Purchasing From Theory to Practice
  • Andrew Webber, President and CEO
  • National Business Coalition on Health
  • Maine Health Management Coalition
  • October 4, 2007

Presentation Outline
  • Setting the Table What Employers Want
  • Value Based Purchasing From Theory to Practice
  • The Unmet Challenge Employer Leadership and

National Business Coalition on Health (NBCH)
  • Our identity National, non profit association
    of 65 business and health coalitions
  • Our vision Health care reform, through value
    based purchasing, community by community
  • Our primary mission To build coalition
    leadership capacity

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Setting the Table
What Do Employers Want?
  • Two Things
  • Improved workforce health and productivity!
  • Improved health care!
  • And Both Impact the Bottom Line!

But Employers Bewildered
  • A Tale of Two Cities
  • Worst of Times Rising health care costs put
    American industry at a competitive disadvantage
  • Best of Times But industry leaders know that
    reengineering and technology can drive improved
    quality and lower cost

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And Employers to Blame!
  • For a Toxic Payment System that Pays for
  • Throughput rather than outcomes
  • Individual units of care rather than episodes of
  • 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
  • No Business Case for Quality!

The Problem in Summary
  • Two of My Favorite Quotes and Pop Quiz
  • Every system is perfectly designed to achieve
    the results it achieves.
  • Getting better at what were currently doing is
    not the answer.

Value Based Purchasing From Theory to Practice
The IOM Blue Print for Reforming the Health Care
Value Based Purchasing Measure, Report, Reward,
  • Five Pillars
  • Performance Measurement
  • Transparency and Public Reporting
  • Payment Reform
  • Informed Consumer Choice
  • Purchaser Leadership and Action
  • Accelerating the Pace to the Ultimate Goal
    Health and Health Care Improvement

A Few VBP Pillar Sound Bites
  • Performance Measurement
  • Foundation for both improvement and reward
  • Measurement needed at multiple levels community
    patient population medical intervention and
    plan/provider levels
  • Clinical, patient care outcome/experience/self-man
    agement, and efficiency measures all needed the
    Bob Brook, John Ware, Jack Wennberg Triad
  • Slow progress because of complexity and lack of
    will practice guideline deficiencies, risk
    adjustment, attribution, cost burden, no trusted
    convener for data aggregation, and lack of
    national investment in comparative
    effectiveness/outcome research and measurement

A Few Sound Bites
  • Transparency and Public Reporting
  • Consumers have right to know
  • Its how every competitive market works
  • Public reporting leads to improvement!
  • No evidence that public reporting alone leads to
    market shift to better performers at least not
    yet - but hope that it will only take a few to
    move a market
  • Translation of performance information for
    consumers a tremendous challenge

Quality Counts The Alliance Hospital Report Care
115 Eligible Hospitals in Wisconsin
Three hospitals were lost to closure and two
hospitals were ineligible due to overlapping
administrative structures
Percentage of hospitals who had poor scores at
baseline and who improved their scores in the
post-report period
A Few Sound Bites
  • Payment Reform
  • The largest mountain to climb and certainly the
    most emotionally charged
  • New payment architecture and aligning payment
    with performance needed
  • Need to move from visit and individual resource
    use FFS to more global/bundled payments
  • Need to rethink the relative value of primary
    care vs. specialty care as reflected in current
  • The largest public (Medicare) and private payers
    (national health plans) and coalitions must lead
    but employers must push and cant do alone

Payment Reform Bridges to Excellence
  • Structure (PPC)
  • Patient safety e-prescribing
  • Guideline-driven care EHRs
  • Focus on high-cost patients Care coordination
  • Improved compliance Patient education support

Process Outcomes (DPRP HSRP)
  • HbA1Cs tested and controlled
  • LDLs tested and controlled
  • BP tested and controlled
  • Eye, foot and urine exams
  • LDLs tested and controlled
  • BP tested and controlled
  • Use of aspirin
  • Smoking cessation advice

Buyers Health Care Action Group
  • BTE Implementation
  • BHCAG formed a Guiding Coalition of stakeholders
    to launch diabetes program statewide in 2006
  • Stratis (MN QIO)
  • MN Medical Association
  • Several large employers
  • Providers
  • 4 large MN health plans
  • Institute for Clinical Systems Improvement (ICSI)
  • MN Community Measurement
  • BHCAG and Guiding Coalition lead a collaborative
    effort on the design, development,
    implementation, and strategy for BTE programs in
  • MN Community Measurement assesses performance of
    medical groups. For performance results, visit

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/care when sick
  • to share in, and make the right, treatment
  • to comply with treatment regimen and self-manage,
    particularly chronic disease
  • to select a plan, hospital, physician.

