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Dr. Sam Ho, Senior Vice President and Chief Medical Officer for PacifiCare Health Systems, oversees patient safety.

PacifiCare's Implementation of the Leapfrog Group's Strategy

Patient safety is a number one priority for PacifiCare, and we continue to emphatically support and promote the Leapfrog Group's patient safety initiatives through a variety of innovative programs. PacifiCare's commitment to patient safety is illustrated by our:

• intense communication with, and education of, hospital providers

• consumer release of the QUALITY INDEX® Profile of Hospitals

• Quality Incentive program designed, in part, to reward physician organizations that primarily utilize Leapfrog-compliant hospitals

• tiered benefit designs favoring providers and consumers that utilize cost-effective hospitals - determined, in part, on Leapfrog criteria.

PacifiCare Endorses Leapfrog

PacifiCare endorses the Leapfrog Group's efforts to improve patient safety and reduce preventable medical errors. Our strategy has included direct mail communication to all contracted hospitals in our network about the importance of the Leapfrog Group's three hospital safety “leaps” focused on evidence-based hospital referral, computerized physician order entry, and intensivist staffing. Communication to members through our HealthBeat newsletter for commercial members, and our Horizons newsletter for our Medicare+Choice members, as well as to our employees, also occurs regularly.

In addition to such general communication, PacifiCare has included Leapfrog measures as a subset of our QUALITY INDEX® profile of Hospitals, which was released for California hospitals on March 4, 2003. Contracted hospitals in all PacifiCare states will be listed in the next edition scheduled for release in Spring 2004. Parenthetically, PacifiCare's QUALITY INDEX® profile of Hospitals includes many measures in addition to the Leapfrog standards, because of consumers' need to have measures of appropriate care (complication rates), patient safety (mortality rates), patient satisfaction, and utilization that extend beyond the nine Leapfrog standards. Measures of medical conditions, general surgical procedures, obstetrics and pediatrics are also included in our QUALITY INDEX® profile of Hospitals.

“Leapfrogging” Leapfrog

Not only does the QUALITY INDEX® profile of Hospitals include 56 measures (more than the Leapfrog standards), but the profile is also disclosed to consumers and physicians in our provider directories, through direct mailings and on the PacifiCare Web site. Both the QUALITY INDEX® profile of Hospitals and the QUALITY INDEX® profile of Physician Organizations can be viewed at www.pacificare.com.

Furthermore, tiered benefit designs have been developed, with differential copayments and member out-of-pocket expenses based on differential performance of providers selected by members. Such tiering is based on both cost measures of the organized system of care selected by members, as well as various quality measures of both physician and hospital performance. Initially, such performance measures include some of the Leapfrog measures of hospitals that are primarily utilized by medical groups. In 2004, we will expand the hospital performance measures to include other measures relevant to consumers, such as those related to medical conditions, general and orthopedic surgery, obstetrics and pediatrics, all derived from our QUALITY INDEX® profile of Hospitals.

Tiering includes substantial incentives for members to select better performing hospitals, with minimal copayments attached to such selection, whereas selection of worse performing hospitals includes significant copayments and out-of-pocket expenses. With such incentives, we intend to reward better performing medical groups and hospitals with substantial market share growth. Such market share has already been demonstrated with our core QUALITY INDEX® profile - despite relying only on disclosure of consumer information and without any incentives in place, at that time.

Furthermore, PacifiCare has developed a provider Quality Incentive Program, which rewards better performing providers, including physicians and physician organizations that utilize better-performing hospitals, which are determined, in part, by Leapfrog criteria. In 2003, PacifiCare began its rewards, based on 16 measures included in the Quality Incentive Program, which are the same measures used to evaluate selection to the HMO network. PacifiCare is rewarding 124 higher-performing physician organizations from an incentive pool of $14 million, and, most remarkably, 12 of the 16 measures have shown an average increase of 29 percent in performance.

PacifiCare is absolutely committed to:

• developing innovative plan designs to promote patient safety

• implementing Leapfrog standards

• mobilizing consumer and physician activities to support achievement of such standards

• publishing report cards

• rewarding results with financial and non-financial incentives

• unleashing market dynamics and managed competition to drive innovation and quality.

Drug utilization reviews (DUR)

Prescription Solutions is on the forefront of Drug Utilization Review (DUR) management, through the use of prospective prescriber education intervention and prospective, concurrent and retrospective drug utilization review.

