GOVERNOR’S CHILDREN’S CABINET WORKGROUP ON DISCONNECTED YOUTH Presenter name Presenter title
Boston Children’s Hospital Enterprise Costing Workgroup Meeting April 6, 2013
description
Transcript of Boston Children’s Hospital Enterprise Costing Workgroup Meeting April 6, 2013
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Boston Children’s Hospital
Enterprise Costing Workgroup Meeting
April 6, 2013
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OverviewIssues:
Rising Healthcare Costs Unprofitable Pricing MethodsProcess Inefficiency
Analysis:Time-Driven Activity-Based Costing (TDABC)
ApproachRecommendations:
Bundled PaymentPhysician Bonus Model
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BCH Financial PositionHistorically has reported higher costs against
competitors The largest provider to low-income families, with 30%
patients covered by MedicaidTreats 90% of the most critical and complex pediatric
cases in Massachusetts
Resulting Key Issue:Rising Healthcare Costs
Patient AttritionLapse in Medicaid contract with New HampshireBlue Cross Blue Shield Contract Renegotiation
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BCBS-MA: Alternative Quality Contract
Medical Expense Trend Comparison for AQC Enrollees and Non-AQC Enrollees
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Payment MethodsCharacteristic
Historical Capitation
Fee for Service (FFS) Bundled Payment
What is the time period of the payment?
Prorated payment per month for a
year
Paid post service
completion
Monthly payments with occasional budget
reconciliation
Which providers and services are bundled?
Physician, hospital, and PRN services related to a specific person (often capitated
separately)
No Bundling
Physician, hospital, and PRN services related to a budgeted payment for a
specific treatment, specific health event, or
chronic conditionAre performance or outcome measures present?
Sometimes No Yes
Is risk-adjustment included?
No No Yes
Who accepts the risk?Provider accepts
financial risk
Payer primarily accepts
financial risk
Provider bears short-term risk
Payor bears long-term risk
What drives physician action?
Volume and Access
ManagementVolume
Efficiency and quality (if paired with performance)
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3-Step Implementation Plan for Bundled Payment at BCH
Bundled Payment for Acute Care
Bundled Payment for
Acute Care and Post Acute Care
Bundled Payment for Post Acute
CarePhase
1Phase
2Phase
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•Specific treatments are bundled
•Ex. Clubfoot cast
•Specific health events are bundled
•Ex. Appendicitis
•Chronic conditions are bundled
•Ex. Type 1 Diabetes
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BCH Cost AnalysisCost Analysis
MethodRatio of Cost to Charges
(RCC)Relative Value Unit
(RVU)Time Driven Activity
Based Costing (TDABC)
Description
RCC approach assume costs are
proportional to charges
RVU measures the amount of resources consumed to provide
a service. Then allocates the RVU weight to labor
Bottom-up approach to costing that
estimates costs based on time used for
services
Benefits
Easy to calculate; simple proportion
demonstrating relationship
Takes into account indirect and direct costs; considers complexity of
services provided
Better cost allocation; easily breaks down
costs to identify service line problems; allows charges to be
more reflective of costs
Drawbacks
RCC measures cost to charge ratio, not cost
to reimbursement ratio
Allocation methodologies tend
to be imprecise during practice
Takes tremendous effort to implement
and launch this costing system;
requires constant re-evaluation
Accuracy Good Better Best
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Department of Plastic and Oral Surgery (DPOS)
WorksheetPersonnel Process Time (minutes)
Diagnosis Surgeon ASR RN CAPlagiocephaly 18 8 23 5
Neoplasm Skin Excision 22 55.5 20 5Craniosynostosis 40 10.5 23 10
Determination of Capacity CostAnnual Cost per person $522,720.00 $89,700.00 $134,550.00 $71,760.00
Clinical minutes available per year 87120 89700 89700 89700Capacity cost rate ($ per minute) $6.00 $1.00 $1.50 $0.80
Medical Diagnosis Cost per patient visit Surgeon ASR RN CA
Total Cost Charge
Average Reimbursement
TDABC PROFIT
RCC COST
RCC PROFIT
Plagiocephaly $108.00 $8.00 $34.50 $4.00 $154.50 $350.00 $224.00 $69.50 $210.00 $14.00
Neoplasm Skin Excision $132.00 $55.50 $30.00 $4.00 $221.50 $350.00 $224.00 $2.50 $210.00 $14.00
Craniosynostosis $240.00 $10.50 $34.50 $8.00 $293.00 $350.00 $224.00 $(69.00) $210.00 $14.00
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Department of Orthopaedic Surgery: Cast Room
Worksheet
Cost per procedure Surgeon ASR RN Total Cost Charge Average Reimbursement
TDABC PROFIT RVU COST RVU
PROFIT
Long leg cast, cotton padding $1.75 $60.00 $- $61.75 $523.00 $366.10 $304.35 $135.67 $230.43
Long leg cast, Gore-tex padding $1.75 $60.00 $8.25 $70.00 $584.00 $408.80 $338.80 $141.77 $267.03
