State of South Carolina Employee Health Plan Initiatives to Promote Quality of Care

1. State of South Carolina Employee Health Plan Initiatives to Promote Quality of Care Academy Health SCI National Meeting Minneapolis, MN August 5, 2010 Rob Tester Former director (1992-2010), SC State Health Plan rob.tester.10@gmail.com

2. State Employee Insurance in South Carolina • PPO model self-insured health plan available to state employees, school employees and local government employees; membership including active employees, retirees, and dependents currently numbers around 395,000 • Three claims payers: BCBS of SC (medical); Medco (pharmacy); APS Healthcare (behavioral) • Disease management program within medical plan • Direct contracting with hospitals and physicians; network administration through BCBS of SC 2

3. Evidence-Based Medicine Program • SC adds evidence-based claims monitoring program • Care gaps continue to occur despite existing programs • Quality of care improvement initiative • Savings associated with improvement in guideline adherence • Equal programming for both active and retired employees • Including Medicare primary and non-Medicare primary • Provider-focused program • RFP issued to administer the program and awarded to ActiveHealth Management. The State of South Carolina program began in February 2006 • ActiveHealth Management provides treatment recommendations according to best practice guidelines • ActiveHealth program also in South Carolina through BCBS and covers over 200,000 member lives • Mission is to prevent adverse clinical events by leveraging evidence-based clinical information, innovative technology and targeted communications

4. The State of South Carolina Program • Aggregate claims data and patient-centric records • Analyze patient records through a clinical rules engine with thousands of clinical algorithms • The clinical rules engine is called CareEngine® System and it identifies gaps between treatment and evidence-based recommendations • Recommendations identified by CareEngine are then sent out to physicians

5. The State of South Carolina Program CareEngine was developed by physicians for physicians CareEngine is maintained by a staff of 21 full-time clinicians Recommendations identified by CareEngine are called Care Considerations Care Considerations help physicians to: See aggregated patient history Understand treatment delivered by other physicians Benefit from updated studies published in medical journals Prevent clinical adverse events

6. Program Implementation • Review of Care Consideration library • Over 800 messages activated • Establish data feeds • Four ongoing data feeds • Five years of historical data • Schedule of implementation meetings • Weekly meetings • Provider Awareness Campaign • Partner with medical plan to meet with high volume providers • Meeting with the Hospital Association and Medical Leadership Council • Development of provider-directed informative documents delivered via mail and on request

7. Program Results Example of a Care Consideration/Case Study 58 year old female with a history of diabetes and hyperlipidemia CareEngine received claims indicating diagnosis of both conditions CareEngine received claims for the prescription medications Zocor, Avandia, and Metformin ActiveHealth Care Consideration #79 fired “Absence of an ACE inhibitor in patients with a history of diabetes and hyperlipidemia” The following was communicated to the doctor on 2/8/2006: Your patient is 55 years of age or older, has claims evidence for diabetes, an additional coronary artery disease (CAD) risk factor (e.g., history of CAD, dyslipidemia, microalbuminuria) and has no claims evidence for an ACE inhibitor. The American Diabetes Association recommends an ACE inhibitor in these patients, with or without hypertension, to reduce the risk of cardiovascular events. If your patient fits this clinical profile, and if not already done or contraindicated, consider starting an ACE inhibitor and titrating the dosage as tolerated. CareEngine received claims indicating that Enalapril 5mg. (ACE inhibitor) was added to the patient’s drug regimen on 3/3/2006

8. Health Economic Model: Stroke *Costs of treatment in the model are for illustration. CONFIDENTIAL- May not be copied, reprinted or redistributed without prior written approval.

9. Initial Program Results Program inception through Q’3 2007 Care Considerations generated: 167,317 Severity 1 and 2* – 162,057 Medicare 17% of total population 49% of all Care Considerations The State Program began with five years of historical medical and Rx claims. As a result, CareEngine was able to identify 30,415 potential gaps in care during the first month of production. Health Economic Model savings 2007 (the projected dollars saved as a result of providers implementing Care Considerations) $16.45 Per Member Per Month (systemwide savings: Medicare, Plan, patient liability) Approximate actual Plan savings during this period = $7.86 PEPM (1.75% of claims expense) * Severity 1: Clinically urgent, Severity 2: Clinically important

10. Subsequent Program Results: 2008, 2009 Care Considerations delivered thru Q3 2008 totaled 71,228 67,021 were Severity Level 1 and 2 Care Considerations HEM savings for this period $8.07 PMPM Care Considerations delivered thru Q3 2009 totaled 85,720 73,004 were Severity Level 1 and 2 Care Considerations HEM Savings for this period $7.52 PMPM Overall Care Consideration compliance has increased through 2008; declined somewhat in 2009 with release of additional Severity 3 Care Considerations 2006: 21% 2007: 28% 2008: 40% 2009: 32% Highest Care Consideration compliance categories: Condition screening: 33% Stop/modify a drug: 55.8% Condition/drug monitoring: 33% Drug-drug interaction: 69.8%

11. Top Ten Most Effective Care Considerations (with at least 10 issued for a rolling 12 month period)

12. Actual Plan Savings Based on Health Economic Model: 2009

13. Reward-Based Hospital Reimbursement The Plan direct contracts with all general hospitals in South Carolina. Beginning in 2006, the Plan provided an add-on to the general inpatient reimbursement schedule for hospitals that achieved 90th percentile status on a number of National Quality Forum-endorsed measures In the initial year, hospitals that achieved 90th percentile on two of the 10 measures for which at least one year of data was available received an additional 0.25% on their inpatient rates, and an additional 0.25% for each achieved measure over two

14. Reward-Based Hospital Reimbursement Threshold for receiving reward-based reimbursement has increased as data for more measures has become available; number of hospitals achieving reward status has increased as well; in addition, the reward was increased in 2009 from 0.25% to 0.5% : Reward $/ Threshold Reward Qualifiers Inpatient $ 2006 2 of 10 0.25% 6 .07% 2007 4 of 20 0.25% 4 .04% 4 of 20 0.25% 12 .28% 2009 4 of 21 0.5% 20 .74% 2010 5 of 23 0.5% 18 na

15. Reward-Based Hospital Reimbursement Hospitals have reacted positively toward reward-based reimbursement Through reward-based program, hospitals have been able to increase base reimbursement by as much as 4% A new reward-based measure relating to re-admission rates was introduced for 2010; however, no hospitals qualified to receive additional reimbursement based on the re-admission measure for this year