includes discussion of the data analytics necessary for value based plan design

1. GETTING TO THE VALUE OF
VALUE BASED PLAN DESIGN
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3. Value Based Plan Design
A Working Definition
 Value based plan design is a modification of
health benefit plan design to reflect the specific
goals of improving the health status and
reducing the risk profile of an employee group.
 Particular focus is given to the diagnoses
represented in the primary cost drivers.
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4. The Key Link: Data
 Data is the only key to truly understanding how to reduce the costs
for a group in the long run.
 Claim data
 Rx data
 Health Risk Appraisal that includes Biometric data
 Wellness program and Disease Management data
 Demographic data
 Staff average tenure and turnover rate

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5. VBPD - One Element
 Other services to complement VBPD:
 Disease Management
 Wellness
 Case Management
 Web Based Personal Health Manager
 On-Site Clinics
 Employer Health Initiatives
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6. What Can We Find Out From
These Data?
 Demographic profile
 Incidence and prevalence of conditions
 Identify primary cost drivers
 Risk score profile for group and by member
 Lifestyle related diagnostic and cost profile
 Patient Rx compliance
 Patient medical “compliance” (MD orders)
 Cost of increasing compliance rates
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7. Age Demographic Data
 31% are over Age 50
Ages Number of
Employees 22%
20-30
31-40
20-30 114 24%
22% 31% 41-50
31-40 104 51-60
41-50 104 7% 61+
25%
51-60 114
61+ 32
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8. Years of Service
 45% of Employees Have 10+ Years of Service
1 year or less 2-5 years 5-10 years
10-20 years > 20 years
25%
31%
45%
18%
14%
12%
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9. At Risk Population
 2% of Population Incurred 31% of Total Claims
 Estimate 39% are At Risk for Severe to Catastrophic
Claims over Next 1-3 Years*
19 or 2%
1200 $3,000,000
$812,243 or
1000 $2,500,000 31%
426 or 39%
Chronic Chronic
800 $2,000,000
At Risk $1,185,767 At Risk
600 $1,500,000 or 45%
640 or 59% Healthy Healthy
400 $1,000,000 $642,438 or
200 $500,000 24%
0 $-
Members by Health Risk Costs by Health Risk
* Based on demographics and claim distribution
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10. Finding Cost Drivers
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11. Finding Cost Drivers
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12. Best Standards of Care
Standards are set by evidence-based sources
American Cancer Society,
American Diabetes Association,
Up To Date
Physician Desk Reference.
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13. Compliance Measurement
 Tracking Compliance by Individual for Diabetes Type I
 Identifies Those Not Obtaining Best Standard of Care
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14. Chronic Disease Compliance Trend
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15. Compliance Rate for Diabetes Type I
Pharmaceutical
As of Date Medical Compliance Measured Members
Compliance
Jan-10 60.01% 83.96% 10
Feb-10 61.68% 84.24% 10
Mar-10 60.27% 84.60% 13
Apr-10 60.27% 84.91% 13
May-10 65.49% 85.94% 14
Jun-10 65.49% 86.54% 14
Jul-10 67.87% 87.41% 14
Aug-10 63.35% 86.97% 15
Sep-10 64.46% 86.45% 15
Oct-10 63.35% 88.09% 15
Nov-10 60.43% 87.41% 16
Dec-10 60.43% 87.33% 16
Jan-11 55.89% 87.97% 17
Average for period 62.2 % 86.29%
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16. Compliance Rates/Month Asthma
Pharmaceutical
As of Date Medical Compliance Measured Members
Compliance
Jan-10 12.93% 52.71% 58
Feb-10 14.12% 53.18% 59
Mar-10 14.17% 54.40% 60
Apr-10 15.64% 56.29% 65
May-10 16.67% 57.69% 66
Jun-10 15.28% 56.08% 72
Jul-10 15.07% 55.05% 73
Aug-10 14.86% 53.96% 74
Sep-10 14.47% 54.26% 76
Oct-10 13.03% 54.20% 78
Nov-10 14.61% 56.01% 81
Dec-10 13.10% 56.39% 84
Jan-11 14.23% 52.82% 89
14.5 % 54.85%
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17. Compliance With Best Standards of Care
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18. Compliance with Preventive Screening
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19. Costs Associated with Life Style Related Diagnoses
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20. How much will this cost?
Standard Measured Current Compliance Wellness
Condition
of Care Members Compliance Goal Investment
American
Diabetes Type I Diabetic 28 70.34% 90.00% $1,741.96
Association
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21. Helping Type I Diabetics come into
Medical Compliance
Standard of Measured Current Compliance Wellness
Condition
Care Members Compliance Goal Investment
American
Diabetes Type I Diabetic 28 70.34% 90.00% $4,041.81
Association
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22. Reduced Severity Levels for Diabetes
 Reduced Illness Severity Reduces Costs
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23. Effect of Differing Rx Benefit Schedules
Base Standard VBID 1 VBID 2 VBID 3
$10/25/40 $0/12.5/30 $0/0/0 $10/10/10
Type 1 Net of copay
PPPM 2008 $127 $158 $207 $169
Virtual Adherence
Patients Compliant 60% 72% 89% 75%
Type 2 Net of Copay
PPPM 2008 $60 $79 $102 $80
Virtual Adherence
Patients Compliant 49% 60% 69% 57%
Source: Milliman modeling of Medstat Commercial 2006
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24. Cost Shifting Consequences
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25. Impact of Cost Shifting
Traditional and typical thinking is to shift costs
to employees
 Indiscriminately increasing deductibles,
co-insurance and/or co-pays will reduce
claims temporarily, but ultimately may
significantly increase costs due to
employees not seeking medical care as
needed.
 One or two large claims can completely
wipe out cost-shifting savings.
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26. The Long Term Cost of Fully Compliant versus
Non- Compliant Patients – Diabetes Type II
The least compliant diabetes patients were more than twice as likely
to be hospitalized compared to those who were most compliant
For diabetes, every additional dollar spent on medication saved
$7 in medical costs. (ROI 1:7)
The combined drug and medical costs for the most-compliant diabetes
patients average $4,570, which is almost 50 percent below the $8,867
cost for the least-compliant group
From the Medco Study on Diabetic Non-Compliance, 2005, Dr. Robert Epstein
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27. Key Design Concepts for VBPD
 Target services known to be of high value without
differentiating among individuals who receive
intervention(eg, flu Shots, tobacco cessation, hospice).
 Target Patients with select clinical diagnoses:
Lower copays for high value services (eg, diabetic
member’s annual eye exams, diabetic prescriptions).
The design may adjust copay by condition severity level
(eg,lower statin co-pay for high risk individuals)
Value Based Insurance Designs for Diabetic Drug Therapy Milliman, Fitch ,Iwasaki and Pyenson 2008
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28. VBPD Myths
 Plans must have at least 5,000 members
 You can not implement VBPD incrementally
 VBPD alone will solve all cost issues
 Members do not like VBPD
 Etc……
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29. Contact Information:
Felicia S. Wilhelm RN
Prairie States Enterprises, Inc.
fwilhelm@prairieontheweb.com
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