The Commonwealth Fund: Pursuing a High Performance Health System in the ACA Era

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The Commonwealth Fund: Pursuing a High Performance Health System in the ACA Era David Blumenthal, MD, MPP President, The Commonwealth Fund Scottsdale Institute 21 st Annual 2014 Spring Conference Scottsdale, AZ April 24, 2014

Agenda 2 Challenges Next Steps ACA The Good and Bad News The Commonwealth Fund s Agenda

3 COST $Billions in unnecessary and wasteful spending Overuse puts patients at risk, drains resources, and makes healthcare less accessible and less effective A BROKEN SYSTEM QUALITY Despite rapid advances, thousands of patients die each year from medical error COVERAGE 55 million uninsured; many more underinsured

4 30 Percent of Working-Age Adults Uninsured Now or During the Past Year Percent of adults ages 19 64 35 30 25 20 Insured now, time uninsured in past year Uninsured now 26 28 28 30 9 9 8 10 15 10 5 0 17 18 20 19 2003 2005 2010 2012 Note: Totals may not equal sum of bars because of rounding. Source: The Commonwealth Fund Biennial Health Insurance Surveys (2003, 2005, 2010, and 2012).

In 2012, Nearly Half of Adults Were Uninsured During the Year or Were Underinsured 5 Insured all year, not underinsured^ 54% 100 million Uninsured during the year* 30% 55 million Insured all year, underinsured^ 16% 30 million 184 million adults ages 19 64 Note: Numbers may not sum to indicated total because of rounding. * Combines Uninsured now and Insured now, time uninsured in past year. ^ Underinsured defined as insured all year but experienced one of the following: out-of-pocket expenses equaled 10% or more of income; out-of-pocket expenses equaled 5% or more of income if low income (<200% of poverty); or deductibles equaled 5% or more of income. Source: The Commonwealth Fund Biennial Health Insurance Survey (2012).

250% 200% Cumulative Increases in Health Insurance Premiums, Workers Contributions to Premiums, Inflation, and Workers Earnings, 1999-2013 Health Insurance Premiums Workers' Contribution to Premiums Workers' Earnings Overall Inflation 196% 182% 6 150% 117% 119% 100% 50% 0% 56% 57% 50% 34% 14% 40% 29% 11% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2013. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2013; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2013 (April to April).

U.S. Health in International Perspective: Shorter Lives, Poorer Health 7 Americans live shorter lives and are in poorer health at any age Poor outcomes cannot be fully explained by poverty or lack of insurance White, insured, college-educated, and upper income Americans are in poorer health than their counterparts in other countries

When it Comes to Health Care, There are Two Americas 8 Source: D. Blumenthal, Two Americas, (New York: The Commonwealth Fund, August 2013).

Overall Health System Performance for Low Income Populations 9 Source: Commonwealth Fund Scorecard on State Health System Performance for Low-Income Populations, 2013.

International Comparison of Spending on Health, 1980 2012 10 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 Average spending on health per capita ($US PPP) US SWIZ NOR NETH GER CAN FRA SWE AUS UK NZ 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 18 $8,745 $3,182 20 16 14 12 10 8 6 4 2 0 Total expenditures on health as percent of GDP AUS NOR UK SWE NZ CAN SWIZ GER FRA NETH US 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 17.6% 8.9% Note: $US PPP = purchasing power parity. Source: Organization for Economic Cooperation and Development, OECD Health Data, 2013 (Paris: OECD, November 2013). US data from National Health Expenditure Accounts, adjusted to match OECD definitions.

$$$$$$$$$$$$$$$ The U.S. sweeps GOLD, SILVER, and BRONZE in international competition

12 Health Policy at a Fork in the Road Benefit and Price Reduction OR Fundamental Delivery System Reform Regardless of how you envision the role of government, health care and the markets in which it s purchased need to be improved

13 13 Improving Performance Microsystems Health System Performance Macrosystems

Microsystems 14 ICU OR ED MD practice Microsystems Admitting dept People, processes and practices that interact directly with patients or support patient care at the local level (the sharp end ).

