FROM VOLUME TO VALUE: Better Ways to Pay for Health Care, and How to Get There
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Transcript of FROM VOLUME TO VALUE: Better Ways to Pay for Health Care, and How to Get There
FROM VOLUME TO VALUE: Better Ways to Pay for Health Care,
and How to Get There
Harold D. MillerExecutive Director
Center for Healthcare Quality and Payment Reformand
President and CEO Network for Regional Healthcare Improvement
2© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
What is an“Accountable Care Organization?”
3© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
What is an“Accountable Care Organization?”
A group of providers who are“accountable for the quality,
cost, and overall care” of patientsSection 3022, Patient Protection and Affordable Care Act
The Official Definition
4© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
What is an“Accountable Care Organization?”
A group of providers who can figure
out how to save moneyin health care
The Real Definition
5© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
How Will ACOs Generate All These Savings?
ACO(“the “Black Box”)
Financial Risk
PatientsLowerCosts
Organizational Structure
6© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
ACO(“the “Black Box”)
What’s In That Black Box Can’t Be Good For Consumers, Can It?
RATIONINGPatientsLowerCosts
Financial Risk
Organizational Structure
7© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
REDUCINGCOSTS WITHOUT
RATIONING
Focus Should Be On Improving Care to Reduce Costs
PatientsLowerCosts
8© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Reducing Costs Without Rationing:Can It Be Done??
9© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Reducing Costs Without Rationing:Prevention and Wellness
PreventableCondition
ContinuedHealth
HealthyConsumer
10© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Reducing Costs Without Rationing:Avoiding Hospitalizations
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
11© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Reducing Costs Without Rationing:Efficient, Successful Treatment
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcome
12© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Reducing Costs Without Rationing:Is Also Quality Improvement!
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcome
Better Outcomes/Higher Quality
13© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Current Payment Systems Reward Bad Outcomes, Not Better Health
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcome$
14© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Are There Better Ways to Pay for Health Care?
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcome$ ?
15© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
“Episode Payments” to Reward Value Within Episodes
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcomeEpisode
Payment$A Single Payment
For All Care Needed From All Providers in
the Episode, With a Warranty For
Complications
16© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Yes, a Health Care ProviderCan Offer a Warranty
Geisinger Health System ProvenCareSM
– A single payment for an ENTIRE 90 day period including:• ALL related pre-admission care
• ALL inpatient physician and hospital services
• ALL related post-acute care
• ALL care for any related complications or readmissions
– Types of conditions/treatments currently offered:• Cardiac Bypass Surgery• Cardiac Stents• Cataract Surgery• Total Hip Replacement• Bariatric Surgery• Perinatal Care• Low Back Pain• Treatment of Chronic Kidney Disease
17© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Payment + Process Improvement = Better Outcomes, Lower Costs
18© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
What a Single Physician and Hospital Can Do
• In 1987, an orthopedic surgeon in Lansing, MI and the local hospital, Ingham Medical Center, offered:– a fixed total price for surgical services for shoulder and knee problems– a warranty for any subsequent services needed for a two-year period,
including repeat visits, imaging, rehospitalization and additional surgery.
• Results:– Surgeon received over 80% more in payment than otherwise – Hospital received 13% more than otherwise, despite fewer
rehospitalizations– Health insurer paid 40% less than otherwise
• Method: – Reducing unnecessary auxiliary services such as radiography and
physical therapy– Reducing the length of stay in the hospital– Reducing complications and readmissions.
19© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
The Weakness of Episode Payment
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcomeEpisode
Payment
How do you preventunnecessary episodes
of care?(e.g., preventable hospitalizations
for chronic disease, overuse of cardiac
surgery,back surgery, etc.)
20© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Comprehensive Care PaymentsTo Avoid Episodes
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcome
A Single Payment
For All CareNeeded ForA Condition
$ ComprehensiveCare
Paymentor
“Global”Payment
21© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Payment Levels Adjusted Based on Patient Conditions
Providers Lose Money On Unusually
Expensive Cases
Limits on Total RiskProviders Accept forUnpredictable Events
Providers Are Paid Regardless of the
Quality of Care
Bonuses/PenaltiesBased on Quality
Measurement
Provider Makes More Money If
Patients Stay Well
Provider Makes More Money If
Patients Stay Well
Flexibility to DeliverHighest-Value
Services
Flexibility to DeliverHighest-Value
Services
No Additional Revenuefor Taking Sicker
Patients
CAPITATION (WORST VERSIONS)
COMPREHENSIVE CARE PAYMENT
Isn’t This Capitation?No – It’s Different
22© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Example: BCBS MassachusettsAlternative Quality Contract
• Single payment for all costs of care for a population of patients– Adjusted up/down annually based on severity of patient conditions– Initial payment set based on past expenditures, not arbitrary estimates– Provides flexibility to pay for new/different services– Bonus paid for high quality care
• Five-year contract – Savings for payer achieved by controlling increases in costs– Allows provider to reap returns on investment in preventive care,
infrastructure
• Broad participation– 14 physician groups/health systems participating with over 400,000
patients, including one primary care IPA with 72 physicians
• Positive first-year results– Higher ambulatory care quality than non-AQC practices, better patient
outcomes, lower readmission rates and ER utilizationhttp://www.bluecrossma.com/visitor/about-us/making-quality-health-care-affordable.html
23© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Payment Reform Allows Pursuing a Different “Triple Aim”
• Better Care for Patients (Win)• Lower Costs for Purchasers/Payers (Win)• Equal or Better Margins for Providers (Win)
24© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
A Deeper Dive into Episode Payments and Implications
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcome
$EpisodePayment
25© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Episode Payment =Bundling + Warranty
• Bundling: Making a single payment to two or more providers who are currently paid separately – e.g., services of both a hospital and a physician– e.g., both hospital and post-acute care services
• Warranty: Not charging/being paid more for costs of treating hospital-acquired infections, problems caused by errors, etc.
26© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Current Episode-of-Care Initiatives
• Medicare Acute Care Episode (ACE) Demonstration– single amount for hospital & physician services for cardiac, orthopedic DRGs– combined payment lower than current Medicare payments– patients receive share of Medicare’s savings through lower copays– Bundled payment goes to a Physician-Hospital Organization which then divides
the payment between the hospital and the physicians– Congressional authorization allows CMS to waive restrictions on gain-sharing,
so hospitals can share internal savings with physicians– Physicians eligible to receive up to 25% more than current payment levels
• Prometheus PaymentTM
– covers full episode of care and all providers– estimates the appropriate payment amount based on historical costs and any
guidelines for evidence-based care– “virtual bundling”: no provider receives the money for another provider’s
services; each provider receives a share of the total episode payment in proportion to the services they’ve billed
– Pilot sites in Rockford, IL; Michigan; Minneapolis; Philadelphia; Utah
27© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
How Can Physicians, Hospitals, and Payers Benefit from Bundling?
28© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Example: Reducing Cost of Implantable Defibrillators
COST TYPE TODAY
Physician Fee $ 1,200
Device Cost $20,000
Other Hospital Cost $ 9,100
Hosp. Margin (3%) $ 900
Total Hospital Pmt $30,000
Total Cost to Payer $31,200
29© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Physicians Could Help Hospitals Reduce Cost of Medical Devices
COST TYPE TODAY CHANGE
Physician Fee $ 1,200
Device Cost $20,000 -10% ($2,000)
Other Hospital Cost $ 9,100
Hosp. Margin $ 900
Total Hospital Pmt $30,000
Total Cost to Payer $31,200
30© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Today: All Savings Goes to the Hospital, No Reward for Physician
COST TYPE TODAY CHANGE SPLIT
Physician Fee $ 1,200 + 0%
Device Cost $20,000 -10% ($2,000)
Other Hospital Cost $ 9,100
Hosp. Margin $ 900 +222% ($2000)
Total Hospital Pmt $30,000
Total Cost to Payer $31,200 -0%
31© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Bundling Allows Savings Split Among Docs, Hospital, Payers
COST TYPE TODAY CHANGE SPLIT
Physician Fee $ 1,200 + 50% ($600)
Device Cost $20,000 -10% ($2,000)
Other Hospital Cost $ 9,100
Hosp. Margin $ 900 +50% ($450)
Total Hospital Pmt $30,000
Total Cost to Payer $31,200 - 2.3% ($950)
32© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
So Defibrillator Implantation is Cheaper But More Profitable
COST TYPE TODAY CHANGE SPLIT NEW
Physician Fee $ 1,200 + 50% ($600) $ 1,800
Device Cost $20,000 -10% ($2,000) $18,000
Other Hospital Cost $ 9,100 $ 9,100
Hosp. Margin $ 900 +50% ($450) $ 1,350
Total Hospital Pmt $30,000 $28,450
Total Cost to Payer $31,200 - 2.3% ($950) $30,250
Win-Win-Win
33© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Won’t Bundling Encourage More Procedures?
34© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Bundling Can Provide a Path to Reducing Overutilization
COST TYPE TODAY 200 Cases
Physician Fee $ 1,200 $240,000
Device Cost $20,000
Other Hospital Cost $ 9,100
Hosp. Margin $ 900 $180,000
Total Hospital Pmt $30,000
Total Cost to Payer $31,200 $6,240,000
35© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
What If There is Evidence of Overutilization?
COST TYPE TODAY 200 Cases
Physician Fee $ 1,200 $240,000
Device Cost $20,000
Other Hospital Cost $ 9,100
Hosp. Margin $ 900 $180,000
Total Hospital Pmt $30,000
Total Cost to Payer $31,200 $6,240,000
Assume a study findsthat 20% of procedures
are unnecessary orcan be avoided throughmedical management
36© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Appropriateness Guidelines Alone Can Hurt Hospitals & Physicians
COST TYPE TODAY 200 Cases TODAY 160 Cases Chg
Physician Fee $ 1,200 $240,000 $ 1,200 $192,000 -20%
Device Cost $20,000 $20,000
Other Hospital Cost $ 9,100 $ 9,100
Hosp. Margin $ 900 $180,000 $ 900 $144,000 -20%
Total Hospital Pmt $30,000 $30,000
Total Cost to Payer $31,200 $6,240,000 $31,200 $4,992,000 -20%
37© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Bundling + Guidelines Can Avoid Harming Providers While Saving $
COST TYPE TODAY 200 Cases NEW 160 Cases Chg
Physician Fee $ 1,200 $240,000 $ 1,800 $288,000 +20%
Device Cost $20,000 $18,000
Other Hospital Cost $ 9,100 $ 9,100
Hosp. Margin $ 900 $180,000 $ 1,350 $216,000 +20%
Total Hospital Pmt $30,000 $28,450
Total Cost to Payer $31,200 $6,240,000 $30,250 $4,840,000 -22%
38© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Bundling Can Also Allow Benefits From Changes in Settings
39© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Under Today’s Separate Facility and Physician Fees…
Physician Fee
Hospital DRG
INPATIENT
Payer
40© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
…Savings From Shifts to Lower Cost Settings All Accrue to Payer
Physician Fee
Hospital DRG
INPATIENT OUTPATIENT
Physician Fee
Outpatient APC
Payer Savings
Payer
41© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
…Savings From Shifts to Lower Cost Settings All Accrue to Payer
Physician Fee
Hospital DRG
INPATIENT OUTPATIENT OFFICE
Physician Fee
Outpatient APC
Physician Fee
Practice Exp.
