Washington State’s Efforts to Transform Health Care

1. Washington State’s Efforts to Transform Health Care Academy Health/State Coverage Initiatives Annual Meeting August 5, 2010 Richard K. Onizuka, PhD Health Policy Director

2. Governor Gregoire’s strategy : Improve quality in health care 2 • Governor Gregoire’s five point plan to improve health care (2005) • Emphasize evidence based health care • Create more transparency in the health care system • Promote prevention, healthy lifestyles, and healthy choices • Better managed chronic care • Make better use of information technology • Blue Ribbon Commission (2006) • Goals set for 2012 • Four strategies • 16 recommendations • Health reform legislation, 2007 (5930)

3. HCA and State Health Reform Efforts Cabinet level agency purchasing health care for over 400,000 Washingtonians Over 330,000 public employees and retirees State, higher ed, some K-12, some local governments Self insured PPOs and fully insured Plans/MCOs About 70,000 low income in Basic Health Program (BHP) Until budget reduction in 2009, program enrollment around 100,000 Now over 100,000 on wait list Entirely state funded, waiver request for early expansion Key implementation of cross-agency health reform efforts Health Technology Assessment (HTA) Prescription Drug Program (PDP) PDA/SDM and AIM Health Information Technology and Health Information Exchange Health Insurance Partnership Medical homes/payment reform pilot 3

4. The State Budget, Health Care, and National Health Reform 4 • Projected shortfall for 2011-2013 is $3 billion • Total health care spending now about 1/3 of state budget, was about 1/5 in 2005 • Waiver request to sustain BHP, Medical Care Services programs • Executive order to consolidate Medicaid, public employees health purchasing, eventually all state health purchasing, under HCA • Executive implementation of NHR, Joint Legislative Select Committee on Health Reform Implementation • Low income expansion • Health insurance exchange • Health care workforce

5. How a Large Purchaser Can Impact the Market 5 • Must change the delivery system to impact cost and quality • Driving change through purchasing • Must target manageable changes for the long haul (lesson learned from 1993) • Governor targeted key initiatives early and stuck with them • Five point plan, BRC • Focus has endured despite a bad economy and political pressure • This focus has helped other employers, health plans and provider groups to think differently • Working together with private sector • Puget Sound Health Alliance • Multi-payer medical homes payment reform pilot

6. Health Care Quality Defects Occur at Alarming Rates 1 (69%) 2 (31%) 3 (7%) 4 (.6%) 5 (.002%) 6 (.00003%) Sources: modified from C. Buck, GE; Dr. Sam Nussbaum, WellPoint; Premera 2004 Quality Score Card; March of Dimes IRS Phone-in Tax Advice Recommended well-child visits (WA) Treatment of Bronchitis (WA) Breast cancer Screening (WA) Hospital acquired infections Adverse drug events U.S. birth defects Detection & treatment of depression Hospitalized patients injured through negligence Overall Health Care Quality in U.S.(Rand Study 2003) Defects per million Airline baggage handling U.S Airline flight fatalities/ U.S. Industry Best of Class NBA Free-throws ∑ level (% Defects) 6

7. Evidence Based Health Care 7 • Cutting edge programs that have become part of our offerings: • Health Technology Assessment (HTA) • State pays for procedures and medicine that show evidence of efficacy, cost-effectiveness, and safety • Prescription Drug Program (PDP) • Preferred drug list used by PEBB, Medicaid, and workers compensation programs • Drug Purchasing Consortium • Pools state purchasing power for any Washingtonian • Patient decision aid pilot (PDA) • Focus on high-variation, preference-sensitive areas that involve multiple options and tradeoffs, e.g. cardiac disease; breast & prostate cancer • Advanced imaging management (AIM) • Using evidence based guidelines, identify highest cost/utilization advanced diagnostic imaging services for state programs

8. Why Health Technology? Part of an overall strategy Medical technology is a primary driver of cost The development and diffusion of medical technology are primary factors in explaining the persistent difference between health spending and overall economic growth. Some health experts arguing that new medical technology may account for about one-half or more of real long-term spending growth. Kaiser Family Foundation, March 2007: How Changes in Medical Technology Affect Health Care Costs  Medical Technology has quality gaps Medical technology diffusing without evidence of improving quality Highly correlated with misues, overutilization, underutilization. Cathy Schoen, Karen Davis, Sabrina K.H. How, and Stephen C. Schoenbaum, “U.S. Health System Performance: A National Scorecard,” Health Affairs, Web Exclusive (September 20, 2006): w459 8

9. HCA Administrator Selects Technology Nominate, Review, Public Input, Prioritize Vendor Produce Technology Assessment Report Key Questions and Work Plan, Draft, Comments, Finalize Clinical Committee makes Coverage Determination Review report, Public hearing Agencies Implement Decision Implements within current process unless statutory conflict HTA Program Elements Semi-annual 2-8 Months Meet Quarterly 9

10. Technologies selected 17 technologies selected since 2007 3 first year; 5 second year; 8 third year Analysis completed Over 6,000 articles/trials reviewed 15 comprehensive technology assessment reports Coverage Decisions 9 public meetings and 13 decisions, where reliable evidence: 7 show benefit and support coverage for certain situations 5 do not yet show benefit and are not covered 1 shown unsafe or ineffective Estimated $27 million cost avoided Projected Utilization impact: 3 increased; 3 same; 7 decrease HTA Outcomes 10

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13. Prescription Drug Program 13 State preferred drug list • Evidenced based review of drug classes, efficacy and effectiveness • Reviewed by Pharmacy and Therapeutics committee (P&T), at least ten independent clinicians • Recommendations to self funded plan, Medicaid FFS, workers comp Drug purchasing consortium • WA and OR collaboration on publicly purchased PBM contracts • Available to all residents, no fee • Average savings per prescription – 40% or $20 • Average percentage of generics – 88%

14. Other Evidence Based Health Care Programs 14 • Patient Decision Aids/Shared Decision Making (PDA/SDM) • 2007 BRC legislation directed HCA to establish pilots • Did not provide any state funding • Provided “safe harbor” for clinicians • HCA convened community collaborative to seek funding • Two pilots funded by FIMDM • Group Health: live January, 2009, results pending • UW: live January, 2010 • Advanced Imaging Management • 2009 legislation directing HCA to convene workgroup • July, 2009 report on guidelines for direct state purchased health care • January, 2011 report for use with other purchased health care

15. Change is a Journey 15 • Lessons learned • Be transparent • Engage the provider community • Find common values • Make consistent coverage decisions • Make bias free zones • Challenges • Resource intensive • Collaborations involve time and tradeoffs • Cultural change - new decision model (not persuasion, expert opinion, advocacy or political clout) • Often identifies information gaps

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18. Thank you! 18 Additional resources: HTA: http://www.hta.hca.wa.gov/ PDP: http://www.rx.wa.gov/ Discount Card: http://www.rx.wa.gov/discountcard.html AIM: http://www.hta.hca.wa.gov/aim.html PDA/SDM: http://www.informedmedicaldecisions.org/washington_state_legislation.html Joint Select Committee: http://www.leg.wa.gov/jointcommittees/HRI/Pages/default.aspx Governor Gregoire: http://www.governor.wa.gov/priorities/healthcare/reform.asp