Update from The Pond

1. Update from The Pond Founded By The Business Roundtable with Support From the Robert Wood Johnson Foundation Greg Belden, Senior Program Associate gbelden@leapfroggroup.org June 18, 2004

2. Populating the Pond Leapfrog represents.. • More than 155 large health care purchasers • More than 34 million Americans • More than $62 billion in health care expenditures

3. Ford Motor Company Gateway Purchasers for Health General Electric Company General Mills, Inc. General Motors Corporation Georgia Health Care Leadership Council Georgia-Pacific Corporation GlaxoSmithKline Greater Milwaukee Business Group on Health and the Health Care Network of Wisconsin Hampton Roads Health Coalition Hannaford Bros. Co. Healthcare21 Business Coalition HealthPartners HealthPlus of Michigan The Health Action Council of Northeast Ohio Health Alliance Plan (HAP) Health Care Payers Coalition of New Jersey Health Language Health Net Inc. Horizon Blue Cross Blue Shield of New Jersey Honeywell Inc. HCA - Hospital Corporation of America HIP Health Plan of New York Indiana Employers Quality Health Alliance International Association of Machinists and Aerospace Workers IBM IDX Systems Corporation International Paper Company JSA Healthcare Medical Group Johnson Controls, Inc. Johnson County Jostens Kellogg Company The KNW Group LG&E Energy Corporation LTV Steel Company Land O’ Lakes Lockheed Martin Corporation Lucent Technologies M-Care, Inc. MDanywhere Technologies Inc. MVP Health Care MaineHealth Maine Health Management Coalition Maine Municipal Employees Health Trust Maine State Employee Health Commission Marriott International, Inc. Massachusetts Healthcare Purchaser Group McKesson Corporation The Mead Corporation Merck & Co., Inc. Meridian Automotive Systems, Inc. Microsoft Corporation Midwest Business Group on Health Minnesota Life Minnesota Mining & Manufacturing Company (3M) Misys Hospital Systems Monsanto Company Motorola, Inc. National Education Association AT&T Aetna Inc. Allscripts Healthcare Solutions American Century Services Corporation American Federation of Teachers American Medical Systems American Re-Insurance Company AmerisourceBergen Corporation ArvinMeritor, Inc. AstraZeneca The Auto Club Group Aventis Pharmaceuticals Inc. Barry-Wehmiller Group, Inc. Bath Iron Works Corporation Becton, Dickinson and Company (BD) Bemis Company, Inc. Bethlehem Steel Corporation Board of Pensions of the Presbyterian Church (U.S.A.) The Boeing Company Brown Shoes Buyers Health Care Action Group Cargill, Inc. Carlson Companies Caterpillar Inc. Ceridian Corporation Cerner Corporation Charter Communications Chicago Business Group on Health CIGNA Corporation CITIGROUP INC. Cleveland State University Colorado Business Group on Health Comerica The Commonwealth of Massachusetts Group Insurance Commission Coors Brewing Company Cummins Inc. DaimlerChrysler Corporation Dallas-Fort Worth Business Group on Health Delta Airlines, Inc. The Department of Employee Trust Funds and State of Wisconsin Group Insurance Board The Doe Run Company The Dow Chemical Company Eastman Kodak Company Eclipsys Corporation Electronic Data Systems Eli Lilly and Company Empire Blue Cross and Blue Shield Employer Health Care Alliance Cooperative (The Alliance) Employers’ Health Coalition ESCO Technologies, Inc. Excellus Inc. Exxon Mobil Corporation FedEx Corporation Fidelity Investments Fisher Scientific International Flint Ink Fleet Boston Financial National Rural Electric Cooperative Association Nevada Health Care Coalition New Jersey State Health Benefits Program New York Business Group on Health North Carolina Business Group o Health, Inc. North Carolina Teachers’ and State Employees’ Comprehensive Major Medical Plan Northwest Airlines, Inc. Olin Corporation, Brass & Winchester Divisions Oxford Health Plans, Inc. Pacific Business Group on Health Pediatrix Medical Group Inc. PepsiCo Pillsbury Company Pitney Bowes Inc. The Procter & Gamble Company Promina Health System, Inc. Quality Systems Inc. Quest Diagnostics Qwest Communications International Inc. Ramsey County Reliant Energy, Incorporated Robert Wood Johnson University Hospital Robert Wood Johnson University Hospital at Hamilton Ryder System, Inc. Savannah Business Group Schering-Plough Corporation Siemens Corporation Solutia, Inc. South Central Michigan Health Alliance Southern California Schools Voluntary Employees Benefits Association Sprint Corporation State of Kansas Division of Personnel Services SUPERVALU INC. TCF Financial Corporation TI Automotive TRW Inc. Target Corporation Tennant Company Textron Inc. Trinity Health Plans Tri-State Business Group on Health Tufts Health Plan Union Pacific Railroad Union Pacific Railroad Employees Health Systems UnitedHealth Group United Parcel Service University of Maine System Verizon Communications WEA Trust Washington Mutual Bank Washington State Health Care Authority Wausau Benefits, Inc. Wells Fargo Wiseman and Associates Financial Services, LTD Xcel Energy Xerox Corporation The U.S. Office of Personnel Management (OPM); Centers for Medicare and Medicaid Services (CMS); the Department of Defense; and Minnesota Departments of Human Services and Employee Relations also participate as liaison members. Leapfrog Members to Date