Payer Savings Payer Savings
Payer
42© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
But if the Physician Is Accepting a Bundled Payment…
Physician Fee
Hospital DRG
INPATIENT OUTPATIENT OFFICE
Physician Fee
Outpatient APC
Physician Fee
Practice Exp.
Payer Savings Payer Savings
Physician Fee
Hospital Cost
Payer
Payer
BundledPayment
43© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
…The Physician Can Be Paid More But Still Charge Less to the Payer
Physician Fee
Hospital DRG
INPATIENT OUTPATIENT OFFICE
Physician Fee
Outpatient APC
Physician Fee
Practice Exp.
Payer Savings Payer Savings
Physician Fee
Hospital Cost
Physician Fee
Outpatient Cost
Physician Fee
Office Costs
Payer Savings Payer Savings
Payer
Payer
BundledPayment
44© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
How Can Physicians, Hospitals,& Payers Benefit from Warranties?
45© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Prices for Warrantied Care Will Likely Be Higher
46© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Prices for Warrantied Care Will Likely Be Higher
• Q: “Why should we pay more to get good-quality care??”• A: In most industries, warrantied products cost more, but
they’re desirable because TOTAL spending on the product (repairs & replacement) is lower than without the warranty
47© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Prices for Warrantied Care May Be Higher, But Spending Lower
• Q: “Why should we pay more to get good-quality care??”• A: In most industries, warrantied products cost more, but
they’re desirable because TOTAL spending on the product (repairs & replacement) is lower than without the warranty
• In healthcare, a DRG with a warranty would need to have a higher payment rate than the equivalent non-warrantied DRG, but the higher price would be offset by fewer DRGs w/ complications, outlier payments, and readmissions
48© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Example: $10,000 Procedure
Cost of Procedure
$10,000
49© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Actual Average Payment for Procedure is Higher than $10,000
Cost of Procedure
AddedCost of
InfectionRate of
InfectionsAverage
Total Cost
$10,000 $20,000 5% $11,000
50© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Starting Point for Warranty Price:Actual Current Average Payment
Cost of Procedure
AddedCost of
InfectionRate of
InfectionsAverage
Total CostPrice
Charged
Change in Net
Revenue
$10,000 $20,000 5% $11,000 $11,000 $0
51© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Limited Warranty Gives Financial Incentive to Improve Quality
Cost of Procedure
AddedCost of
InfectionRate of
InfectionsAverage
Total CostPrice
Charged
Change in Net
Revenue
$10,000 $20,000 5% $11,000 $11,000 $0
$10,000 $20,000 4% $10,800 $11,000 $200
ReducingAdverseEvents…
…ImprovesThe Bottom
Line
...ReducesCosts...
52© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Higher-Quality Provider Can Charge Less, Attract More Patients
Cost of Procedure
AddedCost of
InfectionRate of
InfectionsAverage
Total CostPrice
Charged
Change in Net
Revenue
$10,000 $20,000 5% $11,000 $11,000 $0
$10,000 $20,000 4% $10,800 $11,000 $200
$10,000 $20,000 4% $10,800 $10,800 $0
EnablesLowerPrices
53© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
A Virtuous Cycle of QualityImprovement & Cost Reduction
Cost of Procedure
AddedCost of
InfectionRate of
InfectionsAverage
Total CostPrice
Charged
Change in Net
Revenue
$10,000 $20,000 5% $11,000 $11,000 $0
$10,000 $20,000 4% $10,800 $11,000 $200
$10,000 $20,000 4% $10,800 $10,800 $0
$10,000 $20,000 3% $10,600 $10,800 $200
ReducingAdverseEvents…
…ImprovesThe Bottom
Line
...ReducesCosts...
54© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Win-Win-Win for Patients, Payers, and Providers
Cost of Procedure
AddedCost of
InfectionRate of
InfectionsAverage
Total CostPrice
Charged
Change in Net
Revenue
$10,000 $20,000 5% $11,000 $11,000 $0
$10,000 $20,000 4% $10,800 $11,000 $200
$10,000 $20,000 4% $10,800 $10,800 $0
$10,000 $20,000 3% $10,600 $10,800 $200
$10,000 $20,000 3% $10,600 $10,600 $0
$10,000 $20,000 0% $10,000 $10,600 $600
Quality is Better......Cost is Lower...
...Providers More Profitable
55© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
In Contrast, Non-Payment Alone Creates Financial Losses
Cost of Procedure
AddedCost of
InfectionRate of
InfectionsAverage
Total CostAmount
Paid
Change in Net
Revenue
$10,000 $20,000 5% $11,000 $11,000 $0
$10,000 $20,000 5% $11,000 $10,000 -$1,000
$10,000 $20,000 3% $10,600 $10,000 -$600
$10,000 $20,000 0% $10,000 $10,000 $0
Non-Payment
forInfections
Causes Losses While
Improving
56© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Is P4P Easier Than a Warranty?
Payer-Driven P4P Provider-Driven WarrantyPayer defines what level of
performance is acceptable to determine bonus or penalty
Physiciansdefine feasible level of performance
and have incentive to do betterPayer defines which cases
will be include/excludedPhysicians have incentive to
improve on all potential casesP4P bonus/penalty may not
offset loss in revenues/margin from fewer admissions, visits, procedures
Physicians set price of successful care to adequately cover costs with
fewer admissions/visitsP4P bonus/penalty may not cover costs of extra services needed to
improve performance
Physicians set price of successful treatment to cover costs of additional
services neededPayer must spend more to incent
greater performance improvements beyond the minimum level
Physicians have incentive to improve as much as possible to
reduce costs and to reduce prices in order to attract more patients
Payer decides which providers (hospital, physicians, post-acute
care) to reward/penalize
Hospital, physicians, and other providers decide themselves how to
divide accountability
57© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Not Just Better Acute Care,But Reducing the Need for It
PreventableCondition
ContinuedHealth
HealthyConsumer
NoHospitalization
Acute Care Episode
Efficient Successful Outcome
Complications,Infections,
Readmissions
High-CostSuccessfulOutcome
58© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Significant Reduction in Rate of Hospitalizations Possible
Examples:• 40% reduction in hospital admissions, 41% reduction in ER visits for
exacerbations of COPD using in-home & phone patient education by nurses or respiratory therapists
J. Bourbeau, M. Julien, et al, “Reduction of Hospital Utilization in Patients with Chronic Obstructive Pulmonary Disease: A Disease-Specific Self-Management Intervention,” Archives of Internal Medicine 163(5), 2003
• 66% reduction in hospitalizations for CHF patients using home-based telemonitoring
M.E. Cordisco, A. Benjaminovitz, et al, “Use of Telemonitoring to Decrease the Rate of Hospitalization in Patients With Severe Congestive Heart Failure,” American Journal of Cardiology 84(7), 1999
• 27% reduction in hospital admissions, 21% reduction in ER visits through self-management education
M.A. Gadoury, K. Schwartzman, et al, “Self-Management Reduces Both Short- and Long-Term Hospitalisation in COPD,” European Respiratory Journal 26(5), 2005
59© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
ERVisits
Lab Work/Imaging
HospitalStay
Health Insurance Plan
PhysicianPractice
$ $
We Don’t Pay for the Things That Will Prevent OverutilizationCURRENT PAYMENT SYSTEMS
Avoidable
Avoidable
Avoidable
OfficeVisits
NurseCare Mgr
PhoneCalls
$
No payment for
services that can prevent utilization...
...No penalty or reward for
high utilizationelsewhere
60© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
ERVisits
Lab Work/Imaging
HospitalStay
Health Insurance Plan
PhysicianPractice/
ACO
Global Payment Can Solve That,But It’s a Big Jump from FFS
FULL COMP. CARE/GLOBAL PAYMENT
Avoidable Avoidable
Avoidable
$
Flexibility and accountabilityfor a condition-adjusted budget
covering all services
$Condition-
AdjustedPer PersonPayment Office
Visits
NurseCare Mgr
PhoneCalls
61© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
ERVisits
Lab Work/Imaging
HospitalStay
Health Insurance Plan
PhysicianPractice
$ $
What Might a Transitional Payment System Look Like?
CURRENT PAYMENT SYSTEMS
Avoidable
Avoidable
Avoidable
OfficeVisits
NurseCare Mgr
PhoneCalls
$
62© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
ERVisits
Lab Work/Imaging
HospitalStay
Health Insurance Plan
PhysicianPractice
$ $ $
Typical Medical Home “Solution”:Pay More for Physician Services(TYPICAL) MEDICAL HOME PROGRAM
Avoidable
Avoidable
Avoidable
$Higher payment for primary care...
RN Care Mgr
PhoneCalls
MonthlyCare MgtPayment
OfficeVisits
63© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
ERVisits
Lab Work/Imaging
HospitalStay
Health Insurance Plan
PhysicianPractice
$ $ $
Weakness: More $ for Physicians, But Any Savings Elsewhere?
(TYPICAL) MEDICAL HOME PROGRAM
Avoidable
Avoidable
Avoidable
$Higher payment for primary care...
...But no commitment
to reduceutilizationelsewhere
RN Care Mgr
PhoneCalls
MonthlyCare MgtPayment
OfficeVisits
64© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
ERVisits
Lab Work/Imaging
HospitalStay
Health Insurance Plan
PhysicianPractice
$ $
Is Shared Savings the Answer?
SHARED SAVINGS MODEL
Avoidable Avoidable
Avoidable$Portion of savings from reducedspending in other areas...
...Returnedto physician
practice aftersavings
determined...
...but no upfront $for better care
OfficeVisits
NurseCare Mgr
PhoneCalls
$
65© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Weaknesses of “Shared Savings”
• Provides no upfront money to enable physician practices to hire nurse care managers, install IT, etc.; additional funds, if any, come years after the care changes are made
• Requires TOTAL costs to go down in order for the physician practice to receive ANY increase in payment, even if the practice can’t control all costs
• Gives more rewards to the poor performers who improve than the providers who’ve done well all along
• The underlying fee for service incentives continue; losing less (via shared savings) is still losing compared to FFS
• I.e., it’s not really true payment reform
66© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Health Insurance Plan
PhysicianPractice
$ $ $
Better Approach: Simulate Flexibility/Incentives of Global PmtCARE MGT PAYMENT + UTILIZATION P4P
ERVisits
Lab Work/Imaging
HospitalStay
Avoidable Avoidable
Avoidable
P4P Bonus/PenaltyBased on Utilization
$
OfficeVisits
$ $
$
RN Care Mgr
PhoneCalls
MonthlyCare MgtPayment
More $for PCP
Targets forReduction
In Utilization
$
67© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Example: Washington State Medical Home Pilot Program
• Payers will pay the Primary Care Practice an upfront PMPM Care Management Payment for all patients ($2.50 first year, $2.00 future years)
• Practice agrees to reduce rate of non-urgent ER visits and ambulatory care-sensitive hospital admissions by amounts which will generate savings for payers at least equal to the Care Management Payment (targets are practice specific)
• If a practice reduces ER visits and hospitalizations by more than the target amount, the payer shares 50% of the net savings (gross savings minus the PMPM) with the practice
• If a practice fails to meet its ER/hospitalization targets, thepractice pays a penalty via a reduction in its FFS conversion factor equivalent to up to 50% of Care Management Payment
68© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Not Just PCPs, But The Medical Neighborhood, Too
Primary CareMedical Home
(Non-Primary Care)
Specialists
PATIENT
FFS Payment Based on Volume,
Procedures, & Office Visits
Resources &Incentives for
More CoordinatedCare
69© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Pay Both PCPs & Specialists for Outcomes & Coordination
Primary CareMedical Home
(Non-Primary Care)
Specialists
PATIENT
Resources &Incentives for
More CoordinatedCare
Payment for Consultation w/ PCP;
Outcomes-BasedPayment
70© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Today: Underpaid PCPs, Underused Specialists, High Costs
Per VisitVisits/
Yr Per Pt TotalPCP $100 6 $600 $300,000
Per Month Mo/Yr Per Pt Total
Drugs $400 10 $4,000 $2,000,000
Per StayStays/
Yr Per Pt TotalHospital $10,000 1 $10,000 $5,000,000
Per VisitVisits/
Yr Per Pt TotalSpecialist $100 4 $400 $200,000
Total $7,500,000
Uncoordinated Management Today500 Moderate/Severe Chronic Disease Patients
71© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Today: Underpaid PCPs, Underused Specialists, High Costs
Per VisitVisits/
Yr Per Pt TotalPCP $100 6 $600 $300,000
Per Month Mo/Yr Per Pt Total
Drugs $400 10 $4,000 $2,000,000
Per StayStays/
Yr Per Pt TotalHospital $10,000 1 $10,000 $5,000,000
Per VisitVisits/
Yr Per Pt TotalSpecialist $100 4 $400 $200,000
Total $7,500,000
Uncoordinated Management Today500 Moderate/Severe Chronic Disease Patients
6.7% of the moneygoes to the physicians
72© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Pay PCPs & Specialists to Provide More Coordinated, Proactive Care
Per VisitVisits/
Yr Per Pt TotalPCP $100 6 $600 $300,000
Per Month Mo/Yr Per Pt Total
Drugs $400 10 $4,000 $2,000,000
Per StayStays/
Yr Per Pt TotalHospital $10,000 1 $10,000 $5,000,000
Per VisitVisits/
Yr Per Pt TotalSpecialist $100 4 $400 $200,000
Total $7,500,000
Uncoordinated Management TodayPer Pt Total Change
PCP $1,000 $500,000 67%Specialist $1,000 $500,000 150%
Per Month
Mo Filled Per Pt Total
Drugs 400 12 $4,800 $2,400,000 20%
Per StayStays/
Yr Per Case TotalHospital $10,000 0.75 $7,500 $3,750,000 -25%
Total $7,150,000 -5%
Coordinated Management Tomorrow500 Moderate/Severe Chronic Disease Patients
Pay for Patient Care, Not Visits
73© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Higher Medication Expenses,But Lower Hospital Costs
Per VisitVisits/
Yr Per Pt TotalPCP $100 6 $600 $300,000
Per Month Mo/Yr Per Pt Total
Drugs $400 10 $4,000 $2,000,000
Per StayStays/
Yr Per Pt TotalHospital $10,000 1 $10,000 $5,000,000
Per VisitVisits/
Yr Per Pt TotalSpecialist $100 4 $400 $200,000
Total $7,500,000
Uncoordinated Management TodayPer Pt Total Change
PCP $1,000 $500,000 67%Specialist $1,000 $500,000 150%
Per Month
Mo Filled Per Pt Total
Drugs 400 12 $4,800 $2,400,000 20%
Per StayStays/
Yr Per Case TotalHospital $10,000 0.75 $7,500 $3,750,000 -25%
Total $7,150,000 -5%
Coordinated Management Tomorrow500 Moderate/Severe Chronic Disease Patients
Pay for Patient Care, Not Visits Better OutcomesBetter Medication Compliance
74© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Win-Win-Win Through PCP/Specialist Coordinated Mgt
Per VisitVisits/
Yr Per Pt TotalPCP $100 6 $600 $300,000
Per Month Mo/Yr Per Pt Total
Drugs $400 10 $4,000 $2,000,000
Per StayStays/
Yr Per Pt TotalHospital $10,000 1 $10,000 $5,000,000
Per VisitVisits/
Yr Per Pt TotalSpecialist $100 4 $400 $200,000
Total $7,500,000
Uncoordinated Management TodayPer Pt Total Change
PCP $1,000 $500,000 67%Specialist $1,000 $500,000 150%
Per Month
Mo Filled Per Pt Total
Drugs 400 12 $4,800 $2,400,000 20%
Per StayStays/
Yr Per Case TotalHospital $10,000 0.75 $7,500 $3,750,000 -25%
Total $7,150,000 -5%
Coordinated Management Tomorrow500 Moderate/Severe Chronic Disease Patients
Fewer HospitalizationsMore Revenue for Docs Lower Total Costs
75© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Minnesota’s DIAMOND Initiative
• Goal: improve outcomes for patients with depression• Convened all payers in Minnesota (except for
Medicare) to agree on common payment changes for PCPs & specialists
• Payment changes:– Support for a care manager in the primary care practice– Psychiatrists paid to consult with PCP on how to manage
patient’s care comprehensively, rather than patient having to see psychiatrist separately
• Result: Dramatic improvement in remission ratehttp://www.icsi.org/health_care_redesign_/diamond_35953/
76© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Health Insurance Plan
PhysicianPractice
$
Phase 2: More ACO-ness:Partial Global Payment
PARTIAL GLOBAL PMT (Professional Svcs)
ERVisits
Lab Work/Imaging
HospitalStay
Avoidable Avoidable
Avoidable
$
$
Condition-Adjusted
Per PersonPayment
Flexibility and accountabilityfor a condition-adjusted budget
covering all professional services
OfficeVisits
NurseCare Mgr
PhoneCalls
$ $P4P Bonus/PenaltyBased on Utilization
77© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
ERVisits
Lab Work/Imaging
HospitalStay
Health Insurance Plan
PhysicianPractice/
ACO
And Then Transition to a FullGlobal Payment System
FULL COMP. CARE/GLOBAL PAYMENT
Avoidable Avoidable
Avoidable
$
$Condition-
AdjustedPer PersonPayment Office
Visits
NurseCare Mgr
PhoneCalls
$ $
P4P Bonus/PenaltyBased on Quality
78© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Transitioning to Accountable Care Payment
Health Insurance Plan
PhysicianPractice
$ $ $
CARE MGT PAYMENT + UTILIZATION P4P
ERVisits
Lab Work/Imaging
HospitalStay
Avoidable Avoidable
Avoidable
P4P Bonus/PenaltyBased on Utilization
$
$
OfficeVisits
$ $
$
RN Care Mgr
PhoneCalls
MonthlyCare MgtPayment
More $for PCP
Targets forReduction
In Utilization
$
Health Insurance Plan
PhysicianPractice
$ $
PARTIAL GLOBAL PMT (Professional Svcs)
ERVisits
Lab Work/Imaging
HospitalStay
Avoidable Avoidable
Avoidable
$
$
Condition-Adjusted
Per PersonPayment
Flexibility and accountabilityfor a condition-adjusted budget
covering all professional services
OfficeVisits
NurseCare Mgr
PhoneCalls
$
$ $P4P Bonus/PenaltyBased on Utilization
ERVisits
Lab Work/Imaging
HospitalStay
Health Insurance Plan
PhysicianPractice/
ACO
FULL COMP. CARE/GLOBAL PMT + QUALITY P4P
Avoidable Avoidable
Avoidable
$
$Condition-
AdjustedPer PersonPayment Office
Visits
NurseCare Mgr
PhoneCalls
P4P Bonus/PenaltyBased on Quality
$ $
79© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
How Does All This Fit Into Accountable Care Organizations??
80© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Heart Disease
Back Pain
Pregnancy
PATIENTS
PrimaryCare
Practice
Orthopedic Group
OB/GYNGroup
CardiologyGroup
If Physician Practices Want to Manage a Patient Population...
81© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
MEDICARE/HEALTH PLAN
Heart Disease
Back Pain
Pregnancy
PATIENTS
PrimaryCare
Practice
Orthopedic Group
OB/GYNGroup
CardiologyGroup Heart
Episode Pmt
BackEpisode Pmt
PregnancyEpisode Pmt
CareMgt Pmt
+P4P
...Should They Hope Payers Will Make the Right Payment Changes?
82© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
MEDICARE/HEALTH PLAN
Condition-Adjusted Comprehensive Care(Global) Payment
Heart Disease
Back Pain
Pregnancy
PATIENTS
PrimaryCare
Practice
ACO
Orthopedic Group
OB/GYNGroup
CardiologyGroup Heart
Episode Pmt
BackEpisode Pmt
PregnancyEpisode Pmt
CareMgt Pmt
+P4P
Or Take a Single Payment & Work Out Internal Pmts Themselves?
83© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Challenge: Giving Physicians the Skills to Take Accountable Pmts
PhysicianPractice ? Patient
UnneededTesting
InpatientEpisodes
84© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Resources/Capabilities Neededfor Docs to Take Accountable Pmts
Patient
UnneededTesting
InpatientEpisodes
Physician w/ time for diagnosis,treatment planning, and followup
Resources for patient educ. & self-mgt support (e.g., RN care mgr)
Method for targeting high-riskpatients (e.g., predictive modeling)
Capability for tracking patient care and ensuring followup (e.g., registry)
Coordinated relationships with other specialists and hospitals
Data and analytics to measure and monitor utilization and quality
PhysicianPractice
85© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Capabilities Exist Today, But Don’t Coordinate w/ Physicians
Physician w/ time for diagnosis,treatment planning, and followup
Resources for patient educ. & self-mgt support (e.g., RN care mgr)
Coordinated relationships withother specialists and hospitals
Data and analytics to measure and monitor utilization and quality
PhysicianPractice
HealthPlanorDiseaseMgtVendor
Method for targeting high-riskpatients (e.g., predictive modeling)
Capability for tracking patient care and ensuring followup (e.g., registry)
Patient
UnneededTesting
InpatientEpisodes
86© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Medical Home Initiatives Expand Practice Capacity, But Not Enough
Physician w/ time for diagnosis,treatment planning, and followup
Resources for patient educ. & self-mgt support (e.g., RN care mgr)
Coordinated relationships withother specialists and hospitals
Data and analytics to measure and monitor utilization and quality
Patient-CenteredMedicalHome
HealthPlan
Method for targeting high-riskpatients (e.g., predictive modeling)
Capability for tracking patient care and ensuring followup (e.g., registry)
Patient
UnneededTesting
InpatientEpisodes
87© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Global Payment RequiresROI Analysis & Targeting
• Return on Investment (ROI; Cost-Effectiveness)– Cost of intervention
vs.– Savings from reduced utilization
• Timeframe for Return– Short-term: readmission, ER reduction, complex patients– Long-term: prevention, early-stage chronic disease patients
• Targeting Services/Patient Segmentation– Focusing additional services on high-utilization patients
vs.– Providing services to all patients as a general “benefit”
88© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Goal: Give Docs the Capacityto Deliver “Accountable Care”
Physician w/ time for diagnosis,treatment planning, and followup
Resources for patient educ. & self-mgt support (e.g., RN care mgr)
Method for targeting high-riskpatients (e.g., predictive modeling)
Capability for tracking patient care and ensuring followup (e.g., registry)
Coordinated relationships withother specialists and hospitals
Data and analytics to measure and monitor utilization and quality
PhysicianPractice+Partners=ACO
Patient
UnneededTesting
InpatientEpisodes
89© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Can Small Physician Practices Manage Accountable Payments?
• Infrastructure/Services– Small physician practices may not have enough patients to justify staff
or other services to coordinate care, particularly for patients with complex illnesses (e.g., nurse care managers, patient registries, etc.)
• Quality/Cost Measurement– Small numbers of patients make measurement unreliable; physicians
may be inappropriately labeled low quality, high cost, or vice versa
DO MD DOMD
DO MD DO MD
DO MD DOMD
DO MD DO MD
MD DO MD DO
Better Patient
Outcomes & Lower Cost
?
90© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Solution 1: Hospitals Acquire Physician Practices
DO MD DOMD
DO MD DO MD
DO MD DOMD
DO MD DO MD
Resources for patient educ. & self-mgt support (e.g., RN care mgr)
Method for targeting high-riskpatients (e.g., predictive modeling
Capability for tracking patient care and ensuring followup (e.g., registry)
Coordinated relationships with specialists and hospitals
Data and analytics to measure and monitor utilization and quality
DO MD DO MD
Hospital Management
Better Patient
Outcomes & Lower CostDO MD DOMD
DO MD DO MD
DO MD DOMD
DO MD DO MD
MD DO MD DO
91© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Shared Savings Forces Hospitals To Consider Hiring Physicians
• Hospitals are not directly eligible for shared savings;all savings are attributed to primary care physicians
• Even if the hospital reduces readmissions, infections, complications, etc., it may receive no reward for doing so
• Reducing hospitalizations, ER visits, etc. will reduce the hospital’s revenues, but the hospital may receive no share of the savings to help it cover its stranded fixed costs
• Consequently, hospitals may feel compelled to own physician practices, either to capture a portion of the shared savings revenue, or to prevent there from being any savings!
92© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Solution 2: Hospital-Physician Partnerships
Resources for patient educ. & self-mgt support (e.g., RN care mgr)
Method for targeting high-riskpatients (e.g., predictive modeling
Capability for tracking patient care and ensuring followup (e.g., registry)
Coordinated relationships with specialists and hospitals
Data and analytics to measure and monitor utilization and quality Hospital
Staff& IT(e.g.,via
Physician-Hospital
Org.)
Better Patient
Outcomes & Lower CostDO MD DOMD
DO MD DO MD
DO MD DOMD
DO MD DO MD
MD DO MD DO
DO MD DOMD
DO MD DO MD
DO MD DOMD
DO MD DO MD
DO MD DO MD
93© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Solution 3: Use IPAs for Critical Mass
IndependentPractice Association
Better Patient
Outcomes & Lower Cost
Resources for patient educ. & self-mgt support (e.g., RN care mgr)
Method for targeting high-riskpatients (e.g., predictive modeling
Capability for tracking patient care and ensuring followup (e.g., registry)
Coordinated relationships with specialists and hospitals
Data and analytics to measure and monitor utilization and quality
DO MD DOMD
DO MD DO MD
DO MD DOMD
DO MD DO MD
MD DO MD DO
DO MD DOMD
DO MD DO MD
DO MD DOMD
DO MD DO MD
DO MD DO MD
94© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Examples of Small, Independent MD Practices With Global Pmt
• Small Primary Care Practices Managing Global Payments– Physician Health Partners (PHP) in Denver, CO is a management services
organization that supports four separate IPAs (median size: 3 MDs/practice). PHP accepts capitated risk-based contracts on behalf of the IPAs with both Medicare and commercial HMOs. www.phpmcs.com
• Independent PCPs & Specialists Managing Global Payments– Northwest Physicians Network (NPN) in Tacoma, WA is an IPA with 109 PCPs
and 345 specialists in 165 practices (average size: 2.4 MDs/practice). NPN accepts full or partial risk capitation contracts, operates its own Medicare Advantage plan, and does third party administration for self-insured businesses. www.npnwa.net
• Joint Contracting by MDs & Hospitals for Global Payments– The Mount Auburn Cambridge IPA (MACIPA) and Mount Auburn Hospital jointly
contract with three major Boston-area health plans for full-risk capitation. The IPA is independent of the hospital; they coordinate care with each other without any formal legal structure. www.macipa.com
95© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Benefit Design Changes AreAlso Critical to Success
ProviderPatient
Payment System
Benefit Design
Ability and Incentives to:
•Keep patients well•Avoid unneeded services•Deliver services efficiently•Coordinate services with other providers
Ability andIncentives to:
•Improve health•Take prescribed medications•Allow a provider to coordinate care•Choose the highest-value providers and services
96© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Example: Important to Coordinate Pharmacy & Medical Benefits
Hospital Costs
PhysicianCosts
OtherServices
Medical Benefits (Parts A/B)
DrugCosts
Pharmacy Benefits (Part D)
Single-minded focus onreducing costs here...
...could result in higherspending on hospitalizations
• High copays for brand-nameswhen no generic exists
• Doughnut holes & deductibles
Principal treatment for mostchronic diseases involves regular use
of maintenance medication
97© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Ensuring ThatLower Cost ≠ Lower Quality
• Concern: Giving healthcare providers more accountability for costs reduces the incentives for overuse, but raises concerns about whether patients will get too little care
98© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Effective Quality Measurement and Reporting Needed
• Concern: Giving healthcare providers more accountability for costs reduces the incentives for overuse, but raises concerns about whether patients will get too little care
• Solution: Measure healthcare quality and include incentives for providers to maintain/improve quality as well as reduce costs
99© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Federal Measurement of Quality?
• Concern: Giving healthcare providers more accountability for costs reduces the incentives for overuse, but raises concerns about whether patients will get too little care
• Solution: Measure healthcare quality and include incentives for providers to maintain/improve quality as well as reduce costs
• Undesirable: National data aggregation and reporting– E.g., PQRI/PQRS
100© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Community-DrivenQuality Measurement
• Concern: Giving healthcare providers more accountability for costs reduces the incentives for overuse, but raises concerns about whether patients will get too little care
• Solution: Measure healthcare quality and include incentives for providers to maintain/improve quality as well as reduce costs
• Ideal: Develop quality measures with participationof physicians andhospitals, as agrowing number of regions do
Massachusetts Health Quality Partners
Wisconsin Collaborative for Healthcare Quality
Oregon Health Care Quality Corporation
101© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
“Measurement” vs. “Analysis”
• Measurement presumes we know what we’re looking for, that we know what’s desirable/achievable in all communities, and that we can legitimately rate/rank providers based on the measures– That’s a high standard, and it’s not surprising that we don’t
have adequate measures in many important areas, particularly outcome measures
• Analysis, particularly exploratory analysis, presumes only that we believe there are opportunities to improve value, and that more work will be needed to determine what is achievable and cost-effective
102© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Example: Prometheus Analyses of Avoidable Complications
www.HCI3.org
Analysis of a Commercially-Insured Population
103© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Majority of Opportunities for Savings Related to Cardiology
www.HCI3.org
Opportunities for Cardiology
Analysis of a Commercially-Insured Population
104© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
(Many) Other Issues
• Malpractice/Defensive Medicine– Reforms in malpractice law– Collaborative changes in physician practice,
so more conservative care is the standard of care across the entire community
• e.g., HealthTeamWorks/Colorado Clinical Guidelines Collaborative
• Hospital Restructuring– Significant reductions in admissions, readmissions, infections,
procedures will require multi-year phase-out of existing capital investments & new/different investments
• Workforce Training/Retraining– More PCPs, more nurses willing to make home visits, fewer
support staff for fewer procedures, etc.
• And Others
105© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Payment Reform Is Necessary,But Not Sufficient
ReducingCosts
WithoutRationing
Value-DrivenDelivery Systems
PatientEducation &Engagement
Value-DrivenPayment Systems& Benefit Designs
Quality/CostAnalysis &Reporting
106© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Many Specific Activities in Each Area...
Value-DrivenPayment & Benefits
Quality/Cost Analysis& Reporting
PublicReporting
Business Case
Analysis
Value-DrivenDeliverySystems
TechnicalAssistanceto Providers
Design &Delivery of
Care
PatientEducation/Engagement
Value-BasedChoice
EducationMaterials
Engagementof
Purchasers
Alignment ofMultiplePayers
PaymentSystemDesign
BenefitDesign
ProviderOrganization/Coordination
Claims, Clinical &
Patient Data
Wellness &Adherence
ReducingCosts
WithoutRationing
107© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
...All of Which Need to Be Coordinated to Be Successful
PublicReporting
Business Case
Analysis
Design &Delivery of
Care
Value-BasedChoice
Engagementof
Purchasers
Alignment ofMultiplePayers
PaymentSystemDesign
BenefitDesign
ProviderOrganization/Coordination
Claims, Clinical &
Patient Data
Wellness &Adherence
Do patients know which providers offer the
highest value care?
Will investmentsin new care
models createsavings > costs?
Will benefit designsgive patients the ability to
adhere to care plans?
Will paymentsupport better care?
Can providersaccept new
payment models?
TechnicalAssistanceto Providers
EducationMaterials
108© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
How Can All These Functions Be Delivered in a Coordinated Way?
PublicReporting
Business Case
Analysis
Design &Delivery of
Care
Value-BasedChoice
Engagementof
Purchasers
Alignment ofMultiplePayers
PaymentSystemDesign
BenefitDesign
ProviderOrganization/Coordination
Claims, Clinical &
Patient Data
Wellness &Adherence
TechnicalAssistanceto Providers
EducationMaterials
?
109© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
The Role of Regional Health Improvement Collaboratives
PublicReporting
Business Case
Analysis
Design &Delivery of
Care
Value-BasedChoice
Engagementof
Purchasers
Alignment ofMultiplePayers
PaymentSystemDesign
BenefitDesign
ProviderOrganization/Coordination
