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Briefing:Health System Reform: UpdatePaul Keckley, Ph.D., Executive DirectorDeloitte Center for Health SolutionsWashington, DCNashville, TNAugust 6, 2009

Center for Health Solutions Research2009Monday Health Reform Memo (weekly – ongoing)ROI for Personalized Therapeutics (1/09)Health Care and Public Policy: What Do Americans Really Want (1/09)Reducing Costs While Improving Care in the U.S. Health System: The Health Reform Pyramid (1/09)2009 Survey of U.S. Health Care Consumers (3/09)Comparative Effectiveness (5/09)Academic Medicine: Sustainability (6/09)Episode Based Payments (Summer 2009)The Long Term Care Market in Medicaid: Ticking Time Bomb (Summer 2009)Wellness and Healthy Living: New Business Models and Opportunities (Summer 2009)Retail Medicine: Update (Summer 2009)Medical Tourism: Update (Summer 2009)The Medical Home: Update (Summer 2009)2008Pay for QualityConsumer-Directed Health Plans: Update Medicaid Medical ManagementThe Medical HomeMedical TourismPrice Transparency in Health CareRetail MedicinePreparing for ICD-10Retail Pharmacy and Disease ManagementConnected Care: Technology Enabled Care at Home2008 Survey of Health Care ConsumersBest Practices in Greening in Health Care Organizations1

Monday Health Reform Memo (weekly – ongoing)

ROI for Personalized Therapeutics (1/09)

Health Care and Public Policy: What Do Americans Really Want (1/09)

Reducing Costs While Improving Care in the U.S. Health System: The Health Reform Pyramid (1/09)

2009 Survey of U.S. Health Care Consumers (3/09)

Comparative Effectiveness (5/09)

Academic Medicine: Sustainability (6/09)

Episode Based Payments (Summer 2009)

The Long Term Care Market in Medicaid: Ticking Time Bomb (Summer 2009)

Wellness and Healthy Living: New Business Models and Opportunities (Summer 2009)

Retail Medicine: Update (Summer 2009)

Medical Tourism: Update (Summer 2009)

The Medical Home: Update (Summer 2009)

Pay for Quality

Consumer-Directed Health Plans: Update

Medicaid Medical Management

The Medical Home

Medical Tourism

Price Transparency in Health Care

Retail Medicine

Preparing for ICD-10

Retail Pharmacy and Disease Management

Connected Care: Technology Enabled Care at Home

2008 Survey of Health Care Consumers

Best Practices in Greening in Health Care Organizations

Current context for health reformThe U.S. economy is weak—recession began 12/07Unemployment at 9.4%: highest since 1939Banking industry solvency: 19 major banks stress testedTARP program underway: results unknown, $140 billion yet to deployContaining health costs—key element in economic recoveryFastest growing expense in households, companies and governmentOnly industry with employment increase since 12/07 downturnThe new administration—“change…yes we can”Health care, energy, education prioritiesAccess to health insurance—campaign 2008 focus, but costs now a major theme2Copyright © 2009 Deloitte Development LLC. All rights reserved.

The U.S. economy is weak—recession began 12/07

Unemployment at 9.4%: highest since 1939

Banking industry solvency: 19 major banks stress tested

TARP program underway: results unknown, $140 billion yet to deploy

Containing health costs—key element in economic recovery

Fastest growing expense in households, companies and government

Only industry with employment increase since 12/07 downturn

The new administration—“change…yes we can”

Health care, energy, education priorities

Access to health insurance—campaign 2008 focus, but costs now a major theme

Health costs increased from 5.9 to 16.2% of GDP from 1960 to 2007: Fastest growing expenditure in federal budget2008-2018 Forecast:US economy: +4.1% CAGRHealth costs: +6.2% CAGRGovernment spending for health care (Medicare and Medicaid): +7.2%Private sector spending for health care: +5.3%25% of entire federal budgetAnnual health care expenditures in the United States have gone from $27.5 billion in 1960 to $2.24 trillion in 2007 and are projected to reach $4.35 trillion by 2018. Source: Department of Health and Human Services, Center for Medicare and Medicaid Services, the National Health Expenditures Accounts (NHEA)3Copyright © 2009 Deloitte Development LLC. All rights reserved.