Petrie long leg cast $1.75 $103.50 $- $105.25 $181.00 $126.70 $21.45 $112.98 $13.72
Clubfoot cast (hospital), full cycle $546.00 $135.00 $- $681.00 $975.00 $682.50 $1.50 $225.42 $457.08
Clubfoot cast (Foundation), full cycle $546.00 $135.00 $- $681.00 $715.00 $500.50 $(180.50) $393.25 $107.25
Personnel Orthopedic Surgeon Plaster/ Cast Technician Ambulatory Service RepresentativeDetermination of Capacity Cost
Annual Cost per person $693,000 $83,160 $62,370.00 Available minutes per year $99,000 $83,160 $83,160
Capacity cost rate ($ per minute) $7.00 $1.00 $0.75 Personnel Process Time (minutes)
Procedure MinutesLong leg cast, cotton padding 0.25 60.00 0.00
Long leg cast, Gore-tex padding 0.25 60.00 11.00Petrie long leg cast 0.25 103.50 0.00
Clubfoot cast (hospital; initial visit) 13.00 17.00 0.00Clubfoot cast (hospital; replacement visit) 13.00 22.00 0.00
Clubfoot cast (hospital; final visit) 0.00 8.00 0.00
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Impact of the TDABC Approach
With better costing measures, BCH can determine more accurate and fair prices for servicesPrices reflect acuity
Negotiate better bundled paymentsEasily identifies profit margins and
losses for each service lines
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Key IssuesIssue #1 Rising Healthcare
Costs
Issue #2
Unprofitable Pricing Methods
Issue #3 Process
Inefficiency
Issue #4
Patient Attrition
Recommendations1. Short term:
Bundled payment for acute care
2. Long term: Bundled payment for post acute care
Time-Driven Activity-Based Costing
(TDABC) Approach
Standardized Clinical Assessment and
Management Plans (SCAMPS)
1. Contain costs2. Implement
accurate costing 3. Streamline
processes
BCH Outcomes1. Cost containment2. Cost avoidance3. Enhanced quality4. Population health
1. Identify profit margin and loss for each service line
2. Accurate and acuity sensitive cost data
1. Eliminate waste2. Improve process3. Improve entire
patient care cycle
1. Improved revenues2. Better utilization of
resources 3. Increase in number
of patients
Recommendations for BCH’s Four Key Issues and the Resulting Organizational Outcomes
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Physician Bonus ModelBased on the Program for Patient Safety
and Quality (PPSQ)
Bonus Calculation
Safety Effectiveness Efficiency Timeliness
Patient-Centeredne
ssEquitabili
ty
1 2 3 4 5 6
Percentage of PPSQ
Measures Achieved
Number of Physicians for
the specific treatment
Total Bonus
Distribution Amount
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Evaluation of Aggregate Physician Bonus Payment
1 𝝌 0
𝝌1 = Bundled Payment 𝝌2 = Fee for Service
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Evaluation of Physician Bonus by Treatment
Falling Cost
Quality threshold (Best Practices)
Global budget line
Bonus adjustment for unpreventable adverse event
No bonus earned
Num
ber
of P
PSQ
Mea
sure
s Ach
ieve
d
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Porter’s Value ChainSe
rvic
e D
eliv
ery
Pre-Service Point-of-Service• Save time and
money• Attending a
hospital solely focused on children and their families
• Medicaid patients would receive care they otherwise would not have received
Increased quality of care
• Receive care from providers competing on quality and evidence based practices
• Value Driven Innovation
• More timely and efficient care
Accessibility to high quality network of care
Quality of Life• Increased
emotional well-being
• Less school and work days missed
Post-Service
Demonstrating Value to the Patient:Visual Display
• Display PPSQ results within each department
Technology
• Internet• Web-based Tools• Software
Systems
Communication
• Explanation of Quality Care
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Questions
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Appendix
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Exhibit A: Program for Patient Safety and Quality at BCH
Safety: Adverse events Central line infections in
Intensive Care UnitsTimeliness:
Emergency Department Length of Stay
Effectiveness: Pain Management Diabetes Care Lung Function in Patients
with Cystic Fibrosis Asthma Care
Efficiency: Length of Stay and
Readmission Rate
Equitability: Equitable nursing care
Patient-Centeredness: Inpatient satisfaction Outpatient satisfaction
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Exhibit B: SCAMPS Example
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Exhibit B: SCAMPS Example
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Exhibit B: SCAMPS Example
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Exhibit B:Standardized Clinical Assessment and Management Plans
(SCAMPS)
Reduces diversity of patient assessment Systematic approach to clinical assessments and
management algorithm Allowing better management of care Improving patient care delivery
Determines how effective current clinical processes and practices are
Ease transition towards health management interventions
Reduce unnecessary resource utilization .
