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Practical Approaches to Healthcare Cost Containment
Simon StevensExecutive Vice President, UnitedHealth Group
Chairman, UnitedHealth Center for Health Reform & Modernization
www.UnitedHealthGroup.com/reform
2
Where are the costs in US health care?
300M people across
America
Demand
$2.555T
100%
Administration and net cost of private insurance
$0.184T
7%
HospitalCare
Physicians & Clinical
Drugs
Dental
Home Health/ Nursing Home
Etc.
Supply
$2.371T
93%
$800B$800B
$533B$533B
$264B$264B
$177B$177B
$210B$210B
Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19
3
Where are the costs in US health care?
300M people across
America
Demand
$2.555T
100%
Administration and net cost of private insurance
$0.184T
7%
HospitalCare
Physicians & Clinical
Drugs
Dental
Home Health/ Nursing Home
Etc.
Supply
$2.371T
93%
$800B$800B
$533B$533B
$264B$264B
$177B$177B
$210B$210B
Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19
4
Where are the costs in US health care?
300M people across
America
Demand
$2.555T
100%
Administration and net cost of private insurance
$0.184T
7%
HospitalCare
Physicians & Clinical
Drugs
Dental
Home Health/ Nursing Home
Etc.
Supply
$2.371T
93%
$800B$800B
$533B$533B
$264B$264B
$177B$177B
$210B$210B
Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19
5
Administrative savings: how technology can cut red tape
• Common technology and information standards to ensure interoperability and connectivity
$225 billion
Category 2010-2019 Administrative Savings in National Health Expenditure
Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009
6
Administrative savings: how technology can cut red tape
• Common technology and information standards to ensure interoperability and connectivity
• Advanced system-wide techniques for payment speed and accuracy
$225 billion
$88 billion (+ $361 billion in medical costs)
Category 2010-2019 Administrative Savings in National Health Expenditure
Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009
7
Administrative savings: how technology can cut red tape
• Common technology and information standards to ensure interoperability and connectivity
• Advanced system-wide techniques for payment speed and accuracy
• Streamlined provider credentialing, privileging and quality designation processes
$225 billion
$88 billion (+ $361 billion in medical costs)
$19 billion
$332 billion
Category 2010-2019 Administrative Savings in National Health Expenditure
Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009
Around 50% of the savings go to hospitals and physicians; 20% directly to government; and 30% to health plans
8
Administrative savings: ‘real world’ case studies
Magnetic Identification Cards 30 million UnitedHealthcare swipe cards
in circulation Provides physician with patient’s personal
health record and relevant health alerts Plus verification of coverage and
collection information
“The future is already here – it’s just unevenly distributed” Sci-Fi writer William Gibson
Monthly Health Statements Consolidated monthly like a bank
statement Summary of activity, balances, and
health information Replaces Explanations of Benefits and
other mailings Provided to 20 million membersElectronic Payments Eliminates data entry in doctors office
and delaysSource: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009
9
Administrative savings: ‘real world’ case studies
Magnetic Identification Cards 30 million UnitedHealthcare swipe cards
in circulation Provides physician with patient’s personal
health record and relevant health alerts Plus verification of coverage and
collection information
“The future is already here – it’s just unevenly distributed” Sci-Fi writer William Gibson
Monthly Health Statements Consolidated monthly like a bank
statement Summary of activity, balances, and
health information Replaces Explanations of Benefits and
other mailings Provided to 20 million membersElectronic Payments Eliminates data entry in doctors office
and delays
Estimated 2010-2019 NHE savings from wide adoption
$18 billion
$14 billion
$109 billionSource: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009
10
Medical cost savings: ‘real world’ case studies tackling quality and efficiency variation
Examples from employer programs being run by UnitedHealth Group
Performance transparency – identified 100,000 physicians across 20 specialties with higher quality, and costs up to 20% lower
Informing consumers - sharing data to inform their decisions eg UHG Consumer Activation Index
Supporting choices - employers incentivizing use of high quality & efficiency providers eg UHG Premium Networks
Aligned provider payment models - rewarding high quality appropriate care not just volume eg cardiology, oncology, primary care
Supporting patients’ health behaviors eg UnitedHealthcare’s Diabetes Health Plan
ClinicalData
ConsumerData
NetworkData
EligibilityData
Customer/Employer
Data
Product/Benefits Data
PricingData
Enterprise-WideDatabase
11
Medicare spending per beneficiary, 2005
12
Incentivizing Use of High-Quality Providers
Option 1: Patient Incentives
Option 2: Cancer Support Programs
Option 3: Transplant Solutions Program
Improved Care Management
Option 4: Skilled Nursing Hospital Pre-admission Program
Option 5: Hospital Discharge Re-admission Management
Option 6: Advanced Illness Program
Option 7: CHF Disease Management
Option 8: Gaps in Care Program
Option 9: Integrated Medical Management
Physician Incentives and Information
Option 10: Patient-centered Medical Home
Option 11: Physician Performance Incentives
Option 12: Specialist Data-sharing
Evidence-Based Reimbursement
Option 13: Radiology Benefit Management
Option 14: Radiology Therapy Management
Option 15: Prospective Claims Review
$43 Billion$43 Billion
$59 Billion$59 Billion
$367 Billion$367 Billion
$75 Billion$75 Billion
An estimated $540 billion in Federal savings from proven approachesAn estimated $540 billion in Federal savings from proven approaches
Medical cost savings: ‘real world’ case studies for Medicare
Source: Federal Health Care Cost Containment – How in Practice Can it be Done? Working Paper 1: UnitedHealth Center for Health Reform & Modernization, May 2009
13