Macrosystems 15 Organizations and environmental forces that support and influence microsystems (the blunt end ). Govt programs/ regulations Health plans Hospitals Macrosystems Accrediting organizations National boards

16 Interventions That Work: Microsystem Microsystems Toyota Production System

17

18 Macrosystems We have failed to create macrosystems that encourage and support use of these solutions, thereby changing the behavior of large numbers of microsystems and raising the performance of the health care system as a whole.

19 Fundamental Delivery System Reform We need to make it easier to do the right thing

20 20 Improving Performance Microsystems Health System Performance Macrosystems Affordable Care Act

The Affordable Care Act 21 Reduced Payments for Avoidable Complications Value Based Purchasing Medicare Advantage Plan Bonuses Accountable Care Organizations Bundled Payments Hospital Inpatient Quality Reporting Physician Quality Reporting System Medical Homes Meaningful Use

Surge of Expert Reports 22

Shared Approaches to Confronting Costs Provider payment reform Repeal Medicare sustainable growth rate formula Move from paying for volume to paying for value Enhance support for primary care Delivery system reform Encourage development and implementation of innovative delivery models Medicare reform Improve financial protection for beneficiaries Provide positive incentives for choosing high performing providers Consumer/patient engagement Enhancing performance of health care markets Increase transparency of quality and cost information Eliminate administrative inefficiency 23

Some Good News: Medicare accountable care organizations (ACOs) 24 Over 360 Medicare ACOs serving up to 5.3 million people Costs for beneficiaries aligned to Pioneer ACOs increased 0.3 percent in 2012 vs. 0.8 percent for other beneficiaries. Over $380 million in savings have been generated by Medicare ACOs and Pioneer ACOs. 9 out of 23 Pioneer ACOs produced gross savings of $147 million in their first year (though 9 ACOs also dropped out). Source: Centers for Medicare & Medicaid Services.

ACO Distribution to Date, by Hospital Referral Region 25 Total of 601 accountable care entities in the U.S. 366 Medicare ACOs 235 Non-Medicare ACOs Note: Data for Medicare ACOs as of January 2014; data for non-medicare ACOs and in map as of July 2013. Source: Petersen M, Muhlestein D, Gardner P, Growth and Dispersion of Accountable Care Organizations: August 2013 Update, Leavitt Partners; Centers for Medicare and Medicaid Services.

Delivery System Reform, Further Effects 26 Reporting on hospitalacquired conditions Rates of serious hospital-acquired conditions (HACs) now available on Hospital Compare website Creation of the Center for Medicare and Medicaid Innovation (CMMI) More than 50,000 health care providers involved in CMMI innovation projects Source: CMS.

Healthcare Associated Infections Declining 27 Standardized Infection Rate [2008 set to 1.0] 1 20% drop 0.8 44% drop 0.6 0.4 2008 2012 0.2 0 Central Line-associated Bloodstream Infections Surgical-site Infections for 10 Common Procedures Source: National and State Healthcare Associated Infections: Progress Report, Centers for Disease Control and Prevention, March 2014.

Medicare Hospital Readmissions Declining 28 20% 19% 18% Monthly Rate Trendline 17% 2007 2008 2009 2010 2011 2012 2013 Note: Medicare 30-Day, All-Condition Hospital Readmission Rates January 2007 - May 2013 Source: CMS.

Rate of Uninsured Falls to Lowest Level of Obama s Presidency 29 Source: Gallup-Healthways Wellbeing Index.

30 Spending Growth Rate Has Slowed in Recent Years Percent 7 6 5 4 3 2 1 NHE per capita spending growth 0 2005 2006 2007 2008 2009 2010 2011 2012 Source: Martin AB, Hartman M, Whittle L, Catlin A; National Health Expenditure Accounts Team. National health spending in 2012: rate of health spending growth remained low for the fourth consecutive year. Health Aff (Millwood). 2014 Jan;33(1):67-77.

Is This the Dawn of a New Day? 31

32 Costs Began Picking Up at the End of 2013 Year-Over-Year Growth Rates in NHE Source: Insights from Monthly National Health Expenditures Estimates through February 2014, Altarum Institute, April 8, 2014.