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Exhibit C: Method for Measuring SCAMPS Shortfalls
The costs associated with any failure to meet the standardized care levels determined by SCAMPS will be calculated based on the TDABC approach.
Current BCH examples: No shows within the DPOSMiscommunications when transferring
patients from the Emergency Department
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Exhibit D:DPOS Cost Analysis Breakdown
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Exhibit E: Severity of Illness Index
Acute and Post-Acute care bundled payments adjust for case-mix severity of illness in different patient populations
Severity of Illness Index is a generic (not disease-specific) four-level index (increasing severity from level 1 to level 4) determined from the values of seven dimensions related to a patient's burden of illness. These dimensions are: Stage of the principal diagnosis, Complications of the principal condition, Concurrent interacting conditions that affect the hospital course, Dependency on hospital staff, Extent of non-operating room life support procedures, Rate of response to therapy or rate of recovery, Resolution of acute symptoms/signs.
It is not what is done to the patient that drives the Severity of Illness Index, but what the patient actually looks like.
The signs and symptoms of the patient's principal and secondary diagnoses, as well as the rate of response to therapy contribute most heavily to Severity of Illness coding.
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Exhibit F: What Constitutes an Unpreventable, Adverse
Event?According the World Health Organization, an adverse
event is defined as an injury related to medical management and not due to the complications of a disease.
According to Boston Children’s Hospital, an adverse event is defined as something that unintended that happens in a hospital which causes either harm or the risk of harm to patients.
Examples of unpreventable adverse events: Drug reaction in a patient with no history of prior drug
reaction Side effect of chemotherapy in a patient who must endure the
chemotherapy in order to be cured of cancer
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Key IssuesIssue #1
Rising Healthcare Costs
Issue #2
Unprofitable Pricing Methods
Issue #3
Process Inefficiency
Issue #4
Patient Attrition
Recommendations1. Short term:
Bundled payment for specific treatment
2. Long term: Bundled payment for chronic condition
Time-Driven Activity-Based
Costing (TDABC) Approach
Standardized Clinical Assessment and
Management Plans (SCAMPS)
1. Contain costs2. Implement
accurate costing3. Streamline
processes
Outcomes on Patient Value1. Patient receives
more outcome driven care centered around the full cycle of care
2. Patient saves time and money as only the necessary medical services are performed
1. Potential to reduce charges for services, saving the patient money
1. Better quality of care2. Improves quality of
life for both the child and the parent • less school and
work days missed)• Improved emotional
well-being along the continuum of care
1. Potential to receive innovative care by physicians exposed to a larger case mix
2. Receive care from providers competing on quality and evidence-based practices
Exhibit G: Outcomes of the Value-Based Competition Plan on Patient Value
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Exhibit H: Calculation of Bundled Payment for a
Specific Treatment
60%
10%
30%
100%
Payment Hospital Physician Bonus= + +
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ReferencesAlternative Quality Contract (AQC) Blue Cross Blue Shield of Massachusetts. (2010). Blue Cross Blue Shield of Massachusetts The Alternative QUALITY Contract. Retrieved from:
http://www.massmed.org/AM/Template.cfm?Section=Register&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=28047
Children's Hospital Boston Joins the Alternative Quality Contract (2012). Blue Cross Blue Shield of Massachusetts. Retrieved from: http://www.bluecrossma.com/visitor/newsroom/press-releases/2012/2012-01-24.html
Hennrikus. W., Waters. P., Bae. D.,Virk.S., and Shah. A. (2012). Inside the Value Revolution at
