IHI ExpeditionExpedition: Preparing Care Teams for Bundled Payments

Session 1: Volume to Value

March 24, 2015

Trisha Frick, MS, RN Lucy Savitz, PhD, MBANick Bassett, MBAMolly Bogan, MA

Begins at 1:00 PM ET

Today’s Host2

Akiera Gilbert is a Project Assistant at the Institute for

Healthcare Improvement. She is primarily responsible

for the Passport membership, and is involved in the

facilitation of Expeditions. Her work also delves into the

Conversation Ready Project within Patient and Family-

Centered Care, as well as the Primary Care

Collaborative. Akiera is a second-year student at

Northeastern University, and is on her first co-op at IHI.

She is pursuing a Bachelor of Science in Human

Services (concentrating in Public Health) and a minor in

Social Entrepreneurship.

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For more information or to enroll, email Passport@ihi.org

By joining Passport, your entire staff gets access to a wide range of web-based

tools to help prioritize, deploy, and accelerate your improvement initiatives

without leaving your desks. Passport membership will:

• Bring IHI's world-class expertise to your doorstep (virtually) and support

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in the areas of greatest concern to hospitals today.

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IHI Open School Courses

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– Improvement Capability

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9

What is an Expedition?

ex•pe•di•tion (noun)

1. an excursion, journey, or voyage made for some specific

purpose

2. the group of persons engaged in such an activity

3. promptness or speed in accomplishing something

Expedition Director11

Molly Bogan, MA, co-leads IHI’s Quality, Cost and

Value portfolio of work. Molly began her career in

health working in clinics and outreach programs in

Washington State. She went on to join the US Peace

Corps, assisting local government with health services

planning in Paraguay. Molly also managed a USAID

Global Health fellowship program and an NIH-funded

child health improvement research program at Harvard

School of Public Health in Boston, MA. Molly holds a

Master of Arts in International Development and Global

Health Affairs from the University of Denver. Prior to

joining IHI, Molly was the Director of Finance and

Administration for an international health non-profit

organization.

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Chat

12

What is your goal for participating

in this Expedition?

Please send your message to All Participants

Today’s Agenda13

Ground Rules & Introductions

Pre- Survey Debrief

Moving from Volume to Value

IHI’s Model for Improvement

Action Period Assignment

Ground Rules14

We learn from one another – “All teach, all learn”

Why reinvent the wheel? - Steal shamelessly

This is a transparent learning environment

All ideas/feedback are welcome and encouraged!

Expedition Objectives

At the conclusion of this Expedition, participants will be able to:

Describe the benefits of transitioning to a value-based purchasing model

Understand and apply an activity-based cost accounting methodology to at least one care process

Demonstrate examples of how to engage stakeholders in building a bundle

Describe how to customize care team redesign to deliver optimum care under value-based purchasing

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Schedule of Calls

Session 1 – Moving from Volume to ValueDate: Tuesday, March 24, 1:00 - 2:30 PM Eastern Time

Session 2 – Building a Care Bundle

Date: Tuesday, April 7, 1:00 - 2:00 PM Eastern Time

Session 3 – Collecting Data Using Activity-based CostingDate: Tuesday, April 21, 1:00 - 2:00 PM Eastern Time

Session 4 – Engaging Stakeholders in Bundle DesignDate: Tuesday, May 5, 1:00 - 2:00 PM Eastern Time

Session 5 – Care Team RedesignDate: Tuesday, May 19, 1:00 - 2:00 PM Eastern Time

Session 5 – Putting it All Together: Case StudyDate: Tuesday, June 2, 1:00 - 2:00 PM Eastern Time

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Pre-Work Assignment & Survey Results

• Complete the IHI Open School Course QI 102: The

Model For Improvement: Your Engine for Change

• Complete the Preparing Care Teams for Bundled

Payments Pre-Survey (thanks to all who already

completed!)