4. Why Isn’t Quality Better? Insurers Not Letting Provider Value Show Through Providers Not Seeing Case for Reengineering Purchasers Not Buying Right, Toxic Payment System Consumers Not In the Quality Game Gridlock in the Health Care System: Everyone Responsible, No One Accountable New Thinking Needed to “Leapfrog” Gridlock

5. The Silent Calamity • Needless mortality and morbidity • 44,000-98,000 plus deaths each year from medical errors during hospitalizations (IOM, 1999) • 7,000 deaths from medication errors alone • $17-29 million in added costs • Number of avoidable deaths in ambulatory care unknown

6. Preventable Deaths Personalized: The General Motors Example • US Population:250,000,000 • Preventable deaths per year:98,000 • Preventable deaths per 100,000 Americans per year: 39 • GM’s covered lives: 1,250,000 • GM’s preventable deaths • Per year: 488! • Per day:1.3!

7. The Costs of Poor Quality Care • Patients, on average, receive recommended health care only 55 percent of the time (McGlynn et al. 2003) • 30 percent of all direct health care outlays are the result of poor care (misuse, underuse, overuse, and waste) (Juran Institute/MBGH 2003) Employers Fund U. S. Health Care System – The Buck Starts Here

8. How Are Employers Responding to Rising Costs? Source: Hewitt Associates, 2002 Kaiser/HRET Survey, 2003 Less than 15% of employers think these changes will be “very effective”.

9. The Leapfrog Group’s Mission Trigger giant leaps forward in the safety, quality and affordability of health care by:  • Supporting informed health care decisions by those who use and pay for health care   • Promoting high-value health care through incentives and rewards

10. Leapfrog’s Mission and Vision Aligned with IOM Pursuit of Comparative Excellence Measuring both hospital and physician performance across all 6 IOM Health Care Aims • Timeliness • Efficiency • Safety • Effectiveness • Equity • Patient-centeredness

11. Purchasing Principles • Educate and inform enrollees • Compare at the provider level • Reward superior provider value • Patient volume (select/deselect/freeze,consumer incentives, consumer decision support) • Unit price (pay for performance) • Public recognition • Highlight tangible, evidence-based quality and safety practices (‘Leaps’)

12. Criteria for Safety Leaps • What’s the Difference? Leap will produce big improvement in safety • Value Self-Evident: Leap can be appreciated by consumers • Feasible Now: Implementation steps are doable • Easily Ascertainable: Purchaser or health plan can see if Leap is in place • Keep the List Short: Leaps can be remembered

13. Initial Quality and Safety ‘Leap’ Summary • An Rx for Rx • Computer Physician Order Entry (CPOE) • Up to 8 in 10 serious drug errors prevented • Sick People Need Special Care • ICU Daytime Staffing with CCM Trained M.D. live or via tele-monitoring, or risk-adjusted outcomes comparison • 29% mortality reduction (JAMA, 11/02) • The Best of the Best • Evidence-based Hospital Referral (EHR) or risk-adjusted outcomes comparison • > 30% mortality reduction for 7 complex treatments • New! Overall Safety (See Appendix) • Rolled-up score of the remaining 27 of the 30 NQF Safe Practices (CPOE, IPS and EHR are the other 3 of the 30 NQF Safe Practices)

14. What We Stand to Gain from Initial 3 Leaps Alone? Annual Gain Projected by Dartmouth: •  560,000-907,000 serious medication errors •  61,700 deaths •  61,700 X 5 disabilities • Potential savings $9.7 billion / year (if fully implemented in U.S. urban hospitals)

15. Leap Refinement –Creating More Sophisticated Measures • CPOE: Online evaluation tool developed by First Consulting Group • ICU Staffing: Joint project with JCAHO to develop risk-adjustment methodologies and reporting program; e-ICU (telemedicine) now applicable • Evidence Based Hospital Referral: Seeking additional sources for outcomes reporting

16. Our Approach to Measure Development & Implementation • Collaborate with measure developers • CMS, AHA, AHRQ, NCQA, JCAHO, others • Seek consensus on breadth and content of measurement set • Advance measures through NQF for consensus approval • Develop rapid implementation strategy with key partners

17. Leapfrog Leaps, Today and Tomorrow Today: Hospitals • CPOE, IPS, EHR, NQF Safe Practices Tomorrow: Hospitals and Physician Offices • Physician Office Clinical Decision Support (See Appendix) • Initial development coordinated with HHS, awaiting outcome of HHS-led push toward nationwide EMR implementation • Minimum standards: E-prescribing, E-lab results management, and E-care reminders • Already in practice- CMS DOQ-IT, Bridges to Excellence Physician Office Link

18. Leapfrog’s Position on EMRs • Leapfrog supports the promotion and use of electronic data to protect patient safety and quality and recommends that hospitals implement CPOE systems. • An effective CPOE system rests on a broad array of patient information and an electronic medical record is one of the first steps to achieving this.

