MedEncentive: Does it work?

1. MedEncentive: Does it work? Independent studies of the healthcare cost containment capabilities of the MedEncentive Information Therapy Program Jeffrey C. Greene, CEO and Founder MedEncentive, LLC Amy Chesser, PhD, Research Assistant Professor, Department of Preventive Medicine and Public Health, University of Kansas School of Medicine Debbie Hayes, Benefits Consultant, The Loomis Company

2. Celebrating Five Years of Success Examining a groundbreaking solution for controlling health care costs using financial incentives to invoke doctor-patient mutual accountability By Jeff Greene November 2009 Abstract Our nation is in the midst of an important debate on health care. The issues revolve around affordability, accessibility, quality and funding. Of these issues, the one that all experts agree must be resolved for the good of the country is the high cost of healthcare. Supported by years of testing and overwhelming empirical evidence by independent research, the MedEncentive Program has surfaced as a real breakthrough in resolving the issue of healthcare affordability. This report presents the findings from five years of testing and the independent research that validates the Program’s efficacy and its underlining design principles. using incentives to align these stakeholders’ interests to improve both health behaviors and practice patterns. This thought process led to development of what would become a web-based incentive system called MedEncentive. In August 2004, the first installation of the MedEncentive health­care cost containment program was launched with the municipal government in Duncan, Oklahoma. This unique web-based incentive system functioned as designed and the City of Duncan realized significant cost savings in the very first year of installation. Two studies1,2 were published that attributed these Background - From 1997 though 2007, a small group of innovators consisting of practicing physicians, a medical academician, a self-insured business owner, a medical practice management consultant, and a health insurance executive sought to find ways to align the interests of healthcare consumers, providers and insurers. After years of studying the issues, the group concluded that the single most pressing problem in healthcare was affordability. Understanding that the majority of healthcare costs are driven by people’s poor health habits and medical providers’ variable practice patterns, the group focused on Five year retrospective of MedEncentive trials...

3. Academic Review of Five Year Report and the MedEncentive Model • The following slide is a poster developed by a research team at the University of Kansas School of Medicine (KUSM) that summarizes the health literacy findings from MedEncentive’s Five Year Report. This poster was presented in October 2009 at the National Institutes of Health Conference on Health Literacy in Washington, DC. • This poster helped KUSM earn a grant to study some of the MedEncentive trial installations

4. University of Kansas School of Medicine MedEncentive Seven Trial Installations Research Poster Presented at NIH Health Literacy Conference Washington, DC - October 2009

5. MedEncentive®: An Independent Evaluation of a Cost Containment/Information Therapy Tool Amy Chesser, PhD, Research Assistant Professor, Department of Preventive Medicine and Public Health, University of Kansas School of Medicine

6. Agenda • Introductions • Background • Description of Evaluation Methods • Findings • Questions

7. Our independent analysis of the claims data aims to validate the findings of MedEncentive’s Five Year Report... (available online at www.medencentive.com) NOTE: This current study was internally funded by the KU School of Medicine-Wichita Office of Research, with Kansas Bioscience Authority (KBA) support. NOTE: Our other studies have been gratis with a business arrangement with MedEncentive, so that claims records could be merged with identified data.

8. Investigation Team • Research Team • Amy Chesser, PhD; Health Communication • Nikki Woods, PhD(C); Applied Behavioral Science • Douglas Bradham, DrPH; Health Economist • Philip Twumasi-Ankrah, PhD; Biostatistician

9. City of DuncanStudy Background • Background • Description of Site • Description of Evaluation Methods • Findings

10. Economic Case Study of City of Duncan (in south-central Oklahoma) MedEncentive’s original and longest running demonstration 2004-2011 Duncan's population was 22,505 in 2000 census. The City of Duncan enrolled an average of 527health plan members, in study period, 2004-2008.

11. Methods • Study Population • Employees of City of Duncan (and dependents) • Control Population • N/A • Data Sources • Claims data provided by: TPA • Self-reported survey data provided by: MedEncentive • Data Analysis • Participation rate of employees and health plan claimants • Utilization of health services (frequency of visits and costs

12. City of Duncan Employer's Return on Investment on the validated non-catastrophic and total claims MedEncentive's annual ROIs ranged from: $3.1 to $14.5 saved for each $1 invested (e.g., patient/ physician rewards and fees), when claims costs were com-pared against the Bureau of Labor Statistics MCPI inflation for claims. $5.9 to $17.7 saved for each $1 invested (e.g., patient/ physician rewards and fees), when claims costs were com-pared against the Kaiser/HRET inflation for family cover-age premiums.