Prospective DUR

Our prospective (pre-dispensing) DUR program occurs before a patient receives a particular prescription and provides the opportunity to modify therapy before any actual drug use. Following are our most important prospective DUR tools:

• National Drug Formulary - our outpatient formulary guidelines are a powerful prospective DUR tool used to provide safe, effective, and economical drug therapy for members. Our formulary program is designed to be user-friendly.

• Prior Authorization - targeting specific high-risk or high-cost medication, prior authorization promotes the opportunity for our pharmacists, the prescribing physician, and the employer to review the appropriateness of a drug therapy. This review also enables us to identify candidates for comprehensive case management.

• Therapeutic Guidelines - presented to educate physicians on the standards of drug therapy proven to be the most effective in treating specific disease states. This educational process helps ensure appropriate drug usage.

Prospective activities include:

• Top Prescriber Clinical Review - compares each physician's average prescription cost and generic utilization to their peers.

• Prescriber Prescribing Analysis DUR - “report card” for prescribers with recommendations of more cost-effective therapy.

• Average Cost per Prescription Report - compares the average of the individual agents between therapeutic classes.

• Treatment Protocols and Therapy Guideline - references and flow charts direct the prescriber toward more cost-effective drug therapy

• Counter Detail Monograms - targets particular drug therapies or agents and directs the physician towards more appropriate use of these products.

• Prescriber Peer Reviews - provides the physician an analysis of his prescribing patterns versus other physicians or his peers.

Concurrent DUR

We integrate our concurrent DUR system with our claims processing system. Our concurrent capabilities lie within the edits and messages of our claims system.

Drug utilization review messages, received by the pharmacist at the point-of-dispensing, inform and work cooperatively with the prescribing physician to arrive at the optimal mode of therapy for the member.

All parties benefit when consideration is given to the point-of-dispensing message, as it is derived from the entire drug database maintained for each member filing claims with Prescription Solutions.

Concurrent activities include:

• Eligibility Screening - is the patient eligible for service?

• Duplicate Prescription - alerts pharmacists of duplicate prescriptions by same or different prescriber.

• Refill too soon - the patient is requesting a prescription refill too soon.

• Therapy or Time Interval - allows the plan to specify how many courses of therapy are allowed in a given time-period.

• Control Substance - limits the quantity on certain drugs where potential abuse might occur.

• Drug or Drug Interaction - a quality of care program which will also eliminate over prescribing.

• Duplicate Therapy - alerts the pharmacist that the same class of medication is being prescribed by the same or different prescriber.

• Formulary Compliance - alerts the pharmacist that the medication is non-formulary while providing a formulary alternative.

• Therapeutic Interchange Program - alerts the pharmacist of a preferred cost-effective drug alternative with equivalent treatment outcomes.

Retrospective

Prescription Solutions has developed a Retrospective Clinical Pharmacy Review program executed by a team of clinical pharmacists. This program includes physician analysis and profiling, physician consultation, and patient profile reporting and analysis. Specifically, clinical pharmacists review patient profiles that contain indications of problems because of deviations from appropriate pharmaceutical care. Then, in corroboration with quality assurance staff, Prescription Solutions' clinical pharmacists evaluate each individual case and, if deemed appropriate, contact with the physician is made by either phone or in writing.

The clinical pharmacists evaluate drug utilization based on the following:

• cost effectiveness

• therapeutic appropriateness

• quality of care

• potential drug interactions

• over/under-utilization

• potential fraud and abuse by prescriber, member or pharmacist

• proper use of first-line therapy

• formulary compliance and generic utilization

• outcomes management.

Patient Communications

We send patient information to members using specific targeted drugs that are subject to misuse/abuse/non-compliance problems. We extract information from material supplied by the United States Pharmacopeia Convention, Inc. (USP), an organization that sets official standards of strength, quality, purity, packaging, and labeling for drug products in the United States.

We select patients who incur claims for drugs used to treat lifestyle-related conditions to receive educational information that describes lifestyle modifications that increase quality of life and reduce drug use.

In a constant effort to help reduce the cost of prescription drugs, Prescriptions Solutions has full-time pharmacists perform ongoing drug utilization review and physician education.

