Slide 1

Quality and Cost Containment Rational and Focus of the State of Arizona

Slide 2

Statement of Rationale

The State of Arizona plays a key role in quality improvement and overall health care cost containment for its citizens.

Key Factors in Arizona 's Quality Improvement and Cost Containment Focus:

1. The State of Arizona is a key stakeholder in improving health care quality and containing cost for Arizonans.

2. Arizona has significant state budget and program resources invested in the state Medicaid program, SCHIP, state employee health programs.

3. Health care quality and cost have a significant impact on the state's business environment and overall competitiveness.

Slide 3

Arizona's Health Care System Strategic Environment Scan

An environmental assessment by region/state includes the following:

•  Key Attributes

•  Growth

•  Age

•  Health Status

•  Etc.

•  Medical Costs Trends

•  Cost

•  Utilization

•  Drug Trend

•  Etc.

•  Medical Resources

•  Availability

•  Costs

•  Training

•  Regulatory Climate

•  Insurance Mandates

•  Medicare

•  Medicaid

•  Payers

•  Public

•  Private

•  Employers

•  Self

•  Economic Trends

•  Economic Growth

•  Job Creation

•  Employer Sizes

•  Unemployment

•  Etc.

•  Health Care Delivery Systems

•  Stability

•  Availability

•  Practice Patters

•  Level of Integration

•  Environment

•  Living Conditions

•  Community Resources

•  Public Health

•  Local Knowledge

This environmental assessment by region/state flows into the strategic issues addressed:

•  Uninsured

•  Low income & others

•  Uncompensated care

•  Safety net

•  Public health

•  Access to Care

•  Primary care

•  Specialty Care

•  Urgent Care

•  Hospital/ER

•  HCBS

•  Institutional

•  Disease Management/ Chronic Illness Management

•  System Effectiveness

•  Information System

•  Evidence-Based Models

•  Outcomes

•  Acute and LTC Service Needs

•  Networks

•  Infrastructure

•  Financing/Costs

•  Medical Management

•  Case management

•  Models

•  Patient Centered

•  Quality of Care

The strategic issues, plus cost and quality, flow into strategic initiatives:

-Both the public sector and private sector impact communities and individuals.

Slide 4

HEDIS Measurements

Typical System Performance Measures:

•  Effectiveness of Care:

-Childhood immunization status

-Adolescent immunization status

-Treat child with upper respiratory infection

-Test child with pharyngitis

-Breast cancer screening

-Cervical cancer screening

-Chlamydia screening in women

-Controlling high blood pressure

-Beta blocker

-Cholesterol management

-Comprehensive diabetes care

-Appropriate meds for asthmatics

•  Access & Availability

-Adults' access

-Children's access

-Annual dental visits

•  Health Plan Stability

-Practitioner turnover

-Claims timeliness

-Calls

•  Use of Services

-Frequency of prenatal care

-Well-child first 15 months

-Well-child 3-6

-Adolescent wellcare

-Inpatient utilization - general hospital

-Ambulatory care

-Inpatient utilization - non-acute

-Discharge & ALOS - maternity

-C-section rates

-Vaginal birth after c-section

-Births & ALOS - newborns

-Outpatient drug utilization

-Board certification/residency comp

Slide 5

State Scorecard Summary of Health System Performance Across Dimensions

This slide shows each state's rank on access, quality, avoidable hospital use & costs, equity, and healthy lives. The rankings are color-coded to indicate the top quartile, the second quartile, the third quartile, and the fourth quartile.