13. Summary of MedEncentive's Independent Cost Impact Analysis – City of Duncan Note: These are preliminary results. We have further analyses to conduct. Future implementations need to collect objective clinical outcomes, too!

14. Wichita ClinicStudy Background • Wichita Business Coalition on Health Care • MedEncentive Program Developers • Wichita Clinic Intervention • Funding • Research Instruction Opportunity • Findings

15. Wichita Clinic An innovative, patient-centered & multi-specialty model 1947 to 2011 – “The 10 founders of Wichita Clinic were established physicians who changed their lives in mid-career to pioneer a new type of medical practice in Kansas. Their vision began in the early 1940s as these individuals talked in the halls of Wichita hospitals, discussing the prospect of combining their talents, experience and education into a multi-specialty group practice. All 10 physicians pledged that the welfare of the patient needed to come first.“ (Now part of Via Christi Health Systems, an Ascension Health facility…) NOTE: Wichita Clinic’s Employee population would probably be a difficult environment for Ix to make a positive impact, given the number of employees who are clinically knowledgeable.

16. Methods • Study Population • Employees of Wichita Clinic • Control Population • Data prior to implementation of MedEncentive • Data Sources • Baseline data: Claims data provided by: TPA • Intervention data: Claims data provided by: Wichita Clinic • Self-reported survey data provided by MedEncentive • Data Analysis • Participation rate of physicians and health plan claimants • Utilization of health services (frequency of visits and costs)

17. University of Kansas School of Medicine “Does MedEncentive Work?” Presented at North American Primary Care Research Group Seattle, Washington - November 2010

18. Summary of Research Poster In the 2½ years after the Wichita Clinic imple-mented the MedEncentive Program: • Office visits increased 13% • Medication adherence reported at 94% • Hospitalizations decreased 55% Refer to University of Kansas School of Medicine research abstract and poster

19. Summary of MedEncentive's Independent Cost Impact Analysis – Wichita Clinic Note: These are preliminary results. We have further analyses to conduct. Future implementations need to collect objective clinical outcomes, too! * Both per year and per quarter

20. Limitations • Data sources • Duration of the intervention period • Integrated nature of Ix with incentives • Data gathered from self-reported surveys has limited validity • Lack of comparison population • Lack of corroborating clinical data

21. Dissemination - Scientific Conferences • Research Forum at the University of Kansas School of Medicine – Wichita (April 2010; resident oral presentations) • Annual Health Literacy Research Conference (October 2010; faculty poster) • North American Primary Care Research Group Conference (November 2010; resident poster) • Research Forum at the University of Kansas School of Medicine – Wichita (April 2011; faculty oral presentations) • Kansas Academy of Family Physicians (June 2011; resident poster) • American Public Health Association Annual Conference (abstract submitted; research staff presentation) • The Forum 10 and 11 of the Care Continuum Alliance (October 2010 and September 2011)

22. Published Reports of Findings… Information Therapy (Ix) Overview…JPCCH, Nov 2010. Prescribing Information Therapy: Opportunities for Improved Patient – Physician Commn. & Health Literacy… JPCCH, Aug 2011. Employer's Cost of Insurance & Cost of Care - A Case Study… New Methods for estimating Cost of Care with Bayesian Techniques …

23. The Washington Trial The Loomis Company Analysis of MedEncentive at Lourdes Health Network Debbie Hayes, Benefits Consultant, The Loomis Company

24. Wyomissing, Pennsylvania-based award winning insurance services company • Founded in 1955, family-owned and operated • Offices located across the country • Third party administrator for Lourdes Health Network

25. Located in Pasco, Washington • Founded in 1916 • Faith-based hospital system • 1,100 health plan members • Unionized workforce • Escalating healthcare costs prior to adopting the MedEncentive Program in 2008 • An Ascension Health facility

26. Patient and physician participation in MedEncentive increased and hospitalizations decreased

27. Patient and physician participation in MedEncentive increased and hospital days decreased

28. Patient and physician participation in MedEncentive increased and cost per member per year decreased

29. Projected healthcare cost per member per year increased while Lourdes’ actual all-in PMPY costs decreased

30. Total Investment $124,774 Two Year Savingsvs. Projection $1,640,945 Two year savings vs. MedEncentive program investment = 13:1 ROI 1 Data Source: The Loomis Company 1 Projected values based on average of Kaiser HRET Employer Survey, Segal Health Trend, and U.S. Bureau of Labor MCPI