Our pharmacists target specific therapeutic drug classes, which have significant impact on the quality and/or cost of care. Commonly targeted classes might include:

• frequently prescribed medications such as non-steroid anti-inflammatory drugs

• drugs used in a patient population where there is a high risk of adverse effects

• high-cost drugs, particularly where cost-effective alternatives exist

• antibiotics, particularly those that are expensive and frequently used

• drugs with narrow labeled indication

• drugs with a specific duration of therapy

• drugs requiring monitoring of therapeutic response and potential adverse effects

• drugs with a narrow therapeutic index.

Prescription Solutions communicates findings in writing to the prescribing physician for review and education.

Disease management programs.

PacifiCare has targeted several chronic conditions with an opportunity for improving health and reducing treatment variation. We have taken a multi-pronged approach that includes:

• in-house population-based programs for members

• member-specific feedback to providers

• profiling via the Provider Profile and QUALITY INDEX® profile (currently available in California, Oregon, and Washington)

• in general, vendor-directed case-based interventions for the most severe strata.

Population Based Programs

PacifiCare has developed the following population-based programs aimed at managing the health of our members with chronic conditions:

• Taking Charge of Diabetes®

• Taking Charge of Your Heart Health®

• Taking Charge of Depression®

• Taking Charge of Asthma.

Our quality improvement design focuses on enabling providers to better manage patient care by providing them with necessary tools and information. These programs include a spectrum that addresses the range of issues involved in living with a chronic disease, including maintaining and improving the member's health status and avoiding complications. Members are provided with program information once they have been identified as having a chronic condition. A brief description of each program is provided below.

Diabetes

Taking Charge of Diabetes® is designed to be an enhancement to provider support and clinical care. This is a self-directed, intervention program that addresses both self-care and lifestyle areas. There is no cost to members. Enrollment is initiated via a mailing to all members identified with diabetes or through practitioner referral. The goal of the program is to improve the care of members with diabetes and to increase the members' self-management skills and self-efficacy in managing diabetes.

The Taking Charge of Diabetes® program offers adult members with diabetes the following:

• Information on diabetes and self-care, preventive exams, and lifestyle changes key to managing their diabetes. Members receive mailings at least twice per year.

• glucose meters

• online diabetes diary

• smoking cessation program (if appropriate).

Providers receive the following:

• clinical practice guidelines

• member-specific reporting on missing diabetes-related exams

• Provider Profile and QUALITY INDEX® profile (currently available in California, Oregon, and Washington).

Coronary Artery Disease

Taking Charge of Your Heart Health® is a proprietary, self-directed, lifestyle management program focusing on behavior modification with respect to:

• diet

• exercise

• stress

• tobacco use

• self-care.

The Taking Charge of Your Heart Health® program offers members with Coronary Artery Disease (CAD) the following:

• twice yearly mailings on:

• cholesterol management

• lifestyle changes key to managing heart disease

• medication management

• information on heart disease self-management skills

• online cardio diary.

• smoking cessation program (if appropriate).

Providers receive the following:

• clinical practice guideline

• beta blocker use reporting

• Provider Profile and QUALITY INDEX® profile (currently available in California, Oregon, and Washington).

There is no cost to members.

Congestive Heart Failure

Taking Charge of Your Heart Health® is a proprietary, self-directed, lifestyle management program focusing on behavior modification with respect to:

• diet

• exercise

• stress

• tobacco use

• self-care.

The Taking Charge of Your Heart Health® program offers members with Congestive Heart Failure (CHF) the following:

• twice yearly mailings on:

• symptom recognition and management

• medication management

• lifestyle information.

• log book for tracking weights and symptoms

• smoking cessation program (if appropriate).

Providers receive the following:

• clinical practice guideline

• ACE Inhibitor and beta blocker use reporting

• Provider Profile and QUALITY INDEX® profile (currently available in California, Oregon, and Washington).

There is no cost to members.

Depression

The Taking Charge of Depression® program is a program for members diagnosed with depression and on an antidepressant medication. Providers receive clinical practice guidelines and a toolkit with antidepressant medication guide and depression screening tools. Members enrolled in the program are informed about key aspects of depression and how to better work with their practitioners to alleviate episodes of depression.

(This program is not available in Arizona. For Arizona members, PacifiCare provides a depression program through CONTACT Behavioral Health.)

