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HEALTH REFORM 2.0:FROM COVERAGE TO COSTS ANDTHE ROLE OF TECHNOLOGYSARAH ISELINMass Technology Leadership CouncilApril 24, ...
Massachusetts Now Has the Lowest Rateof Uninsurance in the CountryPERCENT UNINSURED, 2000–2010, ALL AGES                  ...
But the Highest Per Person Health Care Spending…PER CAPITA PERSONAL HEALTH CARE EXPENDITURES, 2009  $10,000   $9,000   $8,...
Though Health Reform Helped, Costs Are Still a Problem   for Many Massachusetts Residents                                 ...
Overall Spending Will Double Between 2009 and 2020 ACTUAL AND PROJECTED MASSACHUSETTS TOTAL PERSONAL HEALTH CARE EXPENDITU...
The More We Spend on Health Care, the LessWe Have for Other ThingsSTATE BUDGET FY 2001 VS. FY 2011 (BILLIONS OF DOLLARS)  ...
BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 6
Costs Are Now the Most ImportantHealth Care Issue for the PublicQ   PLEASE TELL ME IF YOU CONSIDER IT TO BE A CRISIS, A MA...
And the Public Is Ready for Major Actionby the State GovernmentQ   HOW IMPORTANT IS IT FOR THE STATE GOVERNMENT OF MASSACH...
Key Affordability/Cost-RelatedDevelopments in Massachusetts     2006              2007               2008              200...
Technological Advances in Care Have Been a Major Driverof Health Care Spending GrowthCONTRIBUTION TO GROWTH IN SPENDING 19...
Much of the Increased Spending on Medical TechnologyHas Bought Increased Health Value                                     ...
But Certainly Not All of It                              BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 12
Health Care Technology – Especially InformationTechnology – Can Be a Major Health Care Cost-Saver                         ...
But Mere Installation of Technological Tools Will NotYield Cost Savings Alone                                           BL...
Increased HIT Adoption Could Be Cost-Saving or Cost-Additive in MassachusettsPROJECTED SAVINGS AS A SHARE OF SPENDING 2010...
It’s All About Incentives  The current payment system, called fee-for-service (FFS), rewards  doctors and hospitals for do...
Special Commission on the Health CarePayment System’s Recommendation     CURRENT FEE-FOR-SERVICE                        PA...
Information Technology Will Be Key for the Success ofPayment Reform Under global payments, providers will face greater inc...
But How Much We Pay – Prices – Is Just as Important asthe Way We Pay for CareBCBSMA COST DRIVERS FROM 2004-2008PERCENT OR ...
The Crux of the Current Political Debate Centers on theAppropriate Role for Government and the Market                     ...
Stay Tuned… Massachusetts has made health care “universally accessible, but not yet  universally affordable…Massachusetts...