19. How Leapfrog Happens: Leaping in Unison Purchasers Consumers Health Plans (MD Leadership & Governance) Health Care Delivery System (hospitals, physicians, nurses pharmacy...)

20. Leapfrog’s Regional Roll-Outs Leapfrog is a national movement using targeted regions (Regional Roll-Outs) to develop best practices, creating early successes and learning from all stakeholders. *23 Regional Roll-Out areas reach 50% of Americans. • Regions must have: • Effective leadership • Competitive health care market • High concentration of Leapfrog lives *LF Regions in Green w/ exception of NV and NC

21. First Wave: Second Wave: Third Wave: Fourth Wave: • Maine • Illinois • Hampton Roads, VA • Northern NV • *Raleigh/Durham/ Chapel Hill, NC • California • Seattle/Everett/ Tacoma • St. Louis • Michigan • East Tennessee • Minnesota • Atlanta • Dallas/Fort Worth • Colorado • Kansas City • Wisconsin • Savannah • Metro NY & Western CT • Rochester NY • Massachusetts • New Jersey • Central Florida • Memphis • Wichita 23 Roll-Out Regions *On Hold for 2004

22. Collecting Hospital Level Data Hospital survey available via The MEDSTAT Group • Ongoing voluntary Web survey • Outreach to hospitals in 23 Roll-Out areas to date, but nationally available • Survey captures hospitals on the path • Data publicly reported, format based on feedback from consumers and hospitals (survey and results: www.leapfroggroup.org

23. Leap Applicability to Urban/Rural Hospitals 2001-2003- Leaps Apply to Only Urban Hospitals • Areas where consumers have a choice of hospitals • Do not want to raise public expectation that rural hospitals should prioritize the leaps 2004 and Beyond- Leaps Apply to Urban and Rural • 4th Leap (NQF Safe Practices) applies to Rural Hospitals • Rural task force working to apply initial 3 leaps to rural hospitals

24. Hospitals Are Reporting from All Over the Country VT MT SD WY RI NM No Participation Participation inRoll-Out Regions Participation inNon Roll-Out Regions

25. Progress 2nd Quarter 2004 (cont’d)Hospital Survey Results - Regions

26. Hospital Survey Results – Regions CPOE • Final Version 2.0 • 5% (34) of the responding hospitals have fully implemented CPOE - another 17% (118) will implement by 2005 • Final Version 1.0 • 5% of the responding hospitals had fully implemented CPOE - another 22% said would implement by 2005

27. Hospital Survey Results – Regions IPS • Final Version 2.0 • 24% of responding hospitals have fully implemented IPS • Final Version 1.0 • 21% of responding hospitals had fully implemented IPS - another 15% said would implement by 2004

28. Hospital Survey Results – Regions (cont.) EHR % of responding hospitals meeting Leapfrog’s standard

29. Consumers as Drivers • “Preventable mistakes” are frequent and serious • Provider differences can be significant • Enrollee Communications Toolkit by FACCT(NEW version available)

30. NEJM 12-12-2002 • KFFsurvey results • Leapfrogtoolkit Engage Consumers • Heart

31. HealthGrades Subimo DQ SQC Engage Consumers • Heart • Leapfrog Toolkit • NEJM survey results • Mind • Web Hits

32. Engage Consumers • Heart • FACCT Toolkit • NEJM survey results • Mind • Web Hits • Wallet • Co-pays, co-insurance DRAFT

33. The Leap Over the Gridlock Has Begun • Rapid growth in purchasers signing on to Leapfrog’s approach • Rapid growth in hospitals disclosing status to their communities • Active health plan support • 80% of Americans have access to information for at least one hospital in their community • Massive education of consumers through purchasers • Market reinforcement beginning through different channels

34. Market Reinforcement: “The Multiplier Effect” Inform & Educate Enrollees Multipliers:Health Plan Products Member Support & Activation Improved Value (Quality & Efficiency) Compare Providers Federal & state purchasers Rewarding & Creating Incentives for Quality & Efficiency Other distribution channels & partners