31. Why is MedEncentive so effective? Examining the behavioral science and empirical data to explain why this solution works... Jeffrey C. Greene, CEO and Founder MedEncentive, LLC Amy Chesser, PhD, Research Assistant Professor, Department of Preventive Medicine and Public Health, University of Kansas School of Medicine

32. Patient to Clinician: I demonstrate to you I understand how to self-manage my condition/ health, as you pre-scribed; declare my adherence to the recommendations; and agree to allow you to confirm my adherence and knowledge and vice versa. Clinician to Patient: I declare to you my adher-ence or reason for non-adherence to EBM guide-lines; prescribe Ix to you; and agree to allow you to confirm my adherence and vice versa. Patients Clinicians Insurer to Patient: By using the program and agreeing to allow your physician to confirm your adherence/ knowledge, and vice versa, you earn a financial incentive. Mutual Accountability through Triangulation Insurer to Clinician: By using the program and agreeing to al-low your patient to confirm your adherence or reason for non-adherence, and vice versa, you earn additional compensation. Patient to Insurer: I agree to allow my physician to confirm my health literacy and declaration of adherence to recom-mended treatments and healthy behav-iors, and vice versa. Insurers & Employers Clinician to Insurer: I agree to allow my patient to confirm my adherence or concur with my reason for non-adher-ence and vice versa. The MedEncentive Model

33. What Makes MedEncentive So Effective? The process of “Declare and Confirm” or “Demonstrate and Acknowledge” between doctors and patients invokes powerful behavioral science: Studies show that patients don’t want their doctors to think they are medically illiterate and non-compliant… Conversely, doctors don’t want patients to think they practice sub-standard care… In effect, MedEncentive harnesses the strength of the doctor-patient relationship to create “mutual accountability” that promotes better health and healthcare, which leads to lower costs.

34. What Makes MedEncentive So Effective? Confirmation of MedEncentive’s “doctor-patient mutual accountability” concept As you know, your responses are being made available to your physician. On a scale from 1 to 10, with 10 being the most, how much does the knowledge that your physician has access to your questionnaire responses motivate you to improve your health literacy and health behaviors? 8.7 On a scale from 1 to 10, with 10 being the most, how important is it to you that your doctor is aware that you understand how to self-manage your health? 8.9 On a scale from 1 to 10, with 10 being the most, how important is it to you that your doctor is aware that you are trying to accomplish or are accomplishing health objectives? 9.0

35. “We save money and everyone loves it.” • Clyde Shaw, City Manager, City of Duncan A “Win” for the Employer/Insurer, Consumer and Provider... • “If I hadn’t read my husband’s information therapy about a dangerous side effect of medication, my husband might not be here today.” • Betty E., Duncan, OK Triangulation “MedEncentive is easy and quick to use... I think it serves as a good second opinion for me and provides valuable information to my patients. And to top it off, the program increases my reimbursement and my patients are very motivated to get their co-pays back.“ Todd Clapp, M.D., Internal Medicine and Pediatrics, INTEGRIS Health

36. Why is information therapy so important? Health illiteracy and poor doctor-patient com-munications is a bigger problem than expected…

37. Health literacy drives motivation and empowerment... The World Health Organization defines health literacy as: The cognitive and social skills which determine the motivation and ability of individuals to gain access to, understand, and use information in ways which promote and maintain good health. In other words, if patients are unaware, don’t understand or are confused about treatments or the impact of unhealthy behaviors, then they will be unmotivated and unable to maintain good health. It is apparent that persuading a person to improve their health when they don’t know how or why is just short of impossible. So, health literacy is as much about providing the motivation as it is about empowering the individual with the knowledge and ability.

38. Northwestern and Emory Universities Research Team Medical Literacy Study What You Don't Understand Could Kill YouBy LINDSEY TANNER – CHICAGO - July 23 2007 Plenty of evidence suggests that having trouble understanding medical information is bad for your health. Now new research says it could even be deadly. “Inability to understand medical information and instructions makes it hard to manage chronic illnesses from asthma to diabetes to heart disease,” said lead author Dr. David Baker, chief of general internal medicine at Northwestern University's Feinberg School of Medicine. “That in turn can lead to declining health, frequent hospitalizations and ultimately death, especially in older patients whose health may be more precarious to begin with,” he said. Almost 40 percent of those deemed medically illiterate died during the study, compared with 19 percent of those who were literate. Factoring in health at the outset and other variables, medically illiterate patients were 50 percent more likely to die than the others. The difference in death rates "was much higher than we expected," Baker said.

