Practical Approaches to Healthcare Cost Containment

Simon StevensExecutive Vice President, UnitedHealth Group

Chairman, UnitedHealth Center for Health Reform & Modernization

www.UnitedHealthGroup.com/reform

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Where are the costs in US health care?

300M people across

America

Demand

$2.555T

100%

Administration and net cost of private insurance

$0.184T

7%

HospitalCare

Physicians & Clinical

Drugs

Dental

Home Health/ Nursing Home

Etc.

Supply

$2.371T

93%

$800B$800B

$533B$533B

$264B$264B

$177B$177B

$210B$210B

Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19

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Where are the costs in US health care?

300M people across

America

Demand

$2.555T

100%

Administration and net cost of private insurance

$0.184T

7%

HospitalCare

Physicians & Clinical

Drugs

Dental

Home Health/ Nursing Home

Etc.

Supply

$2.371T

93%

$800B$800B

$533B$533B

$264B$264B

$177B$177B

$210B$210B

Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19

4

Where are the costs in US health care?

300M people across

America

Demand

$2.555T

100%

Administration and net cost of private insurance

$0.184T

7%

HospitalCare

Physicians & Clinical

Drugs

Dental

Home Health/ Nursing Home

Etc.

Supply

$2.371T

93%

$800B$800B

$533B$533B

$264B$264B

$177B$177B

$210B$210B

Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19

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Administrative savings: how technology can cut red tape

• Common technology and information standards to ensure interoperability and connectivity

$225 billion

Category 2010-2019 Administrative Savings in National Health Expenditure

Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

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Administrative savings: how technology can cut red tape

• Common technology and information standards to ensure interoperability and connectivity

• Advanced system-wide techniques for payment speed and accuracy

$225 billion

$88 billion (+ $361 billion in medical costs)

Category 2010-2019 Administrative Savings in National Health Expenditure

Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

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Administrative savings: how technology can cut red tape

• Common technology and information standards to ensure interoperability and connectivity

• Advanced system-wide techniques for payment speed and accuracy

• Streamlined provider credentialing, privileging and quality designation processes

$225 billion

$88 billion (+ $361 billion in medical costs)

$19 billion

$332 billion

Category 2010-2019 Administrative Savings in National Health Expenditure

Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

Around 50% of the savings go to hospitals and physicians; 20% directly to government; and 30% to health plans

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Administrative savings: ‘real world’ case studies

Magnetic Identification Cards 30 million UnitedHealthcare swipe cards

in circulation Provides physician with patient’s personal

health record and relevant health alerts Plus verification of coverage and

collection information

“The future is already here – it’s just unevenly distributed” Sci-Fi writer William Gibson

Monthly Health Statements Consolidated monthly like a bank

statement Summary of activity, balances, and

health information Replaces Explanations of Benefits and

other mailings Provided to 20 million membersElectronic Payments Eliminates data entry in doctors office

and delaysSource: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

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Administrative savings: ‘real world’ case studies

Magnetic Identification Cards 30 million UnitedHealthcare swipe cards

in circulation Provides physician with patient’s personal

health record and relevant health alerts Plus verification of coverage and

collection information

“The future is already here – it’s just unevenly distributed” Sci-Fi writer William Gibson

Monthly Health Statements Consolidated monthly like a bank

statement Summary of activity, balances, and

health information Replaces Explanations of Benefits and

other mailings Provided to 20 million membersElectronic Payments Eliminates data entry in doctors office

and delays

Estimated 2010-2019 NHE savings from wide adoption

$18 billion

$14 billion

$109 billionSource: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

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Medical cost savings: ‘real world’ case studies tackling quality and efficiency variation

Examples from employer programs being run by UnitedHealth Group

Performance transparency – identified 100,000 physicians across 20 specialties with higher quality, and costs up to 20% lower

Informing consumers - sharing data to inform their decisions eg UHG Consumer Activation Index

Supporting choices - employers incentivizing use of high quality & efficiency providers eg UHG Premium Networks

Aligned provider payment models - rewarding high quality appropriate care not just volume eg cardiology, oncology, primary care

Supporting patients’ health behaviors eg UnitedHealthcare’s Diabetes Health Plan

ClinicalData

ConsumerData

NetworkData

EligibilityData

Customer/Employer

Data

Product/Benefits Data

PricingData

Enterprise-WideDatabase

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Medicare spending per beneficiary, 2005

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Incentivizing Use of High-Quality Providers

Option 1: Patient Incentives

Option 2: Cancer Support Programs

Option 3: Transplant Solutions Program

Improved Care Management

Option 4: Skilled Nursing Hospital Pre-admission Program

Option 5: Hospital Discharge Re-admission Management

Option 6: Advanced Illness Program

Option 7: CHF Disease Management

Option 8: Gaps in Care Program

Option 9: Integrated Medical Management

Physician Incentives and Information

Option 10: Patient-centered Medical Home

Option 11: Physician Performance Incentives

Option 12: Specialist Data-sharing

Evidence-Based Reimbursement

Option 13: Radiology Benefit Management

Option 14: Radiology Therapy Management

Option 15: Prospective Claims Review

$43 Billion$43 Billion

$59 Billion$59 Billion

$367 Billion$367 Billion

$75 Billion$75 Billion

An estimated $540 billion in Federal savings from proven approachesAn estimated $540 billion in Federal savings from proven approaches

Medical cost savings: ‘real world’ case studies for Medicare

Source: Federal Health Care Cost Containment – How in Practice Can it be Done? Working Paper 1: UnitedHealth Center for Health Reform & Modernization, May 2009

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