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Faculty18

Lucy Savitz, PhD, MBA

Director of Research and

Education

Intermountain Healthcare

Salt Lake City, Utah

Trisha Frick, MS, RN

Assistant Director of

Managed Care

Johns Hopkins

HealthCare LLC

Glen Burnie, Maryland

Nick Bassett, MBA

Healthcare

Transformation

Manager

Intermountain

Healthcare

Salt Lake City, Utah

Introduction to Bundled Payments

Public and private payers are moving toward global

payment arrangements with health care providers

Agreements tie set payments to successful deployment

of specific bundles of care

Require teams from across the system – from

contracting and finance teams to physicians and front-

line care teams – to engage in coordinating care

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Volume to Value

Focus on the cultural changes required to coordinate

care under the new payment structures

Relationship between better patient care and potential

savings – keep the patient at the center

Quality indicators must not decline as costs are reduced

New skill sets and mindsets required – are your teams

ready?

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Setting the Stage

“Bundled payment is generally touted as a promising

example of payment innovation — but the true benefit of

bundling payments derives from reengineering care

delivery, not from combining separately paid line items into

a single tab. Bundled payment provides the impetus, but

the work of care redesign must follow if the promise of

bundled payment is to be realized.”

- Tom Williams and Jill Yegian, Modern Healthcare blog

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IHI Expedition:

Preparing Care Teams for

Bundled PaymentsMarch 24, 2015 Webinar

Lucy A. Savitz, Ph.D., MBA

Director of Research and Education

Intermountain Institute for Health Care Delivery Research

The Burning Platform

Driving Change

• An eagerness to accelerate reforms in

healthcare financing ahead of evidence that

the new models will succeed.

• Bundled payments and other ACA payment

reforms have strong Federal support and a

growing private-sector following.

The Promise

• Bundled payment will lead to higher-

quality, more coordinated care and

lower costs.

• Episode-based bundled payment may

serve to align financial incentives across

the spectrum of care.

Creating a Learning Commons

• Evaluation results of in-progress,

episodic bundle payment initiatives will

not be available for several years.

• Making the case for shared learning as

we go.

Medicare’s Bundled Payment Initiative: Most Hospitals

Are Focused on A Few High-Volume Conditions Tsai TC et al., Health Affairs, March 2015, 371-380

• Aim is to bundle a single payment for an episode of

acute care (while hospitalized) with related post-

acute care in an appropriate setting.

• Participating hospitals are:

– Mostly large

– Non-profit

– Teaching hospitals in the Northeast

– Cover conditions with high clinical volumes

Reported Findings

Claims-based analysis

Focused on only a few clinical conditions

• No significant differences in spending

between participating & non-participating

hospitals

• Post-acute care explains the largest

variation in overall spending

– Presents an opportunity to align incentives

across providers

HHS Announcement

In three words, our vision for improving health delivery is about better, smarter, healthier.

If we find better ways to pay providers, deliver care, and distribute information:

Encourage the integration and coordination of clinical care services

Improve population health

Promote patient engagement through shared decision making

Incentives

Create transparency on cost and quality information

Bring electronic health information to the point of care for meaningful use

Focus Areas Description

Care

Delivery

Information

Promote value-based payment systems

– Test new alternative payment models

– Increase linkage of Medicaid, Medicare FFS, and other payments to value

Bring proven payment models to scale

HHS AnnouncementBetter Care. Smarter Spending. Healthier People

We can receive better care.

We can spend our health dollars more wisely.

We can have healthier communities, a healthier economy, and a healthier country.

