Health Plan Innovation: Delivering Better Value for Consumers

AHIP Hill Briefing Rayburn House Office Building | Washington, D.C. October 8, 2014

Sam Nussbaum, M.D. Executive Vice President, Clinical Health Policy & Chief Medical Officer

WellPoint/Anthem: A Health Benefits Leader

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BC or BCBS licensed plans (6)

Medicaid presence (11) BC or BCBS licensed plans + Medicaid presence (8)

BC or BCBS plans in 14 states and Medicaid presence in 19 states

Medicare 4%

BlueCard 14%

Medicaid 13%

Individual 5%

National Accounts 19%

Local Group 41%

FEP 4%

Diverse customer base of 37 million medical members

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Estimated Sources of Excess Costs in Health Care

Category Sources Estimate of Excess Costs

Unnecessary Services

• Overuse—beyond evidence-established levels • Discretionary use beyond benchmarks • Unnecessary choice of higher-cost services

$210 billion

Inefficiently Delivered Services

• Mistakes—errors, preventable complications • Care fragmentation • Unnecessary use of higher-cost providers • Operational inefficiencies at care delivery sites

$130 billion

Excess Administrative Costs

• Insurance paperwork costs beyond benchmarks • Insurers’ administrative inefficiencies • Inefficiencies due to care documentation requirements

$190 billion

Prices That Are Too High

• Service prices beyond competitive benchmarks • Product prices beyond competitive benchmarks $105 billion

Missed Prevention Opportunities

• Primary prevention • Secondary prevention • Tertiary prevention

$55 billion

Fraud • All sources—payers, clinicians, patients $75 billion

Source: Institute of Medicine; “Better Care at Lower Cost: The Path to Continuously Learning Health Care in America”

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Insurers and Providers: An Evolving Landscape

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Accountable Care Organization Growth

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ACOs by Hospital Referral Region

21 million* Estimated people

in ACOs

626 Accountable Care

Organizations

5.6 million Medicare beneficiaries

in ACOs

357 Medicare Contracted

ACOs

* While some reports estimate ACO-covered lives as high as 52 million; this estimate includes only those patients for which providers are directly taking risk. Source: Leavitt Partners, Dispersion of Accountable Care Organizations: June 2014 Update; Accountable Care Organizations now serve 17% of Americans, Oliver Wyman, 04/23/2014; CMS, All Medicare Shared Savings Program ACOs, May 2014; CMMI Pioneer ACO Model; CMS, All Medicare Shared Savings Program and Medicare Pioneer ACOs, May 2014

The Beginning of Payment Innovation Code of Hammurabi: P4P in 1750 B.C.

Ancient Mesopotamian statutes specified differential, outcome-based

physician compensation:

If a physician make a large incision with an operating knife and cure it, or if he open a tumor (over the eye) with an operating knife, and saves the eye, he shall receive ten shekels in money.

If a physician make a large incision with the operating knife, and kill him, or open a tumor with the operating knife, and cut out the eye, his hands shall be cut off.

— Code of Hammurabi, c. 1750 B.C.

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Provider Collaboration Pathway and Capabilities

7 Low Collaboration

Vertical Integration

Channel Partnerships

Value-Based Payment

Required Capabilities

Data Foundation

Care Continuum

Reporting and Analytics

Operations

Member Engagement

High Collaboration

Landscape of WellPoint Payment Innovation

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Data are as of 1/23/13

1,070 hospitals 2,250 designations

Blue Distinction Centers of Excellence

760 hospitals 76% of inpatient admissions

Hospital Payment for Quality and Safety

72,000 physicians Physician Pay for Quality and Clinical Outcomes

36,000 primary care physicians

Patient Centered Primary Care Including Patient Centered Medical Homes and Comprehensive Primary Care Initiative

100+ health systems Accountable Care Organizations

All value-based contracts $30B; 38% of provider spend

Q-HIP® (Quality Hospital In-Sights Program)

• Evidence-based standards from national organizations

• 760 hospitals participating

• Covers 76% of all admissions

• 47 performance measures

• Average 3% reimbursement increase for achieving Q-HIP quality, safety, and satisfaction thresholds

Quality Based Reimbursement

55% Patient Health Outcomes

35% Patient Safety

10% Member

Satisfaction

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California Patient Safety First

-26%

-57%

-43%

-24%

-74%

Sepsis Deaths

Ventilator Associated Pneumonia

Central Line Blood Stream Infections

Catheter Associated Urinary Tract

Infections

Elective Deliveries Prior to 39 Weeks

Gestation

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182 California hospitals linked together in coordinated efforts to improve patient safety for all Californians

Source: National Health Foundation Data Collection System (data downloaded 6/12/2013) for phase 1 results 2010-2012

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Colorado

• Inpatient admissions: 18% decrease compared to 18% increase • ER visits: 15% decrease compared to 4% increase • Specialty visits: remained flat compared to 10% increase

New York

• Inappropriate use of antibiotics: 27.5% compared to 35.4% • ER Visits: 11% fewer for adults and 17% fewer for children • Cost: 14.5% lower cost* for adults and 8.6% lower cost*

for children

New Hampshire

• Cost: increased 5% compared to 12% increase in traditional practices

• Improvement in quality performance

Patient Centered Medical Home Results

* Risk-adjusted 11

Aligned Incentives Financial Model

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• Shift to value-based reimbursement

• 5%-15% increase to baseline fees

• PMPM management fees

• Shared percentage of total savings

• Must maintain or improve quality along 32 domains

Shared Savings Model

Savings

ACO Program Launch

Year 1 Year 1 Year 1 Year 1

Savings

ACO Program Launch

Year 1 Year 1 Year 1 Year 1

Hea

lthc

are

Spen

ding

Actual Spending

Projected Spending

Year 2 Year 3 Year 4Year 1

Success in Innovative Payment Models

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Information • Risk stratification • Analytics • Identification of gaps

in care • Avoidable ER use • Brand/generic drugs

Resources • Dedicated local

support • Guidance on getting

the most from data and tools

• Assistance with practice transformation

Tools • Practice Advisor (ACP) • Toolkits for Enhanced

Care Management • Longitudinal Patient

Record • Choosing Wisely

WellPoint Cancer Care Quality Program

1 in 3 Chemotherapy patients receive treatment

inconsistent with medical evidence

25% Annual growth in cost of new cancer

therapies

69% Oncology practice revenue from drug

margins

180 New cancer studies published quarterly

Evidence / best practice based pathways developed with oncologists & based on national guidelines

Meaningful incentives for pathway compliance

Streamlined approval process enables increased efficiency

Enhanced reporting for on quality, cost, outcomes

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CareMore: Care Innovation

• Care Centers provide a “Healthy Start” initial evaluation and integrated care that combines wellness and medical supervision and offers personalized health planning

• Extensivists intensively manage chronically ill members

• Biometric monitoring applied to care management

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Superior Outcomes

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ALOS 3.7 days1 5.4 days

Bed Days / 1000 967 1,868

Admit Rate / 1000 261 344

Readmission Rate2 14.1% 19.6%

National Medicare FFS

1 With contracted facilities 2 Excluding ESRD

End Stage Renal Disease

Diabetes

Congestive Heart Failure

56% reduction in hospital admission rate in 3 months

7.07 average HbA1c for those attending our diabetic clinic and

60% lower amputation rate

36% fewer inpatient admissions and 62% less

inpatient bed days than the national average

California: An Innovative Provider Landscape

Information sharing for

quality, coordination,

and public health

Aligns providers in new business

alliances with products in California

Supporting physicians to

improve care and efficiency

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PriMed