A Few Sound Bites
  • Informed Consumer Choice
  • Area of greatest influence for employers
  • Change the entitlement mentality
  • Focus on front end health not just health care
  • Establish a principle of self-responsibility but
    with robust support
  • Support strategy must include creative mix of
    economic incentives, peer support, timely
    information, coaching/counseling

An Example Value Based Benefit Design
  • Basic health insurance benefit architecture
    should tier medical services by evidence of
    effectiveness - and providers by evidence of
  • Co-pay levels (incentives) should vary by tiers
    in a way to help steer individuals toward
    effective services and high performing providers.
    And vice versa.
  • Economic incentives, through value based benefit
    designs, can influence better consumer choices
    but should be joined with timely information,
    coaching, and peer support

Pitney Bowes
  • Pharmacy tier co-pay and benefit changes
  • Tier 1 10 co-pay includes
  • Most generics
  • All medications for Diabetes / Asthma /
  • Tier 2 30 co-pay
  • Most preferred brand name drugs
  • Tier 3 50 co-pay
  • Non-preferred brand name drugs
  • Other Pharmacy Changes
  • No mandatory mail order
  • No mandatory generic
  • No step therapy
  • Limited prior authorization requirements

Pitney Bowes Diabetes Results
  • Market Share
  • Use of impacted drugs increased from 41 to 71
  • For Type 2 diabetics, use of impacted drugs
    increased from 29 to 52
  • 85 of people on impacted drug remained on
  • Cost Utilization
  • Median total medical cost of a diabetic decreased
  • Office visits per 1,000 declined 4
  • ER visits per 1,000 declined 35
  • Pharmacy
  • Net per member per month pharmacy costs declined
  • Decreased cost of drugs used to treat
    complications offset increase in cost of diabetic
  • Decreased pharmacy costs of 7 for diabetics

Source Pitney Bowes, 2004
An Integrated Strategy HealthMapRx (The
Asheville Model)
  • Reinvention of community pharmacy through
    consumer coaching/counseling
  • With value based benefit design
  • Led by American Pharmacists Association
    Foundation and NBCH through national distribution
  • 4 member coalitions participating a dozen more
    coalitions with expressed interest
  • Demonstrated ROI

Asheville Project Results
  • Over 1500 patients from 10 employers enrolled for
    diabetes, asthma, hypertension, lipid therapy
    management, and depression
  • Patients realize improved outcomes increased
    medication adherence
  • 50 reduction in sick days
  • Zero workers comp claims in the City diabetes
    group over 6 years
  • Average net savings of 1,600-3,200 per person
    with diabetes each year from year 2 on
  • Employers saved over 5,000,000 in health care

The Unmet Challenge Employer Leadership and
So Great Battle Plan, but Where are the Employer
  • The unanswered question
  • Culture beats strategy every time.
  • Without top employer leadership engagement, there
    will be no reform
  • National and Community leadership required

What are the Impediments?
  • Not our business We make widgets
  • Health care dynamics hard to master
  • And frustration for those that do
  • Corporate silos HR and HealthSafety
  • Many employers in the business of health care
  • Hard to look beyond individual employer strategy
    to collective engagement

Its Springtime Some Signs of Hope
  • Secretary Leavitts Value Driven Health Care
  • The Partnership for Value Driven Health Care
  • NBCHs eValue8 tool a common RFI for health
  • The Leapfrog Group, Bridges to Excellence, The
    Asheville Model
  • Advanced Medical Home

Its Springtime Some Signs of Hope
  • Integrated Healthcare Association (IHA)
    California P4P Initiative
  • Coalition led initiatives Maine Health
    Management Coalition in particular
  • AQA Pilots and the emerging Chartered Value
  • Robert Wood Johnson Foundation Aligning Forces
    for Quality The Regional Market Project

Insert the Community Visual
Some Key Take Aways
  • Theres gold at the end of the rainbow of
    improving health care quality and efficiency.
  • Business and health coalitions are the key to the
    vision of health care reform, through value
    based purchasing, community by community
  • The biggest obstacle to progress is not absence
    of value based purchasing strategies but absence
    of employer engagement and leadership.