Source: CMS

Target percentage of Medicare FFS

payments linked to quality and alternative

payment models in 2016 & 2018

2016

All Medicare FFS (Categories 1-4)

FFS linked to quality (Categories 2-4)

Alternative payment models (Categories 3-4)

2018

50

%

85

%

30

%

90

%

Source: CMS

Payment Taxonomy Framework

Category 1:

Fee for Service—

No Link to Quality

Category 2:

Fee for Service—Link to

Quality

Category 3:

Alternative Payment Models Built on Fee-

for-Service Architecture

Category 4:

Population-Based Payment

Des

crip

tio

n

Payments are based

on volume of

services and not

linked to quality or

efficiency

At least a portion of

payments vary based on

the quality or efficiency

of health care delivery

Some payment is linked to the effective

management of a population or an episode

of care. Payments still triggered by

delivery of services, but opportunities for

shared savings or 2-sided risk

Payment is not directly

triggered by service delivery

so volume is not linked to

payment. Clinicians and

organizations are paid and

responsible for the care of a

beneficiary for a long period

(e.g. >1 yr)

Med

icar

e F

FS

Limited in

Medicare fee-

for-service

Majority of

Medicare

payments

now are

linked to

quality

Hospital value-

based purchasing

Physician Value-

Based Modifier

Readmissions/Hosp

ital Acquired

Condition

Reduction Program

Accountable care organizations

Medical homes

Bundled payments

Comprehensive primary care

initiative

Comprehensive ESRD

Medicare-Medicaid Financial

Alignment Initiative Fee-For-Service

Model

Eligible Pioneer

accountable care

organizations in years 3-

5

Source: CMS

Sustainable Growth Rate

SGR Repeal & Reform Timeline

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Sunset of existing quality value

penalties under PQRS, VBM, EHR

12/31/2017

Permanent repeal of SGR

0.5% update in physician payments

(2014-2018)

0% update in physician base payments

(2019-2023)

APM participating providers exempt from MIPS; receive annual 5% bonus (2018-2023)

Merit-Based Incentive Payment System (MIPS) adjustments 2018

+/-4%

2019

+/- 5%

2020

+/- 7%

Tr

ac

k 1

Tr

ac

k 2

2021 & beyond

+/- 9%

• CBO estimate of bipartisan, bicameral bill: @$122B/10 years

• Medicare extenders will add another @$25 - 30B to cost of bill

Cu

rre

nt

law 2018

4%

Physician Quality Reporting System Penalty2015

-1.5%

2016 & beyond

-2.0%

Meaningful Use Penalty (up to %)2015

-1.0%

2016

-2.0%

2017

-3.0%

2018

-4.0%

Value-based Payment Modifier penalty (up to %)2015

-1.0%

2016

-2.0%

2017

-4.0% (NPRM)

2019 & beyond

-5.0%

2018 & beyond

???%

Ready to Test the Waters

Getting to Bundles• Identify potential areas to bundle

• Identify available clinical champion(s)

• Identify payer partner(s)

• Flow chart out the episode process of care across the

continuum

• Capture cost and revenue streams for each process segment

• Identify cost structure and/or innovation opportunities to

streamline/eliminate waste

• Apply parameters to historical data &/or run prospective

“shadow” system to assess net financial impact

• Determine which opportunities present “goodness of fit”

• Collaboratively establish monitoring/feedback system—cost,

quality, service, patient experience

Launch

TPS Lean Based on U.S. Manufacturing Expertise

• Henry Ford first to use concepts of

eliminating waste & increasing

efficiency

• Taiichi Ohno pioneered Toyota

Production System (TPS), drawing on

writings of Ford

• Deming added to Japanese post WWII

bid to overtake U.S. manufacturing

Quality Costs• Represent the difference between the

actual cost of a product or service and what the reduced cost would be if there were no possibility of substandard service, failure of products, or defects in their manufacture.