Children’s Hospital Boston: Time-Driven Activity-Based Costing in Orthopaedic Surgery. The Harvard Orthopaedic Journal. Vol.14
Massachusetts Payment Reform Model: Results and Lessons, Massachusetts. Retrieved from: http://www.bluecrossma.com/visitor/pdf/aqc-results-white-paper.pd
Massachusetts Medical Society (2009) Overview of Alternative Payment Models. Retrieved from: http://www.massmed.org/AM/Template.cfm?Section=Register&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=28047
Song. Z., Safran. D., Landon.B., Day. M., and Chernew. M. (2012). The 'Alternative Quality Contract,' Based on a Global Budget, Lowered Medical Spending and Improved Quality. Health Affairs. Retrieved from: http://mobile.commonwealthfund.org/Publications/In-the-Literature/2012/Jul/The-Alternative-Quality-Contract.aspx
Weisman. R. (2012). Children’s, Blue Cross deal curbs payments. The Boston Globe. Retrieved from: http://www.bostonglobe.com/business/2012/01/24/children-hospital-boston-won-get-payment-increase-from-blue-cross-this-year/mraRWoC99jqOI5suyQ8IZI/story.html
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References Bundled Payment Bebinger.M. (January 24, 2012) Children’s Hospital Signs On To Global Payment Strategy Common
Health Reform and Reality. Retrieved from: http://commonhealth.wbur.org/2012/01/childrens-hospital-signs-on-to-global-payment-strategy Global Payment Case Study. Retrieved from: http://www.nbch.org/BCBSMA_Case_Study
Spoerl. B., (May 01, 2012). Massachusetts to Take Up Global Payment Legislation in the Coming Weeks. Retrieved from:http://www.beckershospitalreview.com/racs-/-icd-9-/-icd-10/massachusetts-to-take-up-global-payment-legislation-in-the-coming-weeks.html
Overland. D. (2012). Harvard Pilgrim reaches global payment deal with Partners HealthCare. FierceHealthPayer. Retrieved from: http://www.fiercehealthpayer.com/story/harvard-pilgrim-reaches-global-payment-deal-partners-healthcare/2012-10-25
Massachusetts Law Reform Controlling Health Care Costs in Massachusetts with a Global Spending Target (2012). The journal of the American medical association. 308, (12). Retrieved from:
http://jama.jamanetwork.com/article.aspx?articleid=1352960 – Galewitz. P. (2009). Can 'bundled' payments help slash health costs? Kaiser Health News Retrieved
from: http://usatoday30.usatoday.com/news/health/2009-10-25-bundle-payments_N.htm Glass. K., Pieper. L. , & Berlin. M. (1999). Incentive-Based Physician Compensation Models. J
Ambulatory Care Manage, 22(3), 36–46. Retrieved from: http://www.aspenpublishers.com/books/KongstvedtOLD/Readings/Chapter%2007/JACM%2022-3.p36-46.pdf
GOODNOUGH and Sack (2011). Massachusetts Tries to Rein In Its Health Costs. The New York Times. Retrieved from: http://www.nytimes.com/2011/10/18/us/massachusetts-tries-to-rein-in-its-health-care-cost.html?pagewanted=all&_r=0
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References Physician Bonus Model Formulas Health Affairs Blog (August 13th, 2012) The Release of Massachusetts Health Reform 2.0.
Retrieved from: http://healthaffairs.org/blog/2012/08/13/the-release-of-massachusetts-health-reform-2-0/
Herman. B. (April 03, 2012). Major Lessons from CMS' Bundled Payment ACE Demonstration. Retrieved from: http://www.beckershospitalreview.com/hospital-physician-relationships/2-major-lessons-from-cms-bundled-payment-ace-demonstration.html
Patel. P., (November 01, 2012) Successfully Implementing Bundled Payment Models. Retrieved from:http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=1250004871
SCAMPS Coakley. M., (2011). Examination of Health Care Cost Trends and Cost Drivers. Massachusetts
Attorney. Retrieved from: http://www.mass.gov/ago/docs/healthcare/2011-hcctd.pdf Rathod. R., Farias. M., Friedman. K., Graham. D., Fulton. D., Newburger. J., Colan. S., & Lock. J.
(2010) A Novel Approach to Gathering and Acting on Relevant Clinical. Congenit Heart Dis. 2010; 5: 343–353
SEVERITY OF ILLNESS Severity of Illness with DRGs: Impact on Prospective Payment AHA RESEARCH SYNTHESIS REPORT Retrieved from: http://
www.ncbi.nlm.nih.gov/pmc/articles/PMC1646367/pdf/amjph00286-0081.pdf