Overall, the top quartile consists of the following states:

•  Hawaii

•  Iowa

•  New Hampshire

4. Vermont

5. Maine

•  Rhode Island

•  Connecticut

•  Massachusetts

•  Wisconsin

•  South Dakota

•  Minnesota

•  Nebraska

•  North Dakota

The second quartile consists of the following states:

•  Delaware

•  Pennsylvania

•  Michigan

•  Montana

18. Washington

•  Maryland

•  Kansas

•  Wyoming

•  Colorado

23. New York

•  Ohio

•  Utah

The third quartile consists of the following states:

26. Alaska

27. Arizona

28. New Jersey

29. Virginia

30. Idaho

31. North Carolina

32. District of Columbia

33. South Carolina

34. Oregon

35. New Mexico

36. Illinois

37. Missouri

38. Indiana

The fourth quartile consists of the following states;

39. California

40. Tennessee

41. Alabama

42. Georgia

43. Florida

44. West Virginia

45. Kentucky

46. Louisiana

47. Arkansas

48. Texas

49. Mississippi

50. Oklahoma

Source: Commonwealth Fund State Scorecard on Health System Performance, 2007.

Slide 6

Cost and Quality Factors

Think of all factors that need to be managed to maximize value based health system performance

This slide shows a transparent cube indicating the "patient episode of care." Along the length of the cube is the "Cost of Care", and "Quality of Care" runs along the width of the cube.

Inside the cube are the following terms:

•  Co-morbidities

•  Access to care

•  Med mgmt process

•  Compliance

•  Alternative therapies

•  Out of pocket

•  Disease burden/risk

•  Provider type

•  Time parameters

•  Fees and rates

Outside of the cube, at the bottom of the page, reads "Value Performance Transparency."

Slide 7

Managed Care Cost and Quality Management Tools

•  Benefits packages

-Benefit limitations

-Co-pays

-Deductibles

•  Administrative cost controls

-Provider contracting

-Medical Risk Management

-Provider rate setting

-General administrative expenses

-Pay of Performance

•  Clinical management

-Utilization management

-Disease and care management

-Case management of high risk cases

-Quality improvement management

These tools have not driven health system transformation.

Slide 8

Levels of Medical Management Strategies

This slide shows a pyramid of various population segments and their corresponding medical management process.

Patients and Beneficiaries: Medical management processes include health assessments, behavioral modification, and health information and prevention.

Patients: The medical management process includes care management.

Single High Impact Disease Population: Medical management process is disease management

High Disease Burden Population: Medical management process is case management

Slide 9

Managing Health System Transformation in Arizona

1960s-1970s: Fee for Service

•  Fee for Service

-Inpatient focus

-O/P clinic care

-Low reimbursement

-Poor access and quality

-Little oversight

•  No organized networks

•  Focus on paying claims

•  Little Medical Management

1980s-1990s: Managed Care

•  Prepaid healthcare

-More comprehensive benefits

More choice and coverage

•  Contracted network

•  Focus on cost control and preventive care

-Gatekeeper

-Utilization management

-Medical Management

2000+: Integrated Health

•  Patient Care Centered

- Personalized Health Care

-Productive and informed interactions between Patient and Provider

-Cost and Quality Transparency

-Accessible/Affordable Choices

-Aligned Incentives for wellness

•  Integrated networks and community resources

•  Aligned cost management processes

•  Rapid deployment of new knowledge and best practices in quality care

•  Patient and provider interaction

-Information focus

-Aligned care management

-E-health capable

Slide 10

The Vision of the Transformed Patient Care Management Process

This slide is a series of graphics and text boxes. At the top of the page reads, "electronic health record." In the center of the page reads, "productive interactions," with arrows to "informed, activated patient," and "prepared clinical team." On the bottom of page reads, "Clinical and value decision support tools."

Slide 11

Overcoming Barriers to Quality Improvement and Cost Containment

Slide 12

Quality Management & Cost Containment Maturity Model

This slide shows a model of "initial" hitting an infrastructure barrier; "managed' runs into quantitative knowledge barrier, and "optimized" runs into changeable barrier.

Slide 13

Value Driven Cost and Quality Improvement Evolution

At the transactional level, there is utilization review and quality assurance management. Retrospective transactional activities occur. At the managed level, there is quality improvement management and public reporting. Proactive quality and cost management occurs at this level. At the optimizing level, there is value driven decision support management. Predictive modeling and simulation for optimization occurs at this level.