Taking Charge of Asthma

PacifiCare introduced Taking Charge of Asthma for its pediatric and adult members with asthma in 2002. The program provides online tools and information via mail to assist members and practitioners in better asthma management.

Case-Based Programs

In addition to our population-based programs, PacifiCare offers the following case based management programs for qualified members:

• coronary artery disease

• congestive heart failure

• end-stage renal disease

• cancer disease management

• orthopedics

• chronic lung disease (for Secure Horizons members only)

• frail member

• end of life care management

• neonatal intensive care management.

These case-based programs are designed to enhance care and improve the quality of our members' lives. The services and treatment involved have the goal of effectively treating diseases and/or alleviating the member's pain and symptoms, ultimately managing the member's related health care costs. Expanded descriptions of these programs are provided below.

Coronary Artery Disease & Stroke - ohms|cvd

The ohms|cvd program is designed to provide physicians with additional resources to support them in managing their patients who have coronary artery disease or have had a stroke. The program's ultimate goals are to strengthen the relationship between physicians and members, promote coronary health, decrease the risk for a future stroke, and improve clinical outcomes. The Coronary Artery Disease program is offered in partnership with Interactive Heart Management Corporation (IHMC), developer and owner of the Online Health Management System for Coronary Artery Disease (ohms|cvd) program.

Congestive Heart Failure

PacifiCare provides a congestive heart failure program in conjunction with Alere® Medical Incorporated. The outsourced congestive heart failure program was established to help members increase their knowledge about their condition and provide extra attention and monitoring via technology that connects:

• doctors

• patients

• data.

The program is designed to be a daily “virtual house call” and lets providers receive immediate and vital information from members with congestive heart failure, thereby:

• identifying problems early

• facilitating timely intervention

• avoiding unnecessary complications.

End-Stage Renal Disease (ESRD)

PacifiCare offers an End-Stage Renal Disease program for members with kidney disease. We are contracting with Renaissance Health Care - a disease management company that focuses exclusively on patients with renal failure. Renaissance supports the care currently being provided by the nephrologist and the patient's dialysis unit with a locally based case manager. The Renaissance case manager is a renal nurse who understands the unique needs of these patients and is available to coordinate care among:

• PacifiCare

• the dialysis unit

• the hospital

• the physician

• and, most importantly, the patient.

Cancer Disease Management

PacifiCare recently contracted with Quality Oncology (QO), a wholly owned subsidiary of LifeMetrix, Inc., to provide care management services to members who have cancer. The QO cancer disease management program is aimed at assisting PacifiCare members with their cancer care to maximize their comfort and quality of life. This includes 24-hour-a-day, 7-days-a-week phone access to a QO team of experienced cancer nurses. The nurses educate, inform, and empower cancer patients and their families from diagnosis of disease through the end of treatment.

Orthopedics

Through this new program, our vendor partner OrthoNet will implement its proprietary medical management protocols, procedures and processes in order to provide preadmission and concurrent discharge planning and concurrent review for qualified PacifiCare inpatient admissions with a primary orthopedic diagnosis. The program will cover inpatient stays at hospitals, acute rehabilitation facilities, subacute and skilled nursing facility (SNF) locations. OrthoNet focuses particularly on patient clinical status and progression toward discharge and change in level of care. Careful attention is given to functional status and expected clinical milestones during an inpatient stay.

Chronic Obstructive Pulmonary Disease (COPD) (for Secure Horizons members only)

This program provides:

• education

• telephonic monitoring

• home visits by Respiratory Care Therapists.

Care management plans are developed with the input of the members' physicians.

Evidence-based metrics are tracked and reported on an annual basis.

The disease management program for Chronic Obstructive Pulmonary Disease (COPD) is provided through AirLogix and designed to improve the health status of participating members. The program incorporates national standards with interrelated components of respected publications. It focuses on:

• self-care

• prevention

• intervention

• education support

• quality of life improvements

• reducing complications.

The scope of services includes a telephonic assessment to determine the appropriate intervention for each individual. Based on the initial assessment, participating members are directed to one of three intervention levels but can move between levels based on results of intervention and changes in condition.

The individualized COPD program interventions are designed to empower members to successfully self-manage their respiratory disease along with their physician.

Special Populations Programs

PacifiCare has developed advanced care management programs designed to address the special needs of members with complex medical problems. These focus on the medical, psychosocial and other needs of frail members and patients with terminal conditions.

