“Your true value depends entirely on what you are compared with.”
– Bob Wells, author and editor

Health and Human Services Secretary Michael Leavitt spent a great deal of 2006 traveling the nation and talking to insurers, providers, employers and other health care stakeholders about what he called the “four cornerstones” of the future of health care delivery in America:  electronic medical records, published data on clinician quality, information on pricing of services, and pay-for-performance programs.  The message from the Administration was loud and clear:  if you want to do health care business with the federal government, then you must implement the cornerstones into that work.

No small request, but certainly an appropriate one, especially given that the federal government pays for more health care services than any other entity in America.

And fortunately for our company – which serves federal government customers in some capacity in 47 states – we had taken steps to increase transparency for both our government and commercial members long before Secretary Leavitt’s call to action.

For years, we’ve been working to ensure that we remain focused on providing optimal value to our customers.  2006 was the year that much of our planning materialized, and I’m proud of the depth and breadth we’ve added to our company and its capabilities.

I’m not referring simply to new and innovative products, like health savings accounts, health reimbursement arrangements, and flexible spending accounts – although all certainly are an integral part of our value proposition.  Rather, I’m talking about how, in 2006, our company executed a long-term effort to pull the various levers of health care transformation that, when integrated, ultimately create customer value.  That means offering electronic data exchange capabilities, information transparency, and outcomes-based payment – the foundation, or cornerstones, of total health.

In turn, we’re putting that total health and well-being at the center of all we do.  As I see it, that’s real value.  And this report reflects how we’re doing that.

Take the first of the four cornerstones, for example.  2006 was the year we saw two years of planning and implementation come to fruition for our subsidiary Shared Health, by bringing electronic personal health records to our entire group fully insured population.  By offering Shared Health’s Clinical Health Record to our 600,000 group fully insured customers, we made data exchange between insurer, clinician, and patient a reality.  The Clinical Health Record, which includes information on medication history, allergies, and childhood immunizations, is our way of adding efficiency and effectiveness to the care we facilitate.

And it’s not just our commercial members who are benefiting from Shared Health’s solutions.  Today nearly 2 million Tennesseans, including the state’s entire Medicaid population and the employees and dependents of one of Tennessee’s largest self-funded employers, are on Shared Health’s system, and more than 40 percent of Tennessee’s provider practices have registered to use the system since its inception in July of 2005.

That’s creating value.

Then there are the second and third cornerstones – published data on clinician quality and information on pricing of services.  These are components of the broader consumerism movement, and we pride ourselves on being ahead of the industry and first to market with online tools and resources that help facilitate that movement, by giving customers information that helps them make better and more informed choices.

This past year was no exception.  We piloted real-time claims adjudication in several provider offices statewide, which allowed consumers and providers alike to find out the actual cost of services, at the point of care.  We also added a “treatment options” tool that allows customers to compare treatments for certain medical conditions, based in part on cost and effectiveness, as well as a personal health risk assessment tool that helps customers gauge their health status.

We also were proud to bring to Tennessee the Blue Distinction Hospital Performance and Improvement Measurement tool, which provides consumers with state and national hospital performance information, using standardized national hospital performance measures and AHRQ Patient Safety Indicators.

As a result of these and other 2006 additions to our suite of products and tools, our members are better informed about their options and increasingly engaged in making health care decisions that suit their medical needs, lifestyles, and budgets.

Again, that’s creating value.

We also made good movement in 2006 on evaluating how to transform our payment system from one that favors volume to one that rewards outcomes – the fourth cornerstone.  I’m particularly proud of the Generic Prescription Drug program we implemented, which rewards providers who meet established generic prescribing benchmarks.  The program deserves some credit for contributing to the 9 percent increase in generic dispensing we saw among our members in 2006.  We also implemented a similar performance-based program for electronic prescribing practices.

There are numerous other achievements to note, all of which helped us increase the value of doing business with BlueCross BlueShield of Tennessee.  From expanding our dental network and offering new dental products, to providing new Medicare access and choice to 10,000 seniors throughout the state by offering comprehensive Medicare Advantage and Part D plans, we continued to meet the needs of a diverse and dynamic customer base in 2006.

At the end of the day – or the year, in this case – we recognize that the true measure of value stems not just from the benefits and services we provide and how well we administer them, but really from how wide and how deep the infrastructure is that supports those benefits and services.  What we’re doing here is laying a foundation to support our customers’ total, lifelong health that ensures the right services for the right people at the right time.

We dug deep in 2006, as we competed to be the insurer of optimal value in all of our markets.  I invite you to learn more about where we’ve been this last year and to join us as we take our value even deeper in 2007.

Vicky Gregg
President and CEO