Your entertainment last night. I want to call to order the meeting of the health and Human Services committee. By saying we have a few administrative items to take care of. The governors should have received briefing books in advance including the agenda and nga updates. Sitting next to me is melinda becker, legislative director for health and Human Services for nga, and she will be available after the services if anyone needs further details about what we are talking about. A reminder that the proceedings for this committee are open to the press, and all meeting attendees, i would ask you to silence your cell phones and electronic devices. The discussion will focus on two issues every governor spent a lot of time picking about and working on, first given the democratic demographic changes, rising cost of health care, and other factors, how can we expect the u. S. Health system to evolve over the next decade . For all of us, im willing to make the save that that Health Care Costs save that that Health Care Costs are a major part of our jobs. Secondly, how can governors harness these two improve health care in their state these to improve health care in our states. Whatever changes might be on the horizon, we can be certain governors will be dealing with them because a lot of what we do has to do with dealing with health care. In tennessee we launched a statewide initiative to better reward patientcentered, highvalue care. Over the next five years, tennessee Healthcare Initiative will shift healthcare spending, public and private, away for from fee for service to three outcome based strategy. The first is an episodebased strategy for discrete events such as a joint replacement or pregnancy. The second strategy focuses on identikit transformations that encourages prevention, coordination of care across providers. The third incorporates other value based payment services. With these efforts, it is our hope that tennessee will be at the forefront of a National Trend that is expected to Gain Momentum in the coming years. Many governors are implementing or considering similar statewide multiplayer initiatives multipayer initiatives to assist in their rewards for value over volume. The federal government is supporting many of these efforts to the state innovative models of initiative. Tennessee received a model design award in the first round and in the second round will compete for a second award. Despite these efforts to support statewide information, transformation will statewide innovation, transformation will require a new level of cooperation between state and federal partners. It is a key for states to continue moving the needle toward more efficient care and Better Health status. To this end, at the last nga meeting in february, the voters approved a series of recommendations developed by the task force. We had the privilege of leading the task force is working with the administration of the number of issues including streamlining the federal process for reviewing state innovation proposals, creating a path to permit c4 sustained successful state programs and allowing states to share in savings resulting from their efforts. Achieving these goals will give states the flexibility and the resources they need to transform the Health Care Systems in response to the future challenges and opportunities we will be discussing today. I would like to turn now to the vice chair of our committee, governor peter shumlin, for any remarks he may have. Thank you. I look forward to hearing from the panelists. I do not want to get myself in trouble, but i have to say this has been the most fun, successful summer nga meeting that i have been to, and i that theother governors bet other governors, and last Night Entertainment show was just another example of how youre getting this right. Thank you, Governor Haslam. [applause] it is going to make it tough for any of us to host future summit meetings. Maybe we will just summer meetings. Maybe we wouldve shut them down going forward. We will just shut them down going forward. [laughter] this is an area where we all agree that we have to get costs under control. Todays discussion is critically important to the work governors are doing. Around this table, around the country, leading in our state what it comes to health care, we all working to stop skyrocketing costs that are hammering businesses, hammering job creation, hammering the class, working families, and threatening our ability to invest in other priorities such as education, roads and bridges, public safety, job creation. I know in vermont, as an example, and this is probably no different in other states today come in vermont, we spent . 20 of every dollar we make on health care on average. If we were to see Health Care Costs rise, just for the next 10 years, at the same rate that they did for the last 10 years, that number would double. What i often say is raise your hand if you think that is a prescription for job growth, for economic prosperity, for a great future for all of us. So, healthcare costs is where it is at that containing cost at. Attaining cost there is alignment among stakeholders that outlines base payments moving from quantity to quality is the wave of the future. We governors are prepared for potential challenges that lay ahead, from a rapid, aging population, to increased consolidation of the Health Care Industries we are seeing in all of our states. That are many other trends have implications for Health Care Transformation in our states. In vermont, we are focused on containing costs by covering Health Care Providers