• Commonly accepted categories of quality cost (in manufacturing circa 1945) are:

– Failures

– Appraisal

– Prevention

Muda or Quality Waste

• Mistakes

• Defects

• Overproduction

• Processing

• Transportation and/or Motion

• Waiting

• Inventory

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Capturing Waste

• Designing an effective system for capturing costs

• Requires comprehensive identification & collection of data

• Must be practical

• Determining when, where, & how to use a tool

Evolving Technology, Ease of Use

35

2 6

4

53

2

0.010.020.030.040.050.060.070.0

0.010.020.030.040.050.060.070.0

Average Number of Activities(Number of observations per unit)

0

5

10

15

20

25

30

35

% Interrupted

35

2 6

45

3

2

0.02.04.06.08.010.012.014.016.018.020.0

0.02.04.06.08.0

10.012.014.016.018.020.0

Average Number of Interruptions(Number of observations per unit)

3

5

2 6

4

5

3

2

0.00.51.01.52.02.53.03.54.04.5

0.00.51.01.52.02.53.03.54.04.5

Avg Number of Abandoned Activities(Number of observations per unit)

Facilitated Discussion

Questions & Answers

Group Discussion

Questions/Discussion47

Raise your hand

Use the chat

Action Period Assignment

• Identify one patient population to test a

potential bundled payment design.

• Consider one of the top 10 DRGs or procedures

from your systems

• Request for volunteers to share learning from

test at start of next session

Expedition Communications

• All sessions are recorded

• Materials are sent one day in advance

• Listserv address for session communications:

bundledpaymentexp@ls.ihi.org

• To add colleagues, email us at info@ihi.org

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Session 250

Tuesday, April 7, 2015, 1:00 - 2:00 PM ET

Building a Care Bundle

Trisha Frick, MS, RN

Assistant Director of Managed Care

Johns Hopkins HealthCare LLC

Glen Burnie, Maryland

Nick Bassett, MBA

Healthcare Transformation Manager

Intermountain Healthcare

Salt Lake City, Utah

Thank You!51

Molly Bogan

mbogan@ihi.org

Akiera Gilbert

agilbert@ihi.org

Please let us know if you have any questions or

feedback following today’s Expedition webinar.

VideosBob Lloyd’s Whiteboard Videos:

Model for Improvement, Part 1: http://www.ihi.org/education/IHIOpenSchool/resources/Pages/AudioandVideo/Whiteboard3.aspx

Model for Improvement, Part 2: http://www.ihi.org/education/IHIOpenSchool/resources/Pages/AudioandVideo/Whiteboard4.aspx

PDSA Cycles, Part 1: http://www.ihi.org/education/IHIOpenSchool/resources/Pages/AudioandVideo/Whiteboard5.aspx

PDSA Cycles, Part 2: http://www.ihi.org/education/IHIOpenSchool/resources/Pages/AudioandVideo/Whiteboard6.aspx

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What are we trying toaccomplish?

How will we know that achange is an improvement?

What change can we make that

will result in improvement?

Model for Improvement

Act Plan

Study Do

Aim of Improvement

Measurement of

Improvement

Developing a Change

Testing a Change

Adapted from Langley, G. J., Nolan, K. M., Nolan, T. W.,

Norman, C. L., & Provost, L. P. The Improvement Guide:

A Practical Approach to Enhancing Organizational

Performance. San Francisco, CA: Jossey-Bass, 1996.

Why Test?

• Increase the belief that the change will result in

improvement

• Predict how much improvement can be

expected from the change

• Learn how to adapt the change to conditions in

the local environment

• Evaluate costs and side-effects of the change

• Minimize resistance upon implementation

Repeated Use of the PDSA Cycle55

Hunches

Theories

Ideas

Changes that Result

in Improvement

A P

S D

A P

S D

Very Small

Scale Test

Follow-up

Tests

Wide-Scale Tests

of Change

Implementation of

Change

Sequential building of knowledge under a wide range

of conditions

Spread

Multiple PDSA Cycle Ramps

Transfusion

Administration

Safety

Communication

and Awareness

Strategies

Engaging with

Leadership

56

Implementing

Transfusion

Guidelines

Final Questions/Discussion57

Raise your hand

Use the chat