Blue Print Virginia Healthcare Lets be transparent about this… August 12, 2013 Bob Cramer Norfolk Southern Corporation.

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Blue Print VirginiaHealthcare

Let’s be transparent about this…August 12, 2013

Bob CramerNorfolk Southern Corporation

Purchasing decisions are of varying consequence

Low High

Little Some Much Little Some Much Little Some Much

MuchWatch

(Watchful)Car

(Scary)House

(Very Scary)

Some

LittleBanana

(So what)

Purchase Decision Impact: Moderate

Cost Variation Between Choices

Relative Cost of Item

Quality Variation Between Choices

Low Medium High

Purchasing decisions in Healthcare?

Little Some Much Inexplicable Little Some Much Inexplicable

Much Back Surgery Back Surgery

Some

Little MRI MRI

Relative Cost of Item

Quality Variation Between Choices

Moderate High

Medium High

Purchase Decision Impact:

Cost Variation Between Choices

High-value purchasing is the objective

Above Norm Norm Below Norm

Above Norm Defensible Smart Brilliant

Norm Dumb Defensible Smart

Below Norm Very Dumb Dumb Defensible

Cost*

Quality*

Most Things Purchase Decision

Matrix

* Caveat: Must be considered prior to purchase!!!

The current value decision for healthcare?

Mystery Item Purchase Decision

Matrix

Cost*

Quality*

* Not considered prior to purchase!!!

??????

????? Very Dumb

What do healthcare consumers know about cost?

The Washington Post November 10, 2011

Should government regulate health care prices? “Massachusetts is now in…a debate about how to bring down its skyrocketing health care costs. And the state’s new proposal to regulate

how much providers charge for health care…the state found that some Massachusetts doctors charge six or seven times as much as their colleagues for the exact same procedures …

What do consumers know about cost?

What do consumers know about quality?

What do consumers really know about quality?

Almost 2.5 million patients undergo surgery unnecessarily every year. Many of them end up in worse shape than before their procedures.

“back surgery is needed in only a small percentage

of cases. Most back problems can be taken care of

with nonsurgical treatments, such as medication, ice, heat, gentle massage and physical therapy.”

- Mayo Clinic

What should consumers know?

"The practice of medicine doesn't always follow the best evidence… I think if patients were well informed, they would choose the right thing… the least invasive, less risky procedure.“

James Weinstein

Director, Dartmouth Institute

Health Policy and Clinical Practice.

What about about cosmetic surgery, Lasik, and implants?

Why transparency?

Premise:

Widely available and robust Cost and Outcome Information i.e., healthcare transparency, will enable:

• healthcare consumerism,• value-based benefit design,• outcome-based payment reform, • and therefore, high-value healthcare.

There is some good news in Virginia to build upon

Virginia fares well among most states and earned a B in a national study on health care pricing transparency because of its state’s laws like the All Payer Claims Database (APCD) and the information available like Virginia Health Information (VHI). • 

All Payer Claims Database (APCD)

The Virginia APCD will aggregate all claims databases from all payers and can provide:

– a comprehensive picture on total treatment costs across an episode of care, together with some quality information (e.g., number of diabetics with A1c test compliance),

– data to evaluate what goes into a complete episode of care for a high-cost service, how that cost varies and how to structure provider payments to reward better value.

Note: Self-insured employers must approve release of claims data to the APCD by ASOs.

Virginia Health Information Circa 1993

Virginia Health Information Plan and Transparency

Transparency enables cost-effective benefit design

• Value Based Insurance Design (VBID)Don’t cover ineffective care, e.g., Routine EKGsPay for effective care, e.g., $0 Copays Tobacco Cessation

• Choosing Wisely 45 Don’t do(s) according to the Medical Societies

• Referenced-based pricing (RBP)Set cost limits on coverage based on reasonable cost, i.e. no $3000 MRIs, if $600 MRI is obtainable

Transparency enables more effective benefit design

• Centers of Excellence (COE)Require treatment by high quality providers, e.g.,Lowes: Cardiac Care only at Cleveland Clinic

• Step Therapy Exhaust less invasive/costly first, e.g., ibruprofen before Enbrel, anti-inflammatory medication before surgery

Transparency and the market place

Outcome and cost transparency will enable outcome and performance-based provider rewards:

– P4P Payment structures

– Consumer foot traffic

– Re-pricing of care services, e.g., primary care

– Reallocation of healthcare services investment

– Redirection of medical schools

Transparency is required in a perfect world

“First, patients will be at the heart of everything we do. So they will have more choice and control, helped by easy access to the information they need about the best GPs and hospitals. Patients will be in charge of making decisions about their care. Second, there will be a relentless focus on clinical outcomes. Success will be measured, not through bureaucratic process targets, but against results that really matter to patients – such as improving cancer and stroke survival rates.”

Andrew Lansley

Secretary of State for Health

United Kingdom

July 2010

Improving Healthcare Transparency in Virginia

 • Optimize the analysis, distribution and use of all APCD data

• Develop and proliferate consumer friendly, evidence-based care alternatives to include outcomes for all prevalent services

• Support the transparency initiatives in the VHIP

• Health plan sponsors see Transparency as foundational

Blueprint Virginia - Healthcare

Thank you!