Slide 14

Maturity Barriers

The following list includes infrastructure barriers:

• Information systems do not support medical management data
• Telecommunication technology does not adequately support customer care
• Information systems within network are not linked for transfer of medical information
• Data from various parts of the health care system is not integrated
• Limited web based applications and functionality
• Limited performance and decision support capability

Quantitative Knowledge Barriers include the following:

• Limited medical management organization core competencies and know how
• Quantitative analysis of data is limited and poorly integrated with evidence based medical knowledge
• Data is not timely and integrated with other relevant information
• No formal processes to convert information into useful disease management data
• Decision support systems are limited in capability and not part of executive decision making
• No formal process to improve organizations core competencies

Optimized Health Barriers

• Maintenance of effort is more important than optimizing results
• Future view is limited
• Organization becomes focused on internal processes only
• No systematic organizational maturity plan
• Limited integration of organizational goals
• No continuous and systematic evaluation process

Slide 15

AHCCCS Value Driven Decision Support Environment

This slide is a flow chart. External data/profiles and beneficiary data flow into mega data.

External Data / Profiles includes:

- Population Survey; Performance Benchmarks

-Evidence-Based Medicine

-Public & Specialized Data Sets

Beneficiary Data includes:

-Encounter

-Medical Data

-Population

-Prescription Drug

-Premiums/Cap

-Eligibility Data

-Program Segmentation Analysis

Mega Data includes:

• Management
• Integration
• Profiles
• Translation
• Standards

Mega Data flows into a data warehouse, which flows into Chronic Illness Sub-databases Registries and Decision Support Reporting Uses. These include:

• Medical management
• Fraud detection
• Performance analysis
• Eligibility analysis
• Medical/drug U/R & cost
• Chronic illness sub-databases and registries

Environment includes the following Decision Support Analytics Tools and also flows into Decision Support Reporting Uses:

• Episodes of Care
• Performance Analytics
• Disease Staging

Finally, medical management, fraud detection, performance analysis, eligibility analysis, medical/drug U/R & cost, as well as decision support analytics tools (episodes of care, performance analytics, disease staging) flow into policy and standards development and public reporting.

Slide 16

Aligning Arizona Quality and Cost Containment Strategies between Policy Makers, Payers, Providers, and Patients

Slide 17

MCO Levels of Cost and Care Management Effectiveness

Process: Utilization management

Routine: Traditional UM focusing on prior authorization and concurrent review with standard industry criteria. No onsite UM; no relationship with providers; no assignment of staff to specific providers

Moderate: Assignment of UM staff to each hospital; good relationships with hospital staff and providers.

Highly Effective: "Gold Standard" providers identified for less intensive UM; UM integrated with CM, DM, outreach, and contracting. Optimal use of tended UM data with appropriate benchmark data.

Process: Case Management

Routine: Catastrophic, high cost cases

Moderate: Incorporate CM with contracting department initiatives, focus on cost management; connect with member profiling and provider feedback

Highly Effective: ROI analyses at case and program-wide level

Process: Disease Management / Health Management

Routine: Broad non-specific health management programs and/or the presence of an OB program

Moderate: OB (60% of cases), Asthma, 1-2 additional targeted health management programs based on volume.

Highly Effective: Broad multi-category programs based on epi studies, ROI analyses for all programs. OB program "touches" 80% + cases.

Process: ER and High Utilizers Focus

Routine: No focus specific to ER utilization as evidenced by profiling reports or outreach efforts.

Moderate: Committees/work groups in place to examine opportunities to decrease costs for ER and high cost utilizers; ER utilization trended and monitored frequently; root cause behind rates analyzed; ER and cost triggers for CM with associated outcome measures for C.

Highly Effective: Member and provider profiling, outreach, and noted reduction in costs

Process: Data Analysis

Routine: Broad category UM reporting with little benchmarking and trend analysis

Moderate: Trend analyses by volume, costs, disease categories, member, provider, hospital, geographic issues

Highly Effective: Cost driver reduction analyses using data (inpatient, pharmacy, outpatient, ER, etc) pervasive throughout organization. Risk adjusted methodologies.

Process: Health Promotion and Management

Routine: Broad outreach with blind mailings; no focused DM

Moderate: Outreach and interventions tied to the efforts of the UM, CM programs.

Highly Effective: Predictive modeling (to identify potential high cost members before these cots are incurred), tied to UM, CM, and outreach interventions

Process: Contracting

Routine: Contracting with all providers regardless of cost or quality outcomes

Moderate: Feedback from UM and CM intricately tied to contracting

Highly Effective: Network based on quality improvement and cost reduction; incentives for targeted cost reduction

Process: Profiling

Routine: No profiling

Moderate: Profiling of providers and members for monitoring purposes but with minimal improvement documented in outcomes or cots due to profiling efforts

Highly Effective: Profiling data used for provider and member outreach; Cost savings noted in ROI analyses of outreach interventions; Focused provider network; noted improvement in appropriate utilization results due to member outreach from profiling

Process: Pharmacy Reimbursement Arrangements

Routine: Non-competitive AWP and MAC reimbursement pricing (based on industry standards)

Moderate: Moderately competitive AWP and MAC reimbursement pricing (based on industry standards)

Highly Effective: Aggressive AWP and MAC reimbursement pricing (based on industry standards)

Process: Formulary Structure

Routine: Open formulary

Moderate: Closed formulary

Highly Effective: Closed formulary, 72-hour bridge supply and subsequent physician follow-up

Process: Medication Utilization Management Programs

Routine: Standard concurrent DUR program

Moderate: Standard utilization management programs; Standard Step Therapy; Standard Quantity Limit Lists; Prior Authorization for high cost medications

Highly Effective: Aggressive utilization management programs; Enhanced/Aggressive Step Therapy; Expanded Quantity Limit Lists; Physician Education Programs of Profiling; Targeted Fraud/Abuse Programs (polypharmacy, polyphysician, pharmacy lock-in),

Slide 18

Hypothetical Illustration: Performance by MCO

This slide shows a graph entitled "Performance Index (PI) by MCO)" with an x-axis of MCO and a y-axis of PI. The graph indicates 1.21 PI for MCO1, 0.89 for MC02, and 0.98 for MC03.

Performance Index equals the Expected Paid divided by the Actual Paid and is controlled by ETG Case mix.

Slide 19

MCO Performance Quality and Cost Analysis

•  Assign a score of 0-1-2 or 0-1/2-1 for Routine-Moderate-Highly Effective. Scoring rule depends on the process assessed.

•  Total up the scores for each MCO (adjustment for relative risk across MCOs)

The slide shows the example of a chart that depicts difference MCOs and the number of points they would receive for pharmacy and for medical. The point system indicates 0 for routine medical management, 10 for enhanced medical management, and 20 for highly effective medical management.

Slide 20

The Life of a Care Episode

A "clean period" exists 60 days before the first "anchor" record and 60 days after the last "anchor" record.

First Anchor: You visit your Primary Care Physician for sinusitis. He gives you a prescription and orders blood work. He is concerned that you have a history of sinus infections, so he refers you to an ENT. The PCP visit becomes the first anchor and, because it has been more than 60 days since you have visited him for sinusitis, it begins the episode. The PCP visit, prescription and lab work together form a cluster within the episode.

Second Anchor: You visit the ENT. She orders a sinus X-ray and more blood work. You schedule a follow-up appointment. The ENT visit, X-ray and lab work form another cluster within the same episode.

Third Anchor: You visit the ENT for your follow-up appointment. She tells you that the results of the tests came back negative. She prescribes a preventative medication to help reduce the occurrence of sinusitis. The ENT visit and prescription form another cluster within the same episode.

Conclusion: The medication worked and you have not been back to either doctor within 60 days from you last visit for this illness. Since it has been 60 days since the last anchor record for this illness, the episode is now considered concluded.

Slide 21

Hypothetical Illustration: Provider Cost Performance by Managed Care Organization

The slide shows a scatterplot of performance index (PI) by specialty OB/GYN. Along the x-axis is MCO and along the y-axis is PI. The graph shows the average for each MCO and expected costs.

Performance Index equals the Expected Paid divided by the Actual Paid and is controlled by ETG Case mix.

Slide 22

The Patient and Provider Quality Improvement and Cost Containment Alignment as the Essential Driver of Health System Transformation

The slide shows that productive interactions occur between informed, activated patients and a prepared clinical team.

Slide 23

Individual Patient Episode of Care Life Cycle Tracked Through an EHR

The slide shows predicted costs for chronic sinusitis (without surgery) episode is $950, and the outcome cost is $1020. Two drug therapy cost reduction opportunities occur in the life of a chronic sinusitis episode.

A "clean period" exists 60 days before the first "anchor" record and 60 days after the last "anchor" record.

First Anchor: You visit your Primary Care Physician for sinusitis. He gives you a prescription and orders blood work. He is concerned that you have a history of sinus infections, so he refers you to an ENT. The PCP visit becomes the first anchor and, because it has been more than 60 days since you have visited him for sinusitis, it begins the episode. The PCP visit, prescription and lab work together form a cluster within the episode.

Second Anchor: You visit the ENT. She orders a sinus X-ray and more blood work. You schedule a follow-up appointment. The ENT visit, X-ray and lab work form another cluster within the same episode.

Third Anchor: You visit the ENT for your follow-up appointment. She tells you that the results of the tests came back negative. She prescribes a preventative medication to help reduce the occurrence of sinusitis. The ENT visit and prescription form another cluster within the same episode.

Conclusion: The medication worked and you have not been back to either doctor within 60 days from you last visit for this illness. Since it has been 60 days since the last anchor record for this illness, the episode is now considered concluded.

Slide 24

The slide shows a scatterplot of performance index (PI) by Asthma. Along the x-axis is MCO and along the y-axis is PI. The graph shows the average for each MCO and expected costs.

Performance Index equals the Expected Paid divided by the Actual Paid and is controlled by ETG Case mix.

Slide 25

Tools the State of Arizona Has to Drive Quality Improvement and Cost Containment

Slide 26

State Tools to Improve Health System Quality and Control Cost

The slide shows a venn diagram with three circles. One circle reads, "regulator/licensure." Another circle reads, "standards setting/public reporting." A third circle reads, "Program Contracts and Incentives." Outside of the "Standards Setting/Public Reporting" circle, text reads, "Hospital Network Performance Cost and Quality Information." Outside the "program contracts and incentives" circle, text reads "Medicaid/SCHIP and public employees."

Slide 27

Policy and Programmatic Tools For Driving State Level Health System Transformation

Current State Level Tools for Driving Quality Improvement:

•  Regulation

•  Licensure

•  Public reporting

•  Setting standards

•  Medicaid and SCHIP program contracting

•  Public employee health care contracts

Future Health System Transformation Tools

•  Health information technology and public private e-health initiatives

•  New mega databases

•  New decision support tools for policymakers, payers, providers, and patients/consumers

•  Aligned incentives for patients and providers

Slide 28

The Next Generation of Electronic Health Information Supported Decision Support Tools

•  The next generation of health care decision support applications will be provide payers, MCOs, providers, and patients the tools for value driven decision making.

-Electronic health record will be used to populate the next generation of Health Care Decision Support tools.

-Provide providers and patients with a common point of reference during the care episode that can provide patient care roadmap and a personal Performance Index with both quality and cost information.

- New health care quality and cost simulation tools will provide policy makers, payers, providers, and patients common information and more personalized data.

-New integrated decision support tools will create a whole new dimension of interaction at all levels of the care continuum

-Support consumer directed care and self management

-Provides the opportunity for alignment of patient and provider incentive programs

Slide 29

This slide has a large A on it. Beneath the 'A' reads AHCCCS - Our first care is your healthcare.