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Seeing is believing*
A sustainable framework for achieving
transparency in the health industries
PwC
Perspectives on transparency
Health industry leaders
Research on P4P transparency
Is transparency having an effect?
Government and other industries
Transparency is important for sustainable health
systems
How would you rate “transparency of quality and pricing information” on its
importance to a sustainable health system?
1 (Not important)
1%
2
2%
3
12%
4
35%
5 (Very important)
50%
Source: HealthCast 2020: Creating a Sustainable Future, PricewaterhouseCoopers Health
Research Institute
PricewaterhouseCoopers
March 2007
Slide 3
Health leaders see three goals for a transparent community
• Information about cost and quality that is trusted by
stakeholders
• Incentives for patients, providers and payers that improve
efficiency and effectiveness of care
• Connectivity to disseminate information through interoperable
health information systems
PricewaterhouseCoopers
March 2007
Slide 4
Compare
Patient
Outcomes
Combine Data
on Treatment
Alternatives
Creating a Transparency
Continuum
Measure
Patient
Compliance
PricewaterhouseCoopers
Assess
Preferred
Treatments
March 2007
Slide 5
1. Information about cost and quality that is
trusted by stakeholders
Tremendous variation exists…
 Physician P4P programs are generally more developed among
commercial plans.
 Nearly 60 indicators of physician performance are being used by the
plans surveyed. Of those 60 indicators, not a single indicator was
used by all 10 plans.
Of the plans surveyed, no two pay providers for performance in the
same way.
Of the plans surveyed, all administer their programs in widely different
ways.
PricewaterhouseCoopers
March 2007
Slide 7
Commercial P4P is expanding

All 10 plans surveyed intend to expand quality monitoring of
providers

Eight are expanding P4P programs
 However, plans say P4P as just tinkering with a payment system that
is fundamentally broken:

Emphasis on sick versus well care

Gaps in coverage

A fragmented delivery system

Rising technology and pharmaceutical costs
PricewaterhouseCoopers
March 2007
Slide 8
Commercial plans are in various stages of evolving
1
2
3
4
5
6
7
8
9
10
Physician P4P program
well established
Hospital P4P program
well established
Consistency across
geography
Organizational
commitment/funding
Administrative ease for
providers
Support/incentives for
HIT solutions
Hospital data
transparent
Rated least developed
PricewaterhouseCoopers
to most developed
Plans shaded are Blues plans
March 2007
Slide 9
Key P4P Attributes Are Still in Development
1
2
3
4
5
6
7
8
9
10
Physician data
transparent
Extent of network
provider participation
Degree of provider
engagement in design
Collaboration with other
organizations
Positive cost results
Positive quality results
Rated least developed
PricewaterhouseCoopers
to most developed
March 2007
Slide 10
Health plans believe that they must tailor their
P4P scorecards for specific needs, leading to
a cornucopia of metrics in the market.
PricewaterhouseCoopers
March 2007
Slide 11
Physician Performance Metrics
1
Automated rating of adherence
to evidence-based practice
Appropriate treatment for upper
respiratory infection
Asthma – appropriate use of
medications
Asthma care (several metrics)
4
•
Cervical cancer screening
Colorectal cancer screening
Childhood immunizations
(several metrics)
•
PricewaterhouseCoopers
3
5
6
7
•
•
•
Breast cancer screening
2
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
8
9
•
•
March 2007
Slide 12
Physician Performance Metrics, continued
1
Well-child visits: 1st, 15 mos., 3
to 6 yrs
Pediatric acute otitis media 1st
line antibiotics use
Appropriate antibiotics use:
various conditions
Adolescent well care visits,
immunizations
Chlamydia screening
2
3
4
5
6
7
8
9
•
•
•
•
•
•
Atrial fibrillation management
(several metrics)
Coronary artery disease
management (several metrics)
PricewaterhouseCoopers
March 2007
Slide 13
Physician Performance Metrics, continued
Diabetes management (several
metrics)
1
2
•
•
Hypertension management (several
metrics)
3
4
5
6
7
•
•
•
•
•
•
Cholesterol management: LDL
control < 130
PricewaterhouseCoopers
9
•
•
Congestive heart failure
management (several metrics)
Cholesterol screening
8
•
•
•
•
•
March 2007
Slide 14
Physician Performance Metrics, continued
1
2
3
4
5
Statin use in members w/ischemic
heart disease
•
Cardiology rate control w/chronic
atrial fibrillation
•
Orthopedics total hip arthroplasty
•
PricewaterhouseCoopers
8
9
•
Appropriate mental health mgmt:
Attention deficient and hyperactivity
disorder follow-up care
Assisting smokers to quit
7
•
Cardiology discharge care with
acute myocardial infarction
Osteoporosis management after
fracture
6
•
•
March 2007
Slide 15
Physician Performance Metrics, continued
1
Quality Infrastructure
NCQA certification: “Physician
Practice Connection”
2
3
5
•
NCQA practitioner specialty
certification
CMS physician voluntary reporting
program
Maintenance of board
certification/ABIM PIM
Quality of Service
•
PricewaterhouseCoopers
7
8
9
•
•
•
•
•
•
•
Emergency room visits per 1,000
members
Practice open
6
•
NCQA e-prescribing
Access to care
4
•
•
•
March 2007
Slide 16
Physician Performance Metrics, continued
Coordination of care
•
•
Doctor-patient interaction
•
•
Rating of primary care physician
•
Rating of specialist
•
•
•
Patient satisfaction
Overall satisfaction (2 items)
•
Satisfaction with access (4 items)
•
Satisfaction with care (6 items)
•
Perceived access (5 items)
•
Preventive services counseling
•
PricewaterhouseCoopers
•
•
March 2007
Slide 17
2. Incentives for patients, providers and payers
that improve efficiency and effectiveness of care
1
Bonus–Annual lump sum or
monthly capitation
Enhanced Fee Schedule–
Standard fees augmented
(1% to 8%)
Public Recognition–
Typically viewed on health
plan website
Premium Network
Designation
Administrative relief–
Support provided for IT,
disease mgmt/case mgmt
resources, exemption from
prior auth requirements
PricewaterhouseCoopers
2
3
4
5
6
7
8
9
10
• • • •
• •
• •
•
• •
• • • • •
•
•
• •
• •
March 2007
Slide 18
3. Connectivity to disseminate information
through interoperable health information systems
Physician use of electronic medical records
23.9%
20.8%
17.3%
2002
17.3%
2003
2004
2005
Source: Center for Disease and Prevention, National Center for Health Statistics,
National Ambulatory Medical Care Survey, 2002-2005
PricewaterhouseCoopers
Long-term
influence
March 2007
Slide 19
A report card on P4P shows mixed performance:
+ Provider involvement
- Lack of standard measures
- Limited collaboration
- Limited evaluation of results
- Limited investment
PricewaterhouseCoopers
March 2007
Slide 20
Is transparency having an effect?
PricewaterhouseCoopers
March 2007
Slide 21
Premium increases have leveled off
Percent increase in private health insurance premiums
18.0%
14.0%
13.9%
12.9%
12.0%
10.9%
11.2%
9.2%
8.5%
8.2%
7.7%
7.7%
5.3%
0.8%
1988 1989 1990 1993 1996 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: The Kaiser Family Foundation and Health Research and Educational Trust for 1988-2006;
PricewaterhouseCoopers Estimate 2007
PricewaterhouseCoopers
March 2007
Slide 22
Health spending growth is tracking GDP growth
The gap between national health expenditures and gross domestic product has narrowed
%
18
16
14
12
10
8
6
4
2
0
GDP
NHE
61 964 967 970 973 976 979 982 985 988 991 994 997 000 003
9
1
1
1
1
1
1
1
1
1
1
1
1
1
2
2
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group
PricewaterhouseCoopers
March 2007
Slide 23
80%
18%
70%
16%
60%
14%
12%
50%
10%
40%
30%
20%
8%
Growth in Rx
Spending
Workers in 3
or More Tiered
Formularies
6%
4%
10%
2%
0%
0%
2000
2001
2002
Covered Workers with 3 or More Tiered Formulary
Sources: Kaiser Family Foundation, National Health Accounts, 2006.
PricewaterhouseCoopers
2003
Presciprtion Drug Expenditures Growth
Percent of Workers
Consumer Cost-Sharing Began Affecting Rx Growth
2004
Prescription Drug Spending
March 2007
Slide 24
The long-term trend on medical costs is downward
Average Annual Percent Change 1970-2005
Medicare:
Private Health Insurance:
25%
8.9%
9.8%
20%
15%
10%
5%
0%
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
Medicare
Medicare Trend Line
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
Private Insurance
Private Insurance Trend Line
Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics
Group
March 2007
PricewaterhouseCoopers
Slide 25
2007 and 2008 Expected Medical Cost Trend
2007
2008
PPOs
11.9%
9.9%
HMO/POS/EPOs
11.8%
9.9%
Consumer-directed
health plans
10.7%
7.4%
•Continued deceleration on the horizon
•Single digit expected increases in trends
PricewaterhouseCoopers
March 2007
Slide 26
Slower spending growth for prescription drugs
16.9%
14.2%
11.2%
14.2%
14.5%
13.9%
11.8%
10.5%
12.1%
12.8%
12.8%
10.9%
9.4%
7.5%
7.9%
7.8%
5.0%
4.5%
4.1%
4.7%
5.8%
6.1%
5.8%
4.8%
19
60
19
80
19
90
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
4.7%
4.5%
5.1%
7.0%
NHE
Rx Drug
Source: National Health Expenditures by Type of Service and Source of Funds: Calendar Years 19602005, Centers for Medicare & Medicaid Services
PricewaterhouseCoopers
Short-term
influence
March 2007
Slide 27
Increased transparency and cost-sharing with
employees
%
80
Percentage of workers: all plan types
70
2006
60
Percentage of workers: all plan types
50
2006
40
Percentage of workers: PPO Plans
2004
2006
30
20
2000
10
2000
0
Rx Cost-sharing tiers
greater than 3
PricewaterhouseCoopers
Co-pays of more than
$20
Deductibles of more
than $500
March 2007
Slide 28
Employers say that information alone isn’t enough
Do you believe that giving employees
more information about healthcare
quality and prices will reduce your
company’s healthcare costs?
90%
80%
70%
60%
50%
• Only a small percentage of
40%
consumers change providers based
on quality rankings
30%
• Information must be paired with
20%
incentives to drive change
10%
0%
2005
2007
Source: PricewaterhouseCoopers Management Barometer Survey
PricewaterhouseCoopers
March 2007
Slide 29
Employers starting to favor penalties
“Our company should require employees who exhibit unhealthy behavior to pay
a larger share of their health benefit costs.”
2005
Yes
48%
2007
No
42%
n/a
10%
Source: PricewaterhouseCoopers Management Barometer Survey
PricewaterhouseCoopers
Yes
62%
No
31%
n/a
7%
March 2007
Slide 30
Other industries have learned important lessons from
transparency
Technology
Financial Services
Benefits:
Accelerated product innovation
Increased knowledge sharing
and openness among
user groups
Elimination of weak players
Benefits:
Increased information about
Financial implications of
debt and credit
Improved price comparisons
More effective decision-making
on investments
Challenges
Integrating large quantities
of data from different systems
Challenges:
Increased competition,
Shorter shelf life for products
PricewaterhouseCoopers
March 2007
Slide 31
Lesson from government on transparency
David Brailer, M.D.,
the first national
coordinator for health
information
technology, says that
some key lessons
from encouraging
health IT adoption can
be applied to
transparency
PricewaterhouseCoopers
• Communicate in a common
language that consumers
understand
• Focus on a minimum number
of important initiatives
• Adopt incentives that drive
patient behavior
March 2007
Slide 32
Conclusions and Recommendations
• P4P allows payers to respond to increasing demands for
transparency and shape their own destiny in a consumeroriented market
 But wide variation in P4P programs mutes their potential
impact
 Ultimately, to have impact, we need an all-payer approach
to P4P
© 2007 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to
PricewaterhouseCoopers LLP (a Delaware limited liability partnership) or, as the context requires, other member
firms of PricewaterhouseCoopers International Ltd., each of which is a separate and independent legal entity.
*connectedthinking is a trademark of PricewaterhouseCoopers LLP.
PwC
For more information
www.pwc.com/hri
www.pwc.com/healthcare
Sandy Lutz
Director
Health Research Institute
[email protected]
PricewaterhouseCoopers
March 2007
Slide 34