Transcript galvin old
Medicare Prescription Drugs Improvement and Modernization Act of 2003: What Do Employers Think? Robert S. Galvin, MD Medicare Prescription Drug Congress February 26, 2004 What The Bill Isn’t Perfect 2 What The Bill Is “The Triumph Of Experience Over Hope” Apologies to Samuel Johnson • Government Can Act on Health Care • Employers Included in Dialogue • Favors Competitive / Market Approach . . . But With Safety Net • Pushes Transparency / Quality Agenda • Encourages Consumerism . . . Creates Possibility of New Solutions 3 The Devil (And The Angel) Is In The Details • Details of ‘Actuarial Equivalency’ • FASB Guidance • HSA Design • Rules for PBMs and Health Plans Policy Community: “Please Keep Employers Engaged in ’04” 4 Employer Options • Drop Retiree Coverage: Government Safety Net • Take Employer Subsidy • Coordinate With Medicare As Primary 5 Wall Street Journal December 4, 2004 6 Why Is No One Talking About the “U” Word? Cost = Price Price x Use Use / Mix ’99 5 18 ’00 2 16 ’01 5 9 ’02 6 13 ’03 5 8 7 Why Is No One Talking About the “Q” Word? Use = Price Sensitivity x Compliance x Quality (Appropriateness) Risk Days Sigma = 2.75 Defect = 11% Days Where Necessary Therapy Was Lacking <1% Days Where Unneeded Therapy Was Provided 11% Therapy Dispensed 84,000,000 8 What Kind of Risk? Over Utilization • Overuse • Duration • Duplication 56.1% Misuse Under Utilization • Drug-Drug • Drug-Disease 42.6% 1.2% 9 Quality Saves Money Source of Savings (Approx) by Defect 7 Month Results Conflicts Tracked: Changes Made : Change Rate: Cum Reported Savings : Duration 40% Drug Disease 25% Overuse 25% 81,423 29,864 37% Drug Interaction 5% Duplicate Therapy 5% $7.4MM ’03: $10MM Saved ’04: Send Letter to Physician and Patient 10 A Market Approach to Costs “Employers believe that consumer pressure is a powerful, underutilized lever for improving quality and efficiency. They believe that higher quality and lower cost will result if consumers spend more of their own money for services they believe are high quality, and if providers respond by improving their performance. For this strategy to succeed, consumers will have to be activated to seek more efficient, higher quality care and physicians will have to be rewarded for delivering it.” Sounding Board NEJM, September 19, 2002 Transparency Incentives and Rewards Focus on Quality and Efficiency 11 Efficiency and Quality Create Value Effectiveness (Actual v. Expected Complications) Efficiency (Actual v. Expected Cost) 150% 100% 50% 0% -50% -100% -150% 40% Hospital B 20% Hospital A 15 58 0% Hospital 26 C -20% Hospital E 83 Hospital10 D 11 Hospital F 6Hospital G -40% What Policies Will Accelerate Us Getting To The Right Lower Quadrant? 12 National Centers of Excellence: An Example United Resource Network “Traditional Health Plan Experience” “Centers of Excellence Effect” $273,701 $300,000 $250,000 $191,591 31 $200,000 $85,886 $150,000 $100,000 $15,101 $90,604 Less: COE Discount Advantage URN Per Case $50,000 $0 Average Case Charges Average Case Payment Less: Effective Care Savings This material is provided on the recipient's agreement will only that beitused for the purpose of describing Uniprise's cts or services produ to the recipient. Any other use, copying tribution orwithout dis the express written permission ofprohibited. Uniprise is 13