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120424 MassTLC Sarah Iselin, BCBSMA Foundation presentation

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Sarah Iselin presented the need for technology for providers under payment reform at MassTLC's breakfast seminar on 4/24/12

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  1. 1. HEALTH REFORM 2.0:FROM COVERAGE TO COSTS ANDTHE ROLE OF TECHNOLOGYSARAH ISELINMass Technology Leadership CouncilApril 24, 2012 BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION
  2. 2. Massachusetts Now Has the Lowest Rateof Uninsurance in the CountryPERCENT UNINSURED, 2000–2010, ALL AGES 16.1% 16.3% 14.9% 15.2% 14.7% 14.9% 13.9% 13.1% U.S. AVERAGE 7.4% 6.7% 6.4% 5.9% 5.7% 2.6% 2.7% 1.9% MASS. 2000 2002 2004 2006 2007 2008 2009 2010NOTE: The Massachusetts-specific results are from a state-funded survey, the Massachusetts Health Insurance Survey (MHIS), which estimated that 372,000 Massachusetts residents were uninsured in2006, or 6.4 percent of the states population. Using a different methodology, researchers at the Urban Institute estimated that 507,000 Massachusetts residents were uninsured in 2005, orapproximately 8.1 percent of the total population. Starting in 2008, the MHIS sampling methodology and survey questionnaire were enhanced. These changes may affect comparability of the 2008and later results to prior years. The national comparison presented here utilizes a different survey methodology, the Current Population Survey, which is known to undercount Medicaid enrollment insome states.SOURCES: Urban Institute, Health Insurance Coverage and the Uninsured in Massachusetts: An Update Based on 2005 Current Population Survey Data In Massachusetts, 2007; Massachusetts Division ofHealth Care Finance and Policy, Massachusetts Health Insurance Survey 2000, 2002, 2004, 2006, 2007, 2008, 2009, 2010; U.S. Census Bureau, Current Population Survey 2010. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 1
  3. 3. But the Highest Per Person Health Care Spending…PER CAPITA PERSONAL HEALTH CARE EXPENDITURES, 2009 $10,000 $9,000 $8,000 $7,000 NATIONAL AVERAGE $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 UT AZ GA ID NV TX CO AR CA AL VA SC TN NC OK MS OR KY MI MT NM IN IL KS WA LA HI IA MO WY NE SD OH FL WI MNMD NJ VT WV PA ND NH RI NY DE ME CT AK MA StateNOTE: District of Columbia is not included.SOURCE: Centers for Medicare & Medicaid Services, Health Expenditures by State of Residence, CMS, 2011. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 2
  4. 4. Though Health Reform Helped, Costs Are Still a Problem for Many Massachusetts Residents 2006 2010 20% 19% 19% 18% 10% 6%Had Out-of-Pocket Spending at or Above 10% Family Income Problems Paying Medical Bills Had Had Medical Debt SOURCES: Massachusetts Health Reform Survey, 2010 BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 3
  5. 5. Overall Spending Will Double Between 2009 and 2020 ACTUAL AND PROJECTED MASSACHUSETTS TOTAL PERSONAL HEALTH CARE EXPENDITURES, 1991-2020 (BILLIONS OF DOLLARS) ACTUAL PROJECTED $123 $116 $109 $103 $97 $92 $86 $81 $77 $72 $68 $61 $56 $58 $52 $48 $45 $42 $39 $36 $33 $30 $31 $27 $28 $23 $24 $25 $20 $21 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YearSOURCES: Centers for Medicare& Medicaid Services, Health Expenditures by State of Residence, CMS, 2011; Massachusetts Division of Health Care Finance and Policy, “Massachusetts Health Care CostTrends, Historical (1991-2004) and Projected (2004-2020),” November 2009. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 4
  6. 6. The More We Spend on Health Care, the LessWe Have for Other ThingsSTATE BUDGET FY 2001 VS. FY 2011 (BILLIONS OF DOLLARS) FY2001 FY2011$16 +$5.1 B (+59%) -$4.0 Billion (-20%)$14 STATE EMPL. +40%$12$10 -15% $8 STATE EMPL. $6 MEDICAID/ HCR -13% +61% -11% $4 MEDICAID/ HCR -23% -50% -38% -33% $2 $0 Health Public Mental Education Infra/ Human Local Public Coverage Health Health Housing Services Aid SafetySOURCE: Data extracted from Massachusetts Budget and Policy Center’s Budget Browser BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 5
  7. 7. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 6
