Cost Benefit Analysis for the Alabama Health Information Exchange Conducted by the Finance Workgroup

1. Cost Benefit Analysis for the Alabama Health Information ExchangeConducted by the Finance Workgroup

2. Introduction The Finance Workgroup was asked to conduct a cost benefit study for the Alabama Health Information Exchange (HIE).

3. Study Data and Methods Used national data when available. Extrapolated to Alabama volumes. Verified utilization assumptions with claims experience.

4. Study Data and Methods • Literature Review • Benefits and Net Value of Health Information Exchange • Expert Contacts • Three existing HIEs • Insurance plans • Medical Cost Management Company • National Studies • Projection of Benefits • Alabama accounts for approximately 1% of the total healthcare spent in America.

5. Study Data and Methods *Source: New Mexico HIE HIE’s Impact: Estimated that only 33% of total costs will be impacted (avoided) by the HIE implementation*. Estimated Adoption Rates • Adoption rates are based on Blue Cross’ experience and other statewide utilization.

6. Broadband Connectivity Maps – Alabama Broadband Initiative

7. Population Distribution Population by Metro Area Total : 4,708,708 Birmingham : 1,212,848 Mobile: 540,258 Huntsville: 406,316 Montgomery: 346,528 Dothan: 137,916 Tuscaloosa: 93,215 Based on the 2009 Census

8. Alabama Insurance Coverage

9. Results Methodology • Alabama accounts for approximately 1% of the total healthcare spent in America. • Claims data was used to reinforce national findings at the state level, including estimated spend and duplication of services.

10. Imaging: PET, MRI, CT Assumptions • Duplication: Repeat scans of the same modality in 30 days = 5% duplication. • Alabama Expenditure: $100 billion (National) x 1% (Alabama estimated) = $1 billion. • With 5% duplication = $50 million. • 20% adoption over 5 years.

11. Imaging The National Spend estimate for imaging is $100 billion .

12. Laboratory • All lab codes • Assumptions: • Duplication: Repeat lab code, for the same customer within a week = 5% • Alabama Expenditure: $51.7 Billion (National) x 1% (Alabama) = $517 Million • With 5% duplication = $25.8 Million • 20% Adoption over 5 years

13. Laboratory The National Spend estimate for imaging is $51.7 billion .

14. ER Assumptions: • 476 ER visits / 1,000 persons in Alabama or 47.7 visits per 100 persons in the south. • Average of 14,436,899 office visits each year in Alabama • NMHIC: HIE can result in the reduction of one ER visit for every 5,000 office visits • Average cost / visit: $1,038

15. Emergency Room Visits

16. Total HIE Benefit for All Payers

17. Compared to National StudiesCenter of Health Information Technology (CITL) Leadership Methodology • Proposes benefits are achieved through connectivity • Shows the division of benefits for each stakeholder • The study also takes into account the costs incurred to reach full connectivity. • A “steady state” is slated to begin in year 11 of an information exchange.

18. CITL – Benefits for Stakeholders $19.058 M $29.268 M $19.739 M Estimations based on the yearly benefits after year 11 once the steady state is achieved. Center for Health Information Technology Leadership, The Value of Healthcare Information Exchange and Interoperability

19. Estimation of Benefits at Five Years Assuming 33% HIE Impact and 20% Adoption Rate Based on CITL percentages and on Finance Workgroup methodology

20. Limitations Difficult to determine the quantitative benefits Conflicting information Operational processes are already in place in some cases Too early to measure impact on quality of care

21. Summary • National data scaled to Alabama • Alabama accounts for approximately 1% of the total healthcare spent in America. • Impact of HIE estimated to be 33% • Adoption rate at 5 years is estimated to be 20%

22. Questions?? Contact AHIE@bcbsal.org