Creating a High Performance System:Aligning the Payment Model

April 4, 2014Tom Simmer, MD

Senior Vice President & Chief Medical Officer

A High Performance Healthcare System Addresses the root causes of low system performance

Poorly aligned payment

Payment structure must strongly support a pro-active, patient-centered care model and the population management infrastructure.

Lack of population focus

All-patient registries at the practice level, integrated registries at the ACO/ OSC level. Population performance measured and rewarded through tiered fee structure.

Fragmented health care delivery

Information sharing and process management connect participants in the care process.

Weak primary care foundation

Patient Centered Medical Home;Provider-Delivered Care Management

Lack of focus on process excellence

Collaborative Quality InitiativesLean process redesign

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It’s got to come out of course, but that doesn’t address the deeper problem.

BCBSM Strategy to Align Professional Payment with Performance measured at the Population Level.

• Two separate components:

– Payments to Physician Organizations (PO’s)

– Tiering of professional fees

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BCBSM Strategy to Align Professional Paymentand Population Management.

• Five percent of RVU-based professional service payment are paid to physician organizations (PO’s).

• The Physician Organization payment supports population management infrastructure and facilitation of care transformation, with some money to reward physicians. It is not the primary mechanism for rewarding professional providers.

• 2009, BCBSM began tiering some specialist fees, based on nomination by physician organizations, population-based performance measurement, or participation in specific improvement programs. Tiered fees is the primary method for rewarding professional providers.

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The BCBSM Physician Payment Process• For most services, the BCBSM fee is determined by multiplying the

number of “Relative Value Units (RVU’s) times a conversion factor.

• The total BCBSM will pay for a service is called the “allowed amount.”

• BCBSM pays the lesser of the allowed amount or the “billed amount,” which is the amount “charged” by the practice.

• The allowed amount for each RVU-based service is divided into two components: the Physician Organization component (5%) and the practitioner component (95%). Both components are paid in full; there is no “withhold.”

• There is no expectation by BCBSM that PO’s should pay physicians from their PO component revenue. There is an expectation the PO’s will create the population management infrastructure and facilitate practice transformation.

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The Physician Organization Component

• The Physician Organization component is expected to be “stable” at 5 percent, although small adjustments are likely.

• Physician Organizations will need to make progressively larger investments to meet the information sharing challenges and to support productive engagement by specialists in population management.

• BCBSM PO payments emphasize recognizing capabilities for information sharing, integrated registries, measuring performance, facilitating Patient Centered Medical Home (PCMH), Patient Centered Medical Neighborhood, Provider Delivered Care Management (PDCM) implementation, recruiting additional practitioners, and population measures related to cost and HEDIS quality performance.

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Key Point

Physician Organizations will have more physicians and less money available to distribute to physicians. The most important way a PO delivers value to its practitioners is to promote better results at the population level, resulting in higher fees to the physicians responsible for the care delivered to that population.

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BCBSM Payment Tiers: 2014

• BCBSM is implementing two models for tiering professional fees– Model One: tiers fees for evaluation and management (E & M) services only– Model Two: ties all RVU-based fees

• Each “tier” is a fixed percentage higher than the TRUST fee.

• BCBSM currently uses the first model for PCMH-designated practices and for selected specialties. BCBSM establishes fees for PCMH-designated practices that are a fixed percentage higher than TRUST, based on BCBSM criteria.

• The second model (as of February 2014) for specialties eligible for tiered fees, generally 5 or 10 percent higher than TRUST.

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BCBSM Payment Tiers: 2015

• BCBSM expects to apply the second model for tiering fees to all specialties (except anesthesia) by early 2015.

• Anesthesia fees are generally not RVU-based and BCBSM is not currently planning to apply the tiered-fee model to Anesthesia services.

• In order to be eligible for higher payment tiers, specialists must be nominated by the physician organization. Nomination occurs at the practice unit level.

• Nominated specialists are selected for higher payment tiers based on engagement with the PO’s with which they are affiliated and based on population-based performance measures.

• Population measures are based on the performance of ALL caregivers serving the population.

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Tiering Specialist Fees: Key Points• Specialists must be represented through one of the PGIP groups, even

though specialists may participate in more than one PO.