  8. 8. Costs Are Now the Most ImportantHealth Care Issue for the PublicQ PLEASE TELL ME IF YOU CONSIDER IT TO BE A CRISIS, A MAJOR PROBLEM, A MINOR PROBLEM, OR NOT A PROBLEM IN THE STATE OF MASSACHUSETTS.A High cost of health care 25% 53% Crisis Major problem 78% Limited ability to get needed health care 14% 32% 46% Low quality of health care services 11% 22% 33% Long wait time for medical appointments 5% 26% 31%SOURCE: Blendon, R.J. et al., 2011. “Public Perceptions of Health Care Costs in Massachusetts.” BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 7
  9. 9. And the Public Is Ready for Major Actionby the State GovernmentQ HOW IMPORTANT IS IT FOR THE STATE GOVERNMENT OF MASSACHUSETTS TO TAKE SOME MAJOR ACTION TO ADDRESS RISING HEALTH CARE COSTS IN THE STATE?A Very Important 74% 88% Somewhat Important 14% Not Very Important 3% Not At All Important 1% MA State Government should not try to address rising costs in state 6%SOURCE: Blendon, R.J. et al., 2011. “Public Perceptions of Health Care Costs in Massachusetts.” BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 8
  10. 10. Key Affordability/Cost-RelatedDevelopments in Massachusetts 2006 2007 2008 2009 2010 2011 2012 Health  Much of  Cost  Special  Government  Governor  Cost reform Chapter 58 Containment Commission reports and Patrick files Containment passes enacted, e.g.: Part 1 (Ch. on Payment hearings on payment Part 3? (Ch. 58) – MassHealth 305) passes Reform cost drivers reform – Begins path expansion – Increased – Recommends  Governor legislation to near – Commonwealth transparency move to rejects small  Special universal Care about cost global group Commission coverage – Consumer drivers payment premiums on Provider affordability – Reports on Price  Cost schedule health Reform insurer and Containment – New health Part 2 (Ch. plan options for hospital “reserves” 288) passes young adults – Aims to – Employer Fair control Share premiums for small business, individuals BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION
  11. 11. Technological Advances in Care Have Been a Major Driverof Health Care Spending GrowthCONTRIBUTION TO GROWTH IN SPENDING 1960 – 2007 OECD COUNTRIES Using data from developed countries around the world, economists Technology estimate that advances in Income Effects medical technology 29% 26% explain up to about half of the total increases in real spending between 1960 and 2007; this is split evenly between 5% straight technological Medical Price advances in care, and the Inflation 27% fact that as income 7% grows, consumers Population Aging demand proportionally 11% Technology- more high tech care. Increased Income Interaction Insurance CoverageSOURCE: Smith S, Newhouse JP, Freeland, MS. “Income, Insurance, and Technology: Why Does Health Spending Outpace Economic Growth? Health Affairs 2009; 28(5): 1276-1284. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION
  12. 12. Much of the Increased Spending on Medical TechnologyHas Bought Increased Health Value Technological advances in care have dramatically increased the costs of medical treatments. In Additional Health one study, economists Value found that the cost to Net Benefit of $70,000 Additional treat a heart attack rose Cost of $60,000 $10,000 between 1984 Treating and 1998. But the Heart Attacks improvement in care created $70,000 “worth” of health over the same period, measured as the dollar value of additional years of life gained by a Increase in Treatment Cost patient undergoing the $10,000 more advanced Heart Attack Treatment 1984 - 1998 treatments.SOURCE: Cutler, D.M. and M. McClellan, 2001. “Is Technological Change in Medicine Worth It?” Health Affairs, 20 (5): 11-29. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 11
  13. 13. But Certainly Not All of It BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 12
  14. 14. Health Care Technology – Especially InformationTechnology – Can Be a Major Health Care Cost-Saver $80 Billion in potential savingsSOURCE:Hillestad, R et al. 2005. “Can Electronic Medical Record Systems Transform Health Care? Potential Health? Potential Health Benefits, Savings and Costs”Health Affairs, 24 (5): 1103-1117. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 13
  15. 15. But Mere Installation of Technological Tools Will NotYield Cost Savings Alone BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 14
  16. 16. Increased HIT Adoption Could Be Cost-Saving or Cost-Additive in MassachusettsPROJECTED SAVINGS AS A SHARE OF SPENDING 2010–2020 Utilize bundled payment -5.9% -0.1% Institute hospital all-payer rate setting -4.0% 0.0% Institute regulation for academic medical centers -2.7% -0.2% Eliminate payment for adverse hospital events -1.8% -1.1% Increase adoption of HIT -1.8% 0.6% Institute reference pricing for academic medical centers -1.3% -0.1% Expand scope of practice for NPs and PAs -1.3% -0.6% Promote growth of retail clinics -0.9% 0.0% Create medical homes -0.9% 0.4% Decrease resource use at end of life -0.2% -0.1% Encourage value-based insurance design -0.2% 0.2% Increase use of disease management -0.1% 1.0% -7% -6% -5% -4% -3% -2% -1% 0% 1% 2%SOURCE: RAND. “Controlling Healthcare Spending in Massachusetts: An Analysis of Options.” 2009. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 15
  17. 17. It’s All About Incentives The current payment system, called fee-for-service (FFS), rewards doctors and hospitals for doing more. This is doubly true for new medical technologies, as newer, high-tech services tend to garner higher payments. Providers also face few incentives to invest in information technology that could help reduce unnecessary use of health care. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 16
  18. 18. Special Commission on the Health CarePayment System’s Recommendation CURRENT FEE-FOR-SERVICE PATIENT-CENTERED GLOBAL PAYMENT SYSTEM PAYMENT SYSTEM THE PROBLEM THE SOLUTION Care is fragmented instead of Global payments made to a group of coordinated. Each provider is paid for providers for all care. Providers are not doing work in isolation, and no one is rewarded for delivering more care, but responsible for coordinating care. for delivering the right care to meet Quality can suffer, costs rise and there is patient’s needs. little accountability for either. $ $ $ $ $ $ PRIMARY CARE HOSPITAL SPECIALIST HOSPITAL SPECIALIST PRIMARY HOME HOME HEALTH CARE HEALTH GOVERNMENT, PAYERS AND PROVIDERS WILL SHARE RESPONSIBILITY FOR PROVIDINGINFRASTRUCTURE, LEGAL AND TECHNICAL SUPPORT TO PROVIDERS IN MAKING THIS TRANSITION. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 17
  19. 19. Information Technology Will Be Key for the Success ofPayment Reform Under global payments, providers will face greater incentives to invest in innovative technologies that help manage and coordinate care across settings. Provider groups accepting global payments will need tools and IT to help “divide the pie.” Insurers and providers will also need innovative ways to engage consumers in selecting high-value care. BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 18
  20. 20. But How Much We Pay – Prices – Is Just as Important asthe Way We Pay for CareBCBSMA COST DRIVERS FROM 2004-2008PERCENT OR INCREASE IN COSTS DUE TO CHANGE IN PRICE VS. PROVIDER/SERVICE MIX VS. UTILIZATION 100% 90% UTILIZATION (number of visits) 80% 70% PROVIDER MIX AND SERVICE MIX 60% 58.0% 53.3% 54.8% 53.8% 50% 40% 33.1% 30% UNIT PRICE (amount providers get paid) 20% 10% 0%NOTES: 2004 2005 2006 2007 20081) Reflects fully-insured commercial trend2) “Unit price” reflects increases in provider rates. “Provider Mix and Service Mix” reflect changes in the location of care (shift to more expensive providers) and the intensity of services provided.“Utilization” reflects increases in the number of services provided.SOURCE: Office of Attorney General Martha Coakley, March 2010, “Investigation of Health Care Cost Trends and Drivers.” BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 19
  21. 21. The Crux of the Current Political Debate Centers on theAppropriate Role for Government and the Market BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 20
  22. 22. Stay Tuned… Massachusetts has made health care “universally accessible, but not yet universally affordable…Massachusetts led the nation on health care reform and is poised to lead again on cost containment.” -Governor Deval Patrick “…I think more immediately the issues of the health care debate and the budget really are going to require our attention” -House Speaker Robert A. DeLeo “A careful, phased-in transition of this system-wide reform [removing fee- for-service within 5 years] is achievable. But we need to take the first step this year.” -Senate President Therese Murray BLUE CROSS BLUE SHIELD OF MASSACHUSETTS FOUNDATION 21
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