**Driving Change in Health Care: Strategies to Lower Costs**

1. Community Dialogue: Health Care Waste, Overuse, High Costs November 29, 2012

2. Minnesota Health Action Group (formerly Buyers Health Care Action Group) • Resource for all private and public purchasers • Represent interests of those who pay – employers and consumers • Health care, and only health care • Key strategies • Innovation: Driving meaningful change in Minnesota’s health care system • Collaboration: Sharing information, ideas and resources to improve health and health outcomes • Engagement: Engaging and educating employees/consumers in informed decision-making to create more affordable health care

3. IOM Report – The Health Care Imperative: Lowering Cost and Improving Outcomes • $2.5 trillion 2009 U.S. health care spend • $765 billion in estimated waste • 30% of spend • Over the decade from 1999 - 2009 • Salaries have increased by 38% • While health care premiums have increased by 131% • If other prices had grown as quickly as health care costs since 1945: • A dozen eggs would cost $55 • A gallon of milk would cost $48 • A dozen oranges would cost $134

6. IOM Findings Applied to 2010 MN Health Care Spend of $37.7B Recreated from Doug Wood presentation to MN Health Care Reform Taskforce on November 1, 2012

7. Purchasers • Not waiting for delivery system reforms – they are taking action now • E.g., Movement to High Deductible Plans • Biggest year over year increase in CDHP offerings by large employers – 23% (2010) to 32% (2011)1 • 65% of large employers likely to offer by 20161 • Most reasonable strategy to avoid “Cadillac tax” in 2018 • Individual premium of $10,200 • Family premium of $27,500 • E.g., Private Health Insurance Exchanges • Serious consideration of defined contribution while offering access to a private exchange - 58%2 1 Mercer Presentation to NBCH Health Leadership Council Forum, June, 2012 2 HR Policy Association CHRO Survey Results Presentation to NBCH Health Leadership Council Forum, June, 2012

8. Purchasers • Changes in contracting • E.g., Walmart Announcement October 2012 • Expanded concept of Centers of Excellence beyond organ transplants to surgeries • Heart: Cleveland Clinic, Geisinger, Scott & White, Virginia Mason • Spine: Mercy Hospital Springfield, Scott & White, Virginia Mason • Employee Incentive: No out of pocket cost at all, plus travel, lodging, and food for patient and a caregiver • E.g., Reference Pricing • Reasonable alternative to high-cost providers while not compromising quality • Standard price for a drug, procedure, service or bundle of services set by purchaser • Employee pays any allowed charges beyond standard price, in addition to deductible, coinsurance, etc.

9. Minnesota Health Action Group – Initiatives to Address Waste and Overuse • Minnesota Bridges to Excellence (MNBTE) • Implemented in 2006 • P4P for chronic care – diabetes, vascular disease, depression • Rewards funded by eleven private and public purchasers • Expanded focus introduced in 2011 • Improving the efficiency and quality of care for high cost conditions • Reduction of overuse and waste; outcomes measurement • Systems of Excellence – identifying the “best of the best” • First for back pain and surgery • Other conditions of purchaser interest: knees and hips; maternity care; cancer

10. Minnesota Health Action Group – Initiatives to Address Waste and Overuse • Increased price and quality transparency • Consumers need access to information that is actionable • Measure and report on price, cost and quality • Increase awareness of provider differences • Support Catalyst for Payment Reform (CPR) Statement on Price and Quality Transparency in Health Care released early November • Expectation by 2014 • Providers remove any restrictions on health plans from making price and quality information available for use in transparency tools • Health plans allow self-insured customers full use of own claims data including giving it to a third-party vendor to develop transparency tools

11. Minnesota Health Action Group – Initiatives to Address Waste and Overuse • Choosing Wisely • ABIM Foundation initiative; focus on specific tests/procedures commonly used but not always necessary • Nine specialty societies each identified lists of “Five Things Physicians and Patients Should Question”; additional societies in February 2013 • Supported by Consumer Reports and multiple consumer-oriented organizations and coalitions • Official Consumer Reports partner in Minnesota; Community Dialogue in March 2013 • Total Cost of Care Contracts • Purchasers supportive, but • Concern that shift from FFS to Shared Savings and Risk is too slow • Will “savings” accrue to people who write the checks for health care – purchasers and consumers