U.S. Health Spending is Larger Than the GDP of Most Nations 33 Notes: Data from 2011, adjusted for differences in cost of living Source: D. Blumenthal and R. Osborn, In Pursuit of Better Care at Lower Costs: The Value of Cross-National Learning, (New York: The Commonwealth Fund Blog, April 2013).

Looking Back: What We Could Have Saved if We Had Matched the Next Highest Country (Switzerland) 34 Increase spending on public health by 20,000% Note: Per capita spending amounts adjusted for differences in cost of living, total U.S. savings adjusted for inflation. Source: D. Squires, The Road Not Taken: The Cost of 30 Years of Unsustainable Health Spending Growth in the United States, (New York: The Commonwealth Fund Blog, March 2013).

Commonwealth Fund Mission 35 The Commonwealth Fund among the first private foundations started by a woman philanthropist, Anna M. Harkness was established in 1918 with the broad charge to enhance the common good. The mission of The Commonwealth Fund is to promote a highperforming health care system that achieves better access, improved quality, and greater efficiency, particularly for society's most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults.

36 Commonwealth Fund Agenda: A Fuller View New Strategic Direction Program Priorities Health Care Coverage and Access Health Care Delivery System Reform International Health Policy and Practice Innovations Breakthrough Health Care Opportunities Special Initiatives Medicare and Cost Control Tracking Health System Performance Engaging Federal and State Policymakers

Health Care Coverage and Access 37 Track the insurance provisions of the Affordable Care Act and their effects on coverage, premiums, out-of-pocket costs, and access to care. Highlight successes and lessons from states experiences with implementation. Evaluate the costs and benefits of proposed policy changes and new regulations.

Delivery System Reform 38 Focus on creating high performance health systems for 2 target populations: High need high cost Vulnerable (low income, racial/ethnic minorities)

Health Care Costs Concentrated in Sick Few Sickest 10 Percent Account for 65 Percent of Expenses 39 1% 5% 10% Distribution of health expenditures for the U.S. population, by magnitude of expenditure, 2009 22% Annual mean expenditure $90,061 50% $40,682 50% 65% $26,767 97% $7,978 Source: Agency for Healthcare Research and Quality analysis of 2009 Medical Expenditure Panel Survey.

Models of Care for Serving High Cost Patients 40 On Lok Lifeways' PACE (Program of All-inclusive Care for the Elderly) Participants have access to medical care, social activities, exercise and meals at On Lok Lifeways centers Commonwealth Care Alliance Offers a full spectrum of medical and social services for older people and the physically and mentally disabled Bridges to Health Model Divides the U.S. population into eight groups and offers a series of population-focused priorities Promoting Integrated Care for Dual Eligibles Expands the capacity and scalability of existing wellperforming integrated managed care plans that serve dual eligibles

41 Vulnerable Populations Mongan Minority Health Policy Fellowship Training minority health professionals to be health system leaders. Targeted studies on issues critical to health system performance for minority populations. FQHCs and their payment systems. Integrating social and physical determinants of health. Caring for dual eligible populations

International 42 Pursue transferable international models/insights into health care delivery. Identify key partners. Identify at least one frugal innovation worthy of intensive study for transferability. Maintain and capitalize more fully on our international network of more than 200 Harkness Fellows. Potential eyes and ears for effort to develop and implement transferable lessons. Continue cross-national benchmarking of national health system performance.

Breakthrough Opportunities 43 Definition: 20% improvement in quality or 20% cost reduction over 10 year span. Develop a surveillance process for breakthrough opportunities. Assess the promise of the three exploratory BO candidates. IT enabled consumer engagement. Wiring the U.S. health system. Frugal innovation.

Cost Control 44 New Council of Economic Advisors Harnessing existing databases to develop new insights into underlying dynamics of health care cost escalation. Turn new understanding into policy-relevant reports and recommendations.

Scorecards 45 Use scorecards to increase awareness among policy-makers, providers and public of gaps in health system performance. Use scorecards to track ACA effects.

46 Outreach/Federal/State Bipartisan congressional staff and member retreats. Congressional briefings. Executive branch communication. Work with National Governors Association, National Association of Medicaid Directors, and National Conference of State Legislatures.

Question and Answer 47