39. Northwestern and Emory Research Team

40. UCONN Reports on the Cost of Health Illiteracy NEW REPORT ESTIMATES COST OF LOW HEALTH LITERACY BETWEEN $106 - $236 BILLION DOLLARS ANNUALLYExperts discuss if improving health literacy is the solution to providing coverage for the nation’s 47 million uninsured peopleSTORRS, CT– October 10, 2007 – A new report released today from the University of Connecticut states that the cost of low health literacy to the United States economy is in the range of $106 billion to $236 billion annually.  According to the report, Low Health Literacy: Implications for National Health Policy, the savings that could be achieved by improving health literacy translates into enough funds to insure every one of the more than 47 million persons who lacked coverage in the United States in 2006, according to recent Census Bureau estimates.“Health literacy” is defined as the degree to which individuals have the capacity to obtain, process and understand basic health information.  According to the U.S. Department of Education’s 2003 National Assessment of Adult Literacy (NAAL), which contained a health literacy component for the first time, 36 percent of the adult U.S. population – approximately 87 million people – has only Basic or Below Basic health literacy levels.

41. U.S. Department of Health and Human Services says 9 out of 10 of us are afflicted with some degree of health illiteracy... Universal Precautions: A Model for Health Literacy?By Laura LandroWall Street JournalJuly 6, 2010Low health literacy is a growing concern in the U.S.as medical-treatment decisions become more complex,chronic diseases more prevalent and doctors’ face timewith patients more limited, today’s Informed Patient column reports.While poor and minority groups may be disproportionately affected, HHS says the inability to read, understand and use health-care information to make informed decisions is a problem for nearly nine out of ten adults, cutting across all ages, races, incomes and education levels. So the best approach might be to assume that most patients will have difficulty understanding health information, and to present it in the simplest terms.

42. Poor doctor-patient communications… • A battery of studies have determined: • Doctors interrupt patients within the first 23 seconds • 15% of patients fully understand their doctor • 50% of patients comply with doctors’ orders • Causes misdiagnosis, inferior clinical outcomes, malpractice, and higher costs

43. What do the health literacy and doctor-patient communication studies suggest? • Health illiteracy and poor doctor-patient communication: • is a bigger problem than expected • is a leading cause of premature death • is a principal driver of health care cost • should be diagnosed and treated by physicians • Physicians should be compensated for treating health illiteracy • Patients should be rewarded for demonstrating health literacy

44. Results from MedEncentive’s trials... To measure the efficacy of the information therapy delivered through the Program, all patients are required to answer the following question: “On a scale of 1 to 5, how helpful has this information been to you in self-managing your health (5 being most helpful)?” • The aggregate score of the 13,673 responses was 4.07. • In addition, patients are asked to voluntarily comment on the Program. 1,194 patient/members offered comments out of 3,603 patient/member participants (33.1% response rate). The volume and quality of these responses coupled with the aggregate benefit score present a strong case for the clinical and economic efficacy of information therapy.

45. Bending the cost curve it boils down to… Motivating healthcare consumers to improve their health behaviors Motivating healthcare providers to improve their care performance Motivating healthcare purchasers to foster this improvement ...and motivating all three parties to hold each other accountable for doing so...

46. List types of improvement motivators… Health and wellbeing (the absence of pain, disability and unhappiness) Fear Love and compassion Greed Competition Peer pressure Self-image Knowledge and awareness Respect for authority Etc.

47. So which motivators are most effective? All of the above... ...so it follows that the most effective incentive system will trigger the greatest number of motivators with consumers, providers and purchasers, and do it simultaneously

48. Motivational Factors Comparison

49. Motivational Factors Comparison • Commentary • Comparison explains what’s different about MedEncentive and why it’ so effective • Payer-doctor-patient mutual accountability creates an interactive compounding effect • Helps explain why the other incentive methods have failed or will fail to bend the cost curve in a sustained manner

50. Behavioral Economics and Health Psychology • Briefly, behavioral economics examines people’s health and healthcare decision-making in the presence of economic inducements. Health psychology, on the other hand, studies how non-economic factors (biological, psychological, environmental, and cultural factors) are involved in health. • By using modest financial incentives to invoke more powerful psychosocial motivators inherent to the doctor-patient relationship, the MedEncentive tool bridges these two disciplines to generate greater ROI