• Specialists must be nominated by the PO that represents them in PGIP and, if applicable, their “principal partner” PO, determined by source of their patients.

• PO’s nominate physicians based on written criteria available on the PO website and founded upon Patient Centered Medical Home Neighbor principles.

• The preponderance of measures used to select which specialist PUs receive higher fees are population-based and serve to reward specialists who serve patient populations with higher overall cost performance.

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Specialties Eligible for Fee Uplifts2011 2012 2013 2014 2015

Oncology OncologyCardiology

OncologyCardiologyEmergency MedicineGastroenterologyNephrologyObstetrics/GynecologyOrthopedics

OncologyCardiologyEmergency MedicineGastroenterologyNephrologyObstetrics/GynecologyOrthopedicsAllergyChiropracticCritical CareEndocrinologyInfectious DiseaseNeonatal CareNeurologyOtolaryngologyPain ManagementPodiatryPsychiatryPsychologyPulmonologyPhysical MedicineSports MedicineRheumatologyUrology

OncologyCardiologyEmergency MedicineGastroenterologyNephrologyObstetrics/GynecologyOrthopedicsAllergyChiropracticCritical CareEndocrinologyInfectious DiseaseNeonatal CareNeurologyOtolaryngologyPain ManagementPodiatryPsychiatryPsychologyPulmonologyPhysical MedicineSports MedicineRheumatologyUrologyPLUS:Most remaining specialties

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How can specialists receive higher BCBSM fees?

• Join a PO and become an active participant.

• Learn and meet the PO’s criteria for nomination

• Actively work to support the PO in its work of creating a high performance system of care. Work with other clinicians to improve communication, share information, and improve the process of care. Examples:

– ED use of imaging services– Improve performance on “Choosing Wisely” recommendations– Complex care patient whose doctors “aren’t talking to each other.”

• Understand areas of population management strengths and weaknesses and help the PO carry out its role more effectively.

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Oncology Fee Uplift Metrics (Performance)

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Metric Description Level Type Weight

PMPMOverall per member per month (PMPM)

medical/surgical cost of care + pharmacy - actual cost for cancer population

Population level Utilization 50%

Cancer sensitive

severe events

Cancer sensitive severe events related inpatient admissions or emergency department visits per

100 members per year

Population level Utilization 50%

Metrics for Emergency Medicine 2013 Uplift

Metric Description Level Type

CAVEWeighted average episode cost relative to peer group Sub-PO Efficiency

PMPMOverall PMPM Med/Surg Cost of Care + Rx Cost Sub-PO Utilization

GDRProportion of Rx scripts written for a generic drug Practice Unit Efficiency

LBPProportion of ED visits with a primary Diagnosis of Low Back Pain receiving an imaging study Practice Unit Quality

Population Management Strategy:Align Facility and Professional Providers

• BCBSM ValuePartneship Strategy is to partner with Physician Organizations and Hospitals to create a High Performance Healthcare System in Michigan. BCBSM’s payment models for professional and facility providers are aligned to promote the development of “organized systems of care” and better clinical outcomes measured at the population level.

• BCBSM is creating commercial products that “steer” members to professional and facility providers though lower member cost-share. BCBSM typically contracts with a “health system” and their affiliated professional providers.

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Medicare: Considering Tiered Fees

• CMS is encouraging accountability for population-level performance through Accountable Care Organizations (ACO’s)

• CMS is evaluating replacing the SGR (Sustainable Growth Rate) formula for physicians actively involved in an Accountable Care Organizations. This is likely to evolve into tiered fee structure---one for physicians not practicing within an ACO and a hier one for physicians participating in an ACO.

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Summary

• BCBSM partners with Physician Organizations to achieve a high performance health care system in Michigan.

• The BCBSM payment model with two separate components: payments to Physician Organizations and tiering of fees to physicians based on population level performance.

• Physician fees will be tiered based on performance measured at the population level, encouraging physicians to partner with their Physician Organizations to improve population-level performance.

• BCBSM is aligning its hospital payment model to reward effective

population management, encouraging physician-hospital partnership improve performance.

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