Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensee of the Blue Cross and Blue Shield Association.

Decision Analytic Modeling for Wellness and Care Management

Disease Management ColloquiumMay 20, 2008

Richard E. Ward, MD, MBAVice President, Clinical Programs and Medical Informatics

Blue Cross Blue Shield of Michigan

2

BCBSM MembersBCBSM Members

Effective ProvidersEffective Providers

Car

eR

elat

ions

hip

Basics -Medical Policy-Pre-certification-Utilization Review

Michigan

BCBSM Clinical Programs

Support

Wellness & Care Management

3

BlueHealthConnection components

Medicare DM (Health Dialog)

Medicare DM (Health Dialog)

Complex Case Management

(Internal)

Complex Case Management

(Internal)

Hysterectomy for Benign Uterine

Conditions

Hysterectomy for Benign Uterine

Conditions

Health Risk AppraisalHealth Risk Appraisal

DepressionDepression

Personal Health Record +

Dashboard

Personal Health Record +

Dashboard

24-hour Nurse Line24-hour Nurse Line

Complex Case Management (CareGuide)

Complex Case Management (CareGuide)

Medicare Complex Case Management

(CareGuide)

Medicare Complex Case Management

(CareGuide)

Case Management

(Internal)

Case Management

(Internal)

Medicare Case Management (CareGuide)

Medicare Case Management (CareGuide)

Asthma DMAsthma DM

Hip ReplacementHip Replacement

Knee ReplacementKnee Replacement

Lumbar Back Surgery

Lumbar Back Surgery

Acute/Chronic Back Pain

Acute/Chronic Back Pain

Prostatectomy for Benign Prostate

Enlargement

Prostatectomy for Benign Prostate

Enlargement

Audio LibraryAudio Library

Healthwise Self-Help Book

Healthwise Self-Help Book

Living Health MagazineLiving Health Magazine

Chronic Disease Gaps-in-Care Alert

Chronic Disease Gaps-in-Care Alert

Quit-the-NicQuit-the-Nic

Health FairsHealth Fairs

Biometric MeasurementBiometric Measurement

Wellness Incentive Tracking

Wellness Incentive Tracking

Retrospective Claim Review

Retrospective Claim Review

Consultation about worksite initiatives

Consultation about worksite initiatives

Online Health Managers

(Asthma, Arthritis, Pregnancy)

Online Health Managers

(Asthma, Arthritis, Pregnancy)

Prevention RemindersPrevention Reminders

Medication Treatment Mgmt

Medication Treatment Mgmt

Medical Encyclopedia

Medical Encyclopedia

Drug GuideDrug Guide

Drug Interaction Checker

Drug Interaction Checker

Fitness AssessmentFitness Assessment

(Not a complete list)

Walking WorksWalking Works

Worksite Educ ClassesWorksite Educ Classes

Premium Incentive Tracking

Premium Incentive Tracking

Affinity ProgramsAffinity Programs

Subimo Provider Profiles

Subimo Provider Profiles

Screening for Depression

Screening for Depression

COPD DMCOPD DM

CHD DMCHD DM

CAD DMCAD DM

Diabetes DMDiabetes DM

ChronicConditions

ChronicConditionsWellnessWellness Concerns

& Symptoms

Concerns

& SymptomsAcute

Conditions

Acute Conditions

Preference Sensitive

Conditions

Preference Sensitive

Conditions

Complex Catastrophic Conditions

Complex Catastrophic Conditions

Continuum of member needs

4

Outline

• Consultative Tailoring

• Optimization using Decision Analytic Modeling– Steady State Models

– Dynamic “Ramp Up” Models

– Stochastic Models: Monte Carlo Simulation

• Medical Home-based Coaching

• IT Architecture to support mass customization and multi-party process integration

5

Develop a collection of mix and match wellness & care management componentsDevelop a collection of mix and match wellness & care management components

COPDDiseaseMgmt

IHDDisease Mgmt

DiabetesDiseaseMgmt

CHFDiseaseMgmt

Health Risk Appraisal

Smoking Cessation

AsthmaDiseaseMgmt

DepressionDiseaseMgmt

Back Surg Decision Making

Hip Surgery Decision Making

Incentive Tracking

BUCDecisionMaking

Etc.

CHF Disease MgmtPerformance Characteristics

for this configuration

Yr 2 --------PMPM Cost: $0.07Identify% 0.4%Target % 87%Engage % 36%Admits Avoided 206PMPM Savings: $0.58PMPM Net Savings: $0.51ROI: 7.96

Card Revasc Decision Making

Knee Surg Decision Making

End-of-Life Care Coord

RareConditions

Mgmt

SmokingCessation

WorksiteWellnessConsult

Medicare Case Mgmt

Long Term Care Coord

Intervention Intensity

(Parameters vary by component)

High

80%90%

70%Low

Med

EngagementIncentive Level

40 pts30 pts20 pts

CHF Disease Mgmt Configuration Parameters

TargetPenetration

Consultative Tailoring

6

Simplify sales and consulting process by creatingSimplify sales and consulting process by creating““solution templates” for each typical set of customer needssolution templates” for each typical set of customer needs

Simplify sales and consulting process by creatingSimplify sales and consulting process by creating““solution templates” for each typical set of customer needssolution templates” for each typical set of customer needs

Core

Components

Core

Components

HRA

HRA

Chassis

Core

Components

Core

Components

Chassis

ModerateIntensity

Y% ofPopulation

Core

Components

Core

Components

Chassis

HighIntensity

Z% ofPopulation

HealthCoaching

Z%

MaternityX%

BackPainX%

ESRD

Y%

CancerX%

OnsitePrograms

Z%

Targeted Focus

Solution

Targeted Focus

Solution

Robust

Solution

Robust

Solution

Basic

Solution

BasicSolution

LowIntensity

X% ofPopulation

ERManagement

Consultative Tailoring

Low Program CostSolution Template

Max Net SavingsSolution Template

Productivity MaxSolution Template

7

Dedicated wellness & care mgmt

consulting team interacts with

customer and sales team to understand

customer needs

Consultative Tailoring

Consultant identifies solution

template closest to customer’s need

and uses it as basis for making a

proposal to customer

Consultant and sales team interact with customer to

tailor solution to customer

Flexible information technology platform uses business process mgmt / workflow technology to

facilitate efficient delivery of the solution

Enhanced medical informatics

capabilities enable measurement of

activity and outcomes to be

reported to customer

Consultant and sales periodically

interact with customer to provide

reports & to recommend course

corrections

Listen Propose Tailor

DeliverMeasureRevise

8

Wellness & Care Mgmt Analytics

Plausibility of Value as Justification Effect Size -> Power Calcs -> Sample Size

Evidence-based Parameter Assumptions

EVALUATIONRESEARCH

MeasuringOutcomes

Compared toControl Group

DECISIONANALYSIS

ProjectingOutcomes

For AlternativeIntervention

Designs

WhichComesFirst?

9

Decision Analytic Models

Assumptions

Epidemiology ---- ----Effectiveness ---- ----Economic ---- ----Preferences ----- -----

Optimistic Best Pessimistic-------------- ------ ----------------

Calculations Results

10

Role of Predictive Models

Inpatient Admission Rate by Percentile Rank of Risk Score

0

100

200

300

400

500

600

700

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Risk Percentile

Ad

mit

s P

er T

ho

usa

nd

Per

Yea

r

Diabetes

Highest Risk= Best Candidate

Lowest Risk= Worst Candidate

Diabetes

Threshold

Y NWhich Threshold ValueIs Optimal?-- Depends on Intervention-- Depends on Objectives

11

Diabetes Disease Management

(1,000,000)

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

0% 5% 10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Finding Target Penetration that Yields Max Net Savings

Gross Savings

Cost

Net Savings

Dollars

Target Penetration Rate (as % of Diabetes population)

41%

Fixed Cost

12

Highest ROI Does Not Yield Maximum Net Savings

Diabetes Disease Management

(1,000,000)

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,0000% 5% 10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

-

0.50

1.00

1.50

2.00

2.50

Gross Savings

Cost

Net Savings

ROIDollars

41%18%

Fixed Cost

ROI*

Increasing the target penetration rate from 18% to 41% leads to a lower ROI, but the net savings

increases by 24%.

Target Penetration Rate (as % of Diabetes population)

13

Chronic Disease Management

(0.15)

(0.10)

(0.05)

-

0.05

0.10

0.15

0.20

0.25

- 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45

Variable Cost PMPM

Net

Sav

ing

s P

MP

M

IHD

CHF

Diabetes

COPD

Asthma

47% of Ischemic Heart Disease

87% of CongestiveHeart Failure

41% of Diabetes

34% ofCOPD 20% of Asthma

Max Net Savings Signatures

14

Preference-Sensitive Condition Management

(0.12)

(0.10)

(0.08)

(0.06)

(0.04)

(0.02)

-

0.02

0.04

0.06

0.08

- 0.05 0.10 0.15 0.20 0.25

Variable Cost PMPM

Net

Sav

ing

PM

PM Back Surg

Knee Repl Surg

Revasc Surg

BUC

Hip Repl Surg

BPH

7% of Back Surgery

43% of Knee Replacement Surgery

9% of Cardiac Revasc Surgery

5% of Surgery for Benign Uterine Conditions

6% of Hip Replacement Surgery

0% of Surg forBenign ProstaticHypertrophy

Max Net Savings Signatures

15

Dynamic Models

Disease ManagementAssumed Time Distribution of Savings for an Engaged Case

0%

5%

10%

15%

20%

25%

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10

Cohort Sub-model:

Calendar Sub-model:

16

Dynamic Models

-$500,000

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

Jan-

07

Feb

-07

Mar

-07

Apr

-07

May

-07

Jun-

07

Jul-0

7

Aug

-07

Sep

-07

Oct

-07

Nov

-07

Dec

-07

Jan-

08

Feb

-08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb

-09

Mar

-09

Apr

-09

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

2007 Calculated$5.3M net savings

$9.9M gross savings

$4.6M cost

$35.5M gross savings

$21.8M net savings

$13.7M cost $14.0M cost

$26.7M net savings

$40.7M gross savings

2008 Projected 2009 Projected

Disease Management

RAMP-UPPHASE

STEADYSTATE

SATURATION/DECLINE?

17

Dynamic Models

-$200,000

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

No

v-06

Dec

-06

Jan

-07

Feb

-07

Mar

-07

Ap

r-07

May

-07

Jun

-07

Jul-

07

Au

g-0

7

Sep

-07

Oct

-07

No

v-07

Dec

-07

Jan

-08

Feb

-08

Mar

-08

Ap

r-08

May

-08

Jun

-08

Jul-

08

Au

g-0

8

Sep

-08

Oct

-08

No

v-08

Dec

-08

Jan

-09

Feb

-09

Mar

-09

Ap

r-09

May

-09

Jun

-09

Jul-

09

Au

g-0

9

Sep

-09

Oct

-09

No

v-09

Dec

-09

2007 2008 2009

$16.9Mprojected

$8.7Mprojected

$8.7Mprojected

$7.1Mprojected

$4.1Mcalculated

Lower Intensity ($2.9 million program cost per year)

Higher Intensity ($5.4 million program cost per year)

Case Management Net SavingsCase Management

18

Analyzing Uncertainty

• When buying a bond, we intuitively understand that we need to know:– Price (cost, investment)– Yield (benefit, return)– Bond rating (uncertainty).

• Cost-Effectiveness & ROI consider only price and yield.• Evidence-Based Medicine (EBM) considers only uncertainty.• We need to consider all three.

19

Analyzing Uncertainty

• One-way Sensitivity Analysis– But there is uncertainty about many assumptions…

• Best & Worst Case Scenario Analysis– But the joint probability of “worst case” for every

assumption is exceedingly rare & irrelevant…

• Multi-way Sensitivity Analysis: Monte Carlo Simulation– Stochastic assumptions (shapes, not values)

20

Monte Carlo Simulation

Assumptions

Calculations

90% Interval of Uncertainty

21

Medical Home-based Coaching

• Traditional DM Industry Concept of Integration with Provider– Encourage providers to refer patients to health plan’s coaches– Send “gaps in care” reminders

• BCBSM’s deeper level of provider integration– 4 year goal: 25% of Blue Health Connection coaching done by

staff of primary care practices– Coordination and data exchange necessary to support customer

reporting of activity and outcomes

22

Patient Centered Medical Home

American Academy of Family PhysiciansAmerican Academy of PediatricsAmerican College of PhysiciansAmerican Osteopathic Association

• Care planning based on partnership of patient, patient’s family and personal physician

• Enhanced access • Whole person orientation• Focus of safety, quality, evidence-based

medicine• Integration and coordination of care,

facilitated by information technology• Physician practice accepts responsibility,

held accountable based on performance measures

• Payment structure redesign, including gain-sharing and performance-based components.

23

Physician Group Incentive Program

Initiatives to develop capabilities for collaborative improvement• Establishing staff dedicated to managing or coaching process improvement teams• Establishing analytics and reporting staff• *Performance reporting

Condition-specific initiatives• Diabetes management through Lean Thinking-Clinic Re-engineering CQI• CHF management through Lean Thinking-Clinic Re-engineering CQI

Service-specific initiatives• Increase the use of generic drugs• Radiology procedures utilization• Improve Oncology Practice Performance• Anticoagulation management

Core clinical process initiatives• *Evidence based care tracking/patient registry• *Patient-Provider agreement.• *Extended access• *Individual care management• *Test tracking and follow-up

Clinical information technology initiatives:• *Electronic prescribing

2

3

4

5

1

*Components of the Patient Centered Medical Home (PC-MH)

24

Patient Centered Medical Home

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP

PCP

PCP

PCPPCP

PCPPCP

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP PCP

PCP

PCP PCPPCP

PCP

PCP

PCP

PCPPCP

PCP

PCP

PCP

PCP

PGIP Phys Org A

PGIP Phys Org B

PGIP Phys Org C“ControlGroup”

PC-MHNominee

PC-MHNominee

PC-MHNominee

PC-MHNominee

PC-MHNominee

PC-MHNominee

25

Patient Centered Medical Home

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP

PCP

PCP

PCPPCP

PCPPCP

PCPPCP

PCP

PCP

PCPPCP

PCP

PCP PCP

PCP

PCP PCPPCP

PCP

PCP

PCP

PCPPCP

PCP

PCP

PCP

PCP

PC-MH

PC-MH

PC-MHPGIP Phys Org A

PGIP Phys Org B

PGIP Phys Org C“ControlGroup”

PC-MHNominee

PC-MHNominee

PC-MHNominee

26

Wellness & Care Management Technology Architecture

Business Process Management (BPM) platform• process modeling & simulation• workflow automation

Clinical Programs Operational Data Store

BCBSM Business Intelligence Platform

Other BCBSM Systems (Membership, Claims, Provider Info, Customer Service, etc.)

Questionnaire Component• web• paperBCBSM

IntegrationFramework• internal• externalI

Wellness & Care Mgmt “Modules” (migrate to Portals)

Providers BCBSMStaff Members Customers

VendorPartners