Frail Member

The Frail Member program comprises several specially designed population programs to enhance members' quality of life and maintain their functional independence. These programs may include social services, case management, and other programs.

(Currently, this program is available in California and Texas only.)

End of Life Care Management

In the medical community, the “end of life” condition describes a patient with a chronic, debilitating disease that will cause death. Examples of such diseases are terminal cancer or end stage heart failure. The End of Life Care Management program improves the quality of life for members in the following areas:

• pain management

• advanced directives

• dying with dignity

• psychosocial issues

• family issues.

Case managers and other clinicians provide compassionate care and effectively manage health care services for patients with incurable diseases while optimizing clinical and social outcomes.

(Currently, this program is available in California and Texas only.)

Neonatal Intensive Care Management

PacifiCare has contracted with Paidos to provide medical management services for babies in the neonatal intensive care unit. A clinical team of experts including neonatologists and neonatal nurses work closely with the member's physician to improve outcomes for the infant.

PacifiCare issues evidence-based guidelines to doctors for treatment recommendations

PacifiCare has an extensive process committed to the development and adoption of all practice guidelines for use by our provider network. Clinical practice guidelines are all based on reasonable medical evidence and medical resources are listed on the guidelines. We use nationally recognized guidelines and standards as major sources in the development of PacifiCare Clinical Guidelines, including:

• U.S. Preventive Services Task Force

• American Diabetes Association Guidelines

• American Cancer Society Guidelines

• American Heart Association

• American Academy of Pediatrics

• American College of Obstetrics and Gynecology

• Agency for Healthcare Policy and Research.

The responsibility for development and adoption of guidelines is shared between PacifiCare Quality Improvement Projects Committee (QIPC) and PacifiCare Health Plan Technology Assessment and Guidelines (TAG) Committee. Both committees involve local practitioners of appropriate specialties in this process.

Medical groups and providers routinely receive copies of the Technology Assessments, Clinical Practice Guidelines and Medical Management Guidelines on diskette.

Sharing prescription drug profiles or patient disease profiles with the patient's doctors

Prescription Solutions provides all physicians online access to patient-specific formulary advice. Comprehensive patient profiles are confidential and are not available to physicians due to confidentiality laws.

Prescription Solutions' integrated concurrent DUR system cross references patient profiles with online claims processing, so that pharmacists receive DUR messages at the point of service. When the pharmacist enters the claim into the processing system it will:

• screen the patient profile records (if completed by the patient) for drug allergies and potential cross-sensitivities.

• scan the patient's claim history for potential drug conflicts

• compare the days supply provided on the current prescription claim and any previous prescription claims on the patient's history.

• examine the patient's claim history to identify potential overlap of medication therapies.

• run the prescription against a database of dosage parameters designed to detect inappropriate medication dosing.

• check for under-utilization of maintenance drugs to detect non-compliance.

• profile specific drugs to determine if a dosing change is indicated after a specified period of time.

• review the patient's history to infer a state of health and compares that health state to the prescribed drug (this is how the edit system screens for drug/pregnancy contraindications and drug/disease contraindications).

• review the prescribed drug and identifies contraindications in drug therapy based upon the patient's age.

Though Prescription Solutions does not share comprehensive patient profiles with physicians for confidentiality reasons, we do maintain patient profiles for the purposes of safety, quality and care management assistance. Patient profiles are built by each prescription drug claims transmission, whether paid, rejected or reversed.

A standard patient profile includes:

• Patient information - name, date of birth, address, known allergies, sex. Can also included information related to the member's insurance coverage, medical clinic or Medicare status.

• Medication filled - name of medication, strength, dosage form, quantity, days supply, date filled, prescription number.

• Health related information - can contain a list of diagnosis, or other health condition indicators like smoking, pregnancy and alcohol.

• Physician information - name of prescribing physician, address, phone number, DEA number when required. Can also include information related to the members primary medical group.

• Pharmacy information - name of pharmacy, location, phone number.

• Cost information - what pharmacy would normally charge (U&C), total charges, what the member paid, what was it paid by the plan.

• Prior authorization records - a listing of prior authorization requests entered for each individual member.

• Patient notes - a series of text messages recorded that relate to the specific member or any of his/her claim records. May include notes on phone calls to customer support or from the member's pharmacy.