35. Where We are Beginning to Make Progress Transparency • Movement towards standardization of measures • The National Quality Forum • Medicare Modernization Act 2003: IOM to “evaluate leading health care performance measures” Education • Creation of consumer demand for good quality care • 80% of Leapfrog members communicate to their employees about medical errors and 70% about Leapfrog

36. “Putting the Money Where Our Mouth Is- Working Markets Must Reward Quality” • Current reimbursement system does little to encourage quality improvement • 80% of Leapfrog members publicly recognize providers but only 30% are working to reward providers • Optimal Incentive and Reward systems • Pay-for-Performance/Direct Financial Reward (DFR) models • Bonus payments/Financial awards • Volume/Market-share Shift/Direct-to-Consumer (DTC) models • Tiering, Payment differentials

37. Lily Pads: Opportunities to Shape the Movement HEALTH PLANS CLINICIAN INCENTIVES & REWARDS BENEFITS CONSULTANTS REGIONAL LEADERS BOARD & MANAGEMENT COMMITTEE ENROLLEE COMMUNICATIONS LEAPS & MEASURES

38. Paying for Performance (DFR) • Blue Cross Blue Shield of Michigan • Blue Cross of California • Bridges to Excellence • Excellus • Pay for Performance - Integrated Healthcare Association (IHA) • Medi-Cal/Healthy Families - Integrated Healthcare Association (IHA) • Massachusetts Health Quality Partners

39. Bridges to Excellence Physician Office Link Physicians can earn up to $50 per sponsored patient Must pass NCQA office practice performance assessment program http://www.ncqa.org/pol/ IHA Paying for Performance Common measures Clinical quality (40 percent) Patient experience (40 percent) Investment in information technology (20 percent) Each plan comes up with own reward methodology Paying for Performance (DFR)

40. Paying for Performance (DFR) Other Initiatives • Empire Blue Cross, IBM, PepsiCo, Verizon, and Xerox (NY) • Hospitals: 4% bonus if meet Leapfrog’s CPOE and ICU standards • Group Insurance Commission (MA) • Health plans: $25-50K bonus if plans increase admissions to Leapfrog-compliant hospitals • Anthem Blue Cross Blue Shield (NH) • Physicians: $20 per enrollee for group practices that finish in top quartile for quality scores

41. Co-pay/ins differentials PBA fund “COE”-type Benefits (travel, etc.) Provider Ratings Closed Networks Tiered Networks Market-share/Volume Shift (DTC) High Consumer Resistance Low Minimum Maximum Provider Pressure

42. Market-share/Volume Shift (DTC) • Provider Tiering • Pacificare (CA), HealthNet (CA), Blue Shield (CA), Aetna (FL, TX, WA), Patient Choice Health Care (MN, CO, OR, MA) • Co-pay, co-insurance, premium differentials • Hannaford Brothers • $250 co-pay difference for employee going to hospital meeting the volume criteria for 5 of LF’s high risk procedures • General Motors • Adjusts employee premium contribution based on plan’s cost and quality performance

43. Health Plans Using or Planning to Use Leapfrog Criteria in Incentive Programs

44. Purchasers Using or Planning to Use Leapfrog Criteria in Incentive Programs

45. What’s in the Pipeline? AHRQ Incentive and Reward Pilots

46. Market-share/Volume Shift (DTC) Creating Differential Hospital Insurance for Employees – The Boeing Company • Part of collective bargaining agreement with two largest unions • Effective July 1, 2004, union employees and early retirees will obtain 100% coverage after deductible for services provided by a Leapfrog-compliant hospital • Hourly employees hospitalized in facilities that do not meet the Leapfrog safety practices will obtain 95% coverage after deductible • This benefit design will remain in place until July 1, 2006 when a new collective bargaining agreement becomes effective

47. What’s in the Pipeline? • Leapfrog’s E 2 (Effectiveness and Efficiency) Hospital Rewards Program-Piggy-backing on CMS-Premier “Pay-for-Performance” Demo • Actuarial analysis shows win for members • Data collection method already in place • No new measures • Plans can implement quickly for self-insured or fully-insured customers • Can implement nationally or at local level • Can expand to other GPOs/Hospital groups

48. Other Incentives and Rewards Initiatives/Leverage Points • *I&R Toolkit • *I&R Compendium • Health Plan User Groups • *Standard Health Plan Contract Language • *eValue8 Common RFI • *Update of Economic Implications of original three leaps • Malpractice Study * Found on Leapfrog Web site: http://www.leapfroggroup.org

49. Beginning to Leap Over Gridlock but Gaps Still Exist • Transparent Market- nationally standardized measures of quality and efficiency • Market Reinforcement- reward quality and efficiency and better demonstrate business case • Engage Consumers- aware of variation, mechanisms for timely and effective delivery of information, financial incentives • Engage Purchasers- including government- sufficient tools and critical mass • New health plan products

50. APPENDIX