Purpose of Today’s Presentation

1. Trends in Healthcare for the 2007 Vision ElementsPublic Employees’ Benefit Board Meeting of the Board of DirectorsTuesday, November 21, 2006

2. Purpose of Today’s Presentation • To present a high level overview of the trends in the PEBB Vision elements over the recent past • To provide feedback and an assessment of PEBB’s plan to accelerate change and improvement in the health of their members and the health care system in Oregon

3. Consensus Has Developed for the Role of the Medical Home Provider • Agreement(1) on the essential elements of the Patient-Centered Medical Home includes • A primary care team of healthcare professionals • Partnership between the primary care team, the patient and the family • Use of a care plan developed with the patient and team • Coordinates care and information across the providers and community organizations • Uses a proactive approach to management of chronic condition care • PEBB is contributing to the growth of the Patient-Centered Medical Home through its carrier initiatives (1) Between the Center for Medical Home Improvement, the Oregon Medical Home Project, The National Quality Forum, the American College of Physicians, the American Academy of Family Physicians, and the American Academy of Pediatrics

4. Evidence-basedCare/Practice Guidelines – Slow Growth Continues - Where Strong Provider Relationships Exist, Growth is Faster • Strong physician leadership among peers is required to obtain buy-in • Cost of roll-out can be prohibitive to implement across multiple settings of care • Guidelines from credible sources abound • OHSU’s Oregon Evidence-based Practice Center (EPC) provides systematic evidence reviews on guidelines related to screening and prevention services – dozens are available • OHSU and Kaiser Permanente’s Center for Health Research are currently working on a dozen more • HHS provides dozens on its website

5. Evidence-based Care – Spread of Other Elements is Starting to Accelerate • Pay for Performance Programs using Evidence-based criteria begins to spread • Premier/CMS Hospital Quality incentive Demonstration Project • First year results in five clinical areas shows significant improvement in quality results • Bridges to Excellence Pay for Performance • Designed to re-engineer physician office practices • Focused on producing better outcomes for patients with diabetes and cardiovascular disease

6. Member Self-Management Efforts Have Been Historically Disease-Specific • Pittsburg Business Group on Health: LivingMyLife program (Diabetes) • The Pittsburgh Business Group on Health (PBGH), an employer-only coalition, has joined with the American Pharmacists Association (APhA) Foundation for the program • Physicians, diabetic educators and pharmacists act as “coaches” to help the diabetic patient to gain knowledge needed to manage their care

7. The Scope of Member Self-Management Efforts is Widening Beyond Clinical Support for a Specific Disease • Pacific Business Group on Health: Breakthrough Strategy • The program includes a variety of strategies in addition to clinical teaching and support such as general health promotion, lifestyle behavioral change, and consumer decision support • HMOs, PPOs and consumer driven models are included and some employ consumer incentives

8. State Agencies Lead Developments in Service Integration • Most efforts are being sponsored by state Departments of Human Services • They combine formal coordination of delivery systems and use a service brokering program in which staff coordinate services for physical or mental health, substance abuse, housing, children’s services, and domestic violence

9. Developments in Infrastructure Make Steady Progress • The federal government takes an affirmative step by Executive Order in August, 2006 • Federal agencies administering insurance directed to improve interoperability of agency information systems dealing with health insurance • Spread of Electronic Medical Records continues despite lack of financial incentives to physicians at the federal level • Gap widens between small and large practices for adoption of EMRs

10. Steady Progress In Infrastructure • Overlap begins to appear between organizations utilizing clinical systems and Health Information Exchanges (“Shared Health”) • Medical and pharmacy claims/encounter data is pulled from two information exchanges backed by business coalitions and fed into a Health Information Exchange made available online to all the physicians contracted to BlueCross BlueShield of Tennessee • Oregon’s Health Information Security and Privacy Collaborative • Is a joint initiative between OHPR and the private sector to identify solutions and an implementation plan to address business practices and state laws that affect privacy and security practices and permit interoperable health information exchange • comment from the group is expected within a year

11. Federal Support of Transparency Develops • The federal government takes initiative by Executive Order • Sharing cost information • CMS posts costs for hospitals for 30 elective procedures as inpatient admissions • CMS will post costs for Ambulatory Surgery Centers, hospital outpatient and physician services next • The federal government will develop measures of quality at the provider and health plan level • Federal agencies were directed to develop approaches that facilitate high quality, efficient care

12. States Accelerate Developments in Transparency • The creation of The Oregon Patient Safety Commission was a turning point • Implemented voluntary and confidential reporting of medical errors in hospitals in 2003 and most Oregon hospitals have joined • Advocates disclosure of the medical error to the patient and family and analysis and process improvement as follow up to the error • Implementation is next for nursing homes and pharmacies • Last month OHPR released the second annual report on death rates in hospitals for selected procedures and medical conditions

13. Purchasers and the States Take the Lead in Developments in Transparency • Health Information Exchanges sponsored by business coalitions of purchasers are proliferating at an almost exponential rate; sharing regional claims based data to report cost and quality information

14. Managing for Quality – “Modest” Progress • The National Healthcare Quality Report concludes improvement in Quality is moving at a “modest” pace • Improvement is variable with some areas of high performance – for example • The 100,000 Lives Campaign efforts to reduce the number of lives lost to medical errors by 100,000 a year include • The development of rapid response team for clinical assessment in hospitals • Significant reduction of medication errors in the inpatient setting • Computerized physician order entry (CPOE) reduces transcription errors • Implementation of CPOE is spreading quickly because the technology is available now to support its use in real time

15. Developments in Managing Quality – Purchasers Prove They Can Drive Change • TheLeapfrogGroup • Regional Roll-Out leaders include local hospitals, health plans, physicians, unions, and consumer groups • The Regional Roll-Outs encourage the implementation of Leapfrog’s four recommended quality and safety practices or ‘leaps’ • Implementation of computer physician order entry (CPOE) systems • Staffing ICUs with intensivists • Referring patients to hospitals with the best results for treating certain high risk conditions • Implementation of The National Quality Forum-endorsed Leapfrog Safe Practices

16. Developments in Managing Quality – Purchasers Prove They Can Drive Change • TheLeapfrogGroup - continued • Western Oregon is one of 28 Roll-Out Regions • 11 out of 57 Oregon hospitals have shared data for public disclosure with TheLeapfrogGroup • Providence Milwaukie and McKenzie-Willamette were the two new members from Oregon in 2006

17. Assessment • The lines between initiatives to achieve the Vision elements are beginning to blur and efforts overlap as change in healthcare and benefit coverage accelerates • PEBB’s plan for Implementation of the Vision is keeping pace with developments in the industry • Aon recommendation is to continue to implement from the individual carrier work plans (matrices) to execute the Vision stretch goals • Consistency in collaboration produces results • The satisfaction of successful achievement is the best motivator for your collaborating partners to participate in future efforts