and payers with funding from the state innovation models grant, which has been a huge help to us. So, just for a second, imagine the Health Care System where Healthcare Providers, everyone in the system, our doctors, nurses, hospitals, all the other ancillary services, are totally driven to keep you as healthy as they possibly can as a team, and do not have to use as many Expensive HealthCare Services to achieve those goals. Second, imagine a system where providers have the healthcare records at their fingerprints fingertips, and an i. T. System that cannot be beat through american innovation, and they are there when they need them. Providers workre with people outside of the Healthcare System to make sure you have the support you need to stay healthy once you move back into your communities and homes such as good housing, good nutrition, active, Preventative Care i often say eating good, vermontgrown food, all of those things, getting off the smokes, exercising, all the things we should be doing. Does maple syrup help you that much . [laughter] maple syrup is that only the suite that you want to use and it has to be vermont syrup. [laughter] changing provider payment so that we pay for outcomes of care, not volume of care that will me a major transformation in our system. And, where we were providers and patients for achieving that where we reward providers and patients for achieving that. Second, Building Systems that link providers together, and third, designing a statewide system for how we target and coordinate services to keep folks getting better. What have we achieved so far in vermont in our innovation projects . We have created shared savings programs for providers. The obvious question is how do you achieve this model, how the move from the model of payment that we have to the new one that goes forward . Shared savings programs are the first step toward valued valuebased payments. We have launched one program for medicaid and one for private insurers. Vermont is the first day to launch that kind of program on a statewide, all payer basis, so that everyone is in Healthcare Providers, hospital executives, everyone around the table trying to figure out how to get this right. We have also invested grant funds in health care technology, as i mentioned, continued buildout of the base between Health Care Providers and the Exchange System is critically important. That includes establishing connections between hundreds of health care sites across the state. We all face the challenge of governors. Finally, building an electronic gateway that will route Health Care Data for quality reporting, care management, and improvements to patient care. Payers all of our major and providers of the state talking collaborative way collaboratively about improvements. Everyone knows it will not be affected unless suite focus completely on keeping vermont healthy. For all governors, the First Priority is quality of care, keeping people healthy. Second, everyone is taking their own approach to health care improvements. That is what we need. , coordinatedl out effort across the state, and, finally, this is what we are building in vermont. So, i look forward to the presentations we will here, the comments of the other governors. I really do believe that the governors working together in a bipartisan spirit with the states as the models for innovation and change in health care is where the rubber is going to hit the road and bringing about affordable, Quality Health care that allows us to spend more money growing jobs and investing in infrastructure. Thank you so much Governor Haslam, and im delighted to turn it back over to you. Thank you, governor peter shumlin. We have a distinct panel. If you could hold questions at the end of presentations. We will set aside a good chunk of time for questions and answers at the end. Let me begin by introducing tom lack of it tom, a director of mckinsey and company who has spent 13 years working to improve the performance of the Healthcare System. He leads the payment sector and the state and local government practice. He also found that health care analytics, a special department within mckinsey. Welcome. Dreyfus, us is andrew chief executive officer for blue cross, blue shield of massachusetts. Prior to becoming ceo, he spearheaded the alternative quality contract, one of the largest commercial payment reforms in the country. He also recently led the Massachusetts Foundation and massachusetts hospital foundation. He led numerous positions in massachusetts state government. Also, found out his son is an aspiring singer songwriter, so youre in the right place. Finally, bill rutherford of the Hospital Corporation of america, one of tennessees in the nations leading provider of health Care Services. They are based here in nashville. Servedhis tenure, he has to hisriety of roles current role as chief Financial Officer and executive vice president. In 2005 he took a brief hiatus to start his own training and education company, and then served as chief executive officer of the Behavioral Service provider psychiatric solutions. , mr. Tom latkovic, i would ask you to leadoff. Thank you. Im with mckinsey and company, a Consulting Firm better known for our work in the private sector, but we also do quite a bit of work with governors and states across education, economic development, technology, etc. , and we are working with a number of states on health care, payment innovation, performance improvement, technology, etc. Today, perspectives will be from our research is a firm in my personal experience working in the