US economy: +4.1% CAGR

Health costs: +6.2% CAGR

Government spending for health care (Medicare and Medicaid): +7.2%

Private sector spending for health care: +5.3%

25% of entire federal budget

Since December 2007, 6 million overall jobs have been lost; however, health care jobs have increased 190,000Source: Labor Department4Copyright © 2009 Deloitte Development LLC. All rights reserved.

Consumer inclined toward reform: “The system isn’t working very well…”Only 1 in 5 consumers give the U.S. health care system an above-average report card grade; those grading the system “F” outnumber those giving it an “A” by 6 to 1. Source: 2009 Survey of US Health Consumers5

Consumers believe system is wasteful52% of Americans feel that at least half of health costs are wasted. Source: 2009 Survey of U.S. Health Consumers6Copyright © 2009 Deloitte Development LLC. All rights reserved.

Not a system…a federation of interests that’s fragmented, costlyAdministrators/WatchdogsRegulatorsMediaProfessional Societies/Special InterestsInsurersInnovatorsAcademicMedicinePharmaBioTechAccrediting AgenciesEmployersHCITDeviceService ProvidersDisruptorsHospitalsOutpatientFacilitiesLong TermCareAllied HealthProfessionalsDiseaseManagementCAMPhysiciansConsumers7Copyright © 2009 Deloitte Development LLC. All rights reserved.

White House puts priority on health reform above energy, education: Reduce costs, cover everyoneFebruary 24, 2009 to Joint Session of Congress: Reform energy, education and health care. Pass bill in 2009.May 11, 2009 to Major Trade organizations: Cut CAGR to 4.7%, reduce costs by $2 trillion (2008 – 2018)June 3, 2009: Everything on the table—mandates, employer tax exclusion, employer mandate, public plan, et al. Bill this summer.8Copyright © 2009 Deloitte Development LLC. All rights reserved.

February 24, 2009 to Joint Session of Congress: Reform energy, education and health care. Pass bill in 2009.

May 11, 2009 to Major Trade organizations: Cut CAGR to 4.7%, reduce costs by $2 trillion (2008 – 2018)

June 3, 2009: Everything on the table—mandates, employer tax exclusion, employer mandate, public plan, et al. Bill this summer.

Funding–follow the moneyJanuary 23: President Obama signs SCHIP expansion legislation, increasing eligibility to 4,000,000 children and pregnant women; $32.3B funded through increase of 62 cent federal tax on each pack of cigarettesFebruary 17: President Obama signs $787B stimulus package (America’s Recovery and Reconstruction Act) that includes $145B for health careFebruary 26: President announces “down payment on health reform”—a $634B 10-year fund to pay for long-term health reforms; cuts to pharmaceutical companies and Medicare Advantage plans plus increased taxes for those earning more than $250,000March 11: Congress approves $410B appropriation to operate government through September 2009, including modest increases in a few areas of health care—primary care, NIH, National Service CorpsApril 29: Passage of FY10 budget; targeted investments in health reforms (FDA, bundled payments); 8% overall growth in federal spending for Medicaid and Medicare but effective rate increase of 0.1%; insurance reform9Copyright © 2009 Deloitte Development LLC. All rights reserved.

January 23: President Obama signs SCHIP expansion legislation, increasing eligibility to 4,000,000 children and pregnant women; $32.3B funded through increase of 62 cent federal tax on each pack of cigarettes

February 17: President Obama signs $787B stimulus package (America’s Recovery and Reconstruction Act) that includes $145B for health care

February 26: President announces “down payment on health reform”—a $634B 10-year fund to pay for long-term health reforms; cuts to pharmaceutical companies and Medicare Advantage plans plus increased taxes for those earning more than $250,000

March 11: Congress approves $410B appropriation to operate government through September 2009, including modest increases in a few areas of health care—primary care, NIH, National Service Corps

April 29: Passage of FY10 budget; targeted investments in health reforms (FDA, bundled payments); 8% overall growth in federal spending for Medicaid and Medicare but effective rate increase of 0.1%; insurance reform

Presidential news conference on July 22, 2009:“health insurance reform”1 Health reform is necessary to reduce escalating costs of the system that threaten economic recovery. The result of inaction is economic collapse: employers will drop employee benefits coverage or shift financial burdens to employees who cannot afford premiums. The “status quo” is not an option.2 Reform of the system must be deficit neutral: added costs for covering “47 million lacking insurance” (there are actually 45.7 million) and changes to the delivery system must be offset by savings or new revenues. The White House believes a combination of two-thirds from savings and one-third from taxes on high income households is the appropriate funding mechanism.3 The President supports a public plan option available to uninsured and under-insured individuals and small businesses. Repeating an oft-used phrase, the President supports the public plan option to “keep the plans honest” and provide competition to commercial plans. NOTE: A positive earnings report from “a major plan” released today was referenced as evidence plans benefit at the expense of patients by denying coverage or refusing to pay for needed care.4 Agreement among legislators is a “work in progress”: there is agreement that individual mandates, a comparative effectiveness program, health insurance exchanges, fraud reduction, health information technology utilization and integrated delivery systems are key elements. Pressed about partisan issues and defections among moderate Democrats due to the costs of the plan, the President defaulted to the legislative process: messy, necessary, and soon to result in a reform bill. The forthcoming work in the Senate Finance Committee is a key part of the process.5 Key industry stakeholders support the need for reform: in his remarks and responses to reporters’ questions, three references to AARP and two each to AMA, ANA and PhRMA were used to suggest the White House has industry support.6 To deflect criticism of government intrusion in coverage decisions and payment calculations for providers, the White House supports the development of an independent board to make recommendations. Congress would have 30 days to prevent implementation based on a vote. It would make determinations about advisable diagnostic and therapeutics based on evidence and costs. It would also set payment rates for providers based on its assessment of comparative effectiveness and value. NOTE: Sen. Jay Rockefeller proposed MedPAC as the independent entity; OMB Director had previously proposed a new entity, IMAC (Independent Medicare Advisory Commission).7 The President anticipates signing a bill in 2009 but did not state his determination of a bill by the August recess.10

Key players: Congressional Committee leadershipSenate Finance CommitteeSenate Health Education, Labor and PensionsCHUCK GRASSLEY:Senior Senator from IowaTED KENNEDY:Senior Senator from MassachusettsMAX BAUCUS:Senior Senator from MontanaHouse Ways and Means CommitteeHouse Energy and Commerce CommitteeHouse Education and LaborGEORGE MILLER:Member of the U.S. House of Representatives from California's 7th districtCHARLES RANGEL:Member of the U.S. House of Representatives from New York’s 15th districtHENRY WAXMAN: Member of the U.S. House of Representatives from California's 30th district11

Key players: Two offices of health reformKathleen Sebelius:United States Secretary of Health and Human ServicesNancy-Ann DeParle:Director of the White House Office on Health Reform12Copyright © 2009 Deloitte Development LLC. All rights reserved.

Some major proposals have emerged: more to come13Copyright © 2009 Deloitte Development LLC. All rights reserved.

The most delicate issues will be:14Copyright © 2009 Deloitte Development LLC. All rights reserved.

Key stakeholders engaged in cost containmentReduce spending to 4.7% ($2 trillion reduction over 10 years)Administrative simplification, coordination of care, utilization management key initial focus(excerpt from publicly available document)15

Reduce spending to 4.7% ($2 trillion reduction over 10 years)

Administrative simplification, coordination of care, utilization management key initial focus

The reform bill will likely include four strategies to reduce cost to fund improved quality and increased access for uninsuredIt will take 6 years implement major reformsSavings can be more than $2 trillion if implementation is accelerated via payment reform, IT adoptionNet result: reduce CAGRto 4.5%4ConsumerismFocus: CDHPs, transparency, PHRs, incentives, valueCoordination of careFocus: Primary Care 2.0 Model (the new “Medical Home”)3Comparative Effectiveness/Evidence – based MedicineFocus: (1) Personalized medicine, (2) comparative effectiveness; episode based payments to acute organizations 2Health Care Information TechnologyFocus: (1) e-prescribing, (2) care coordination (3) administrative cost reduction 116Copyright © 2009 Deloitte Development LLC. All rights reserved.

The impact of major reforms will vary by sectorModest Moderate impact Significant impact17Copyright © 2009 Deloitte Development LLC. All rights reserved.

Paying for health reform: proposed sources of funding18

Contact informationFor more information, please contact:Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutionspkeckley@deloitte.com202-220-2150 For more information on the Center's view of health care in the new administration, please visit: www.deloitte.com/us/healthreform And visit our website to subscribe to our content:www.deloitte.com/CenterforHealthSolutions/subscribeCopyright © 2009 Deloitte Development LLC. All rights reserved.

US CongressmanMarsha Blackburn7th District of Tennessee

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Looking under the covers - Measuring Quality/ValueA Panel Discussion - August 6, 2009John R Morrowwww.HospitalValueIndex.com

A Panel Discussion - August 6, 2009AgendaJohn R. Morrow – The Ratings GuyJustin Lansing – Credence HealthcareEddie Pearson – HealthstreamMiriam Paramore -- Emdeon

A Panel Discussion - August 6, 2009What is Value?Why Transparency?Transparency is a form of openness, a medium of communication and a measure for accountability; opposite of privacy.Banking - R. Levine, policy of transparency improved efficiencyCorporate – Sarbanes-Oxley Act – confidence in capital marketsManagement – PCAOB –oversight, independence, disclosuresMedia – FOIA provides accessPolitics – ethics, law, policy, economics, media, social new mediaResearch – Peer review, double blinded clinical trialSports – World Anti Doping Agency

A Panel Discussion - August 6, 2009Transparency in Health CareBefore HCFA realized it was a purchaser of health care we relied on FOIA for:Financial, and Operating ReportsClinical experienceOutcomesMortalityComplicationsResearch

A Panel Discussion - August 6, 2009Transparency in HospitalsAfter CMS realized spending, utilization outcomes and experience were all different:Ratings outpaced CMS w/Web & social media Industry shamed by IOM findingsQuality differentiation made marketsInfo systems and industry standards drive new insightsGreater disclosures by CMS forces accountabilityValue based purchasing to determine reimbursementBetter management embraces disclosure & accountability

A Panel Discussion - August 6, 2009What We Can Now SeeCore Process MeasuresPatient Safety IndicatorsHCAHPS – Patient ExperienceFinancial reportingClinical reporting – RAMI, RACI, Post discharge mortality & readmissionsPopulation utilization

A Panel Discussion - August 6, 2009What We Want to See and DoInstitutional – more of the same…faster.Purchaser/Employer Sponsored – what’s under the shell, what’s it all meanConsumer/Patient/Person – How about the real price?My personal records and data?Everything that John and thepanel can show me…Why Not?

A Panel Discussion - August 6, 2009How?Defining Value by provider engages the patient/provider relationshipFor routine care, services are a commodity where quality is not always a factor,For complicated cases, experience with better outcomes becomes a factor,All require disclosure and transparency so the patient can apply their own value judgment and participate in their own decision making about utilization,Value incorporates all known aspects of outcomes with a published fair price.

A Panel Discussion - August 6, 2009Value is what Value doesOutcomesMortality & Complication ratesPatient Safety Indicator ratesReadmission ratesEfficiency ratesSatisfaction & Experience RatesPost-discharge functional status SF-36Affordability

A Panel Discussion - August 6, 2009Value like TransparencyCreates efficiencies, removes barriersImproves communication – EMR/PHRDifferentiates to the community Form990Integrates the patient into the care processBuilds the foundation of the medical homeShares the responsibility and accountabilityIncreases compliance; realigns priorities

A Panel Discussion - August 6, 2009Your PanelJustin Lanning – Credence HealthcareEddie Pearson – HealthStreamMiriam Paramore – EmdeonJohn Morrow – www.HospitalValueIndex.com

August 6, 200945Transparency in Healthcare Miriam Paramore, SVP Strategy & Government Affairs

Emdeon: A Leader inToday’s National Health Information Network155 millionPatients350,0001,2005 billionProvidersPayersRCM & PaymentDistributionHealthcareInformationPBM ServicesePrescribingPharmacies55,0004646Emdeon – We make healthcare efficient.

efficient healthcare47Emdeon – We make healthcare efficient.

Healthcare Reform Is Demanding Price Transparency (Senate HELP Bill)48

Healthcare Reform Is Demanding Price Transparency (House Tri-Committee Bill)49

What is Transparency Hard?50Emdeon – We make healthcare efficient.PriceHealthcare is not retail – there is no price at the point of serviceWhat a hospital charges is not the “price”What an insurance company pays is the “price”But the consumer can’t buy at that “price”QualityData is not digitalLack of standards means even digital data is meaninglessThere is no good clinical information exchangeConsumer-friendly communication of medical terms is difficult

HIMSS Price and Quality Reporting White Paper (coming very soon)51HIMSS Financial Systems Steering Committee6 Public-Private Collaborations7 State & Local Initiatives5 Value Driven Healthcare Initiatives3 Business CoalitionsTotal = 21 separate initiatives

efficient healthcareFunding Healthcare Reform52Emdeon – We make healthcare efficient.

Where Does the Money Go?85%15%Admin Costs = $360 BCost of Care = $2 TTotal U.S. Healthcare Spend = $2.4 Trillion53

“Gang of 6” Letter to President Obama5454Emdeon – We make healthcare efficient.

“Gang of 6” Recommendations55Utilization of careCost of doing businessAdministrative simplification: Streamlining the claims processing system will allow clinicians and other personnel to spend less time and fewer resources on paperwork, lowering costs for everyone.Chronic care55Emdeon – We make healthcare efficient.

U.S. Healthcare Efficiency Index™Launched December 20085656

U.S. Healthcare Efficiency Index™Advisory Council (partial list)5757Emdeon – We make healthcare efficient.

Funding Healthcare Reform – The Duh FactorJune 13, 2009 – President Obama announces $313 billion in cuts to Medicare/Medicaid providersPeter Orzag: Cuts will save Medicare patients money “as much as $43 billion in reduced premiums for prescription drug coverage over the next 10 years.”$43 billion over 10 years through Medicare/Medicaid cutsvs.$150 billion over 5 years through HIT 58Emdeon – We make healthcare efficient.

June 13, 2009 – President Obama announces $313 billion in cuts to Medicare/Medicaid providers

Peter Orzag: Cuts will save Medicare patients money “as much as $43 billion in reduced premiums for prescription drug coverage over the next 10 years.”

what would u dow/ $150 B?ushealthcareindex.com

Discussion

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Panel Discussion: PHR, EHR or EMR – A real solution or just Alphabet soup?Moderator: Daniel Fell, Partner NDPPanelist:Steve Starkey, COO/CIO, HMSMikell van derLaan, Manager of Architecture, CHSPHR EHR EMR

Discussion

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