public and private sector. I should also clarify where not a political organization. , and weretty much nerds come at things from an operational, technical standpoint, but not from a political one, so none of my comments will reference any policies or pieces of legislation, including the Affordable Care act. I would like to take a step back and make a case for the kind of initiatives going on in tennessee and vermont. Dark water things i want to share with you. One, i think we have a unique time and opportunity to fundamentally change the trajectory of the Healthcare System in this country, and that is exciting. Years of the critical but the change will be difficult. Second other states may not. Third, i would argue that governors action and inaction would be consequential in the private sector and the public sector. There is a huge opportunity for what states do and governors do to encourage, enable, and innovation and to be they willcess path, need to be shifted agenda, capability, and governance. So, to start with, and i am a consultant, so i came with two charts, although two is pretty good. I will not belabor the point, strengths, its many there is an enormous and welldocumented opportunity to improve our Health Care System. There are a number of studies, including some done by mckinsey, that would suggest that hundreds of billions of dollars we spent hundreds of billions of dollars when we need to for the outcomes that we get. Medicaid,ue across and across the public sector. Documentinga paper how intelligent changes in our Payment System could literally lead to saving 1 trillion over the next decade. In the face of that opportunity, which there is strong consensus for, we are experiencing a number of real discontinuities or massive forces affecting the system some of them were mentioned. Increasing prevalence of current disease, it proliferation of technology and data, growing provider specialization, increasing role for consumers, and across all this, inaffordability crisis with an across all this, affordability crisis. Effectively, i believe these forces present a huge opportunity to capture the opportunity in front of us, however if ignored or addressed and effectively, it could make things worse. So, the challenge is harnessing these forces is quite difficult. There are a great deal of stakeholders in the Health Care System. It is externally fragmented. That brings me to my second perspective, which is we anticipate greater separation between states with highperforming Health Systems and those with less performing of their systems. Innovation that is needed will ultimately play out at a local level. It will depend on the actions and behaviors of literally thousands of physicians, hospitals, Mental Health professionals, managedcare company, employers, consumers, etc. Some will make changes more effectively than others. Allow me to be more specific. I will highlight a few areas where i think there is a lot of consensus, not exactly on how to do this, what the elements of success include. One of those factors on a success that is that there is nothing Competition Among sticklebacks there is productive there is a doubt the competition there is part of the competition. Productivee cap, competition is limited because few purchasers understand performance in ways that matter. On a success path, Healthcare Providers will be rewarded for delivering Better Outcomes at lower cost. A failure path will largely continue to pay providers for activity. The last example, on a success path, most consumers would have adequate insurance and savings, agnostic of the approach that we used to get there. The good news is that the state were communities that did on and aay on this success path had real opportunity to experience moderate health cost increases, more in line with inflation, luding Medicare Program or program. In other words, being on the success path has a really long return on investment both for states directly in terms of their budget and medicaid, and in a broader, societal sent. Sense. Much of the change will occur in the private sector, so why will government and state actions be consequential . The Largest Party state influence regulation and infrastructure, which has a profound effect on how the private sector operates, but safety is not just a referee in health care. It is an actor. There is a kiloway linkage between the actions of state takes twoway linkage between the actions a state takes three Medicaid Expansion is in large part a function of the performance of the entire Delivery System in a state. It is difficult for a medicaid system to improve from a cost standpoint without the Delivery System in that state fundamentally improving its performance. That includes physicians, nursing homes, Mental Health professionals, etc. It is incredibly difficult, if not impossible for those providers to change and improve the performance only for medicaid enrollees, thus medicaid enrollees and private sector enrollees are inextricably linked together from a performance standpoint. In that way, the two interact. Lets assume you want to be on the success path. That sounds a lot better. Lets assume you buy the argument that states could make a positive difference in private sector programs and in accelerating private Sector Innovation. What can you do . A few suggestions here at a high , i wouldthe first is argue to start to measure success on what you influence as governors and state, not what you directly control, and from the perspective of citizens and employers. For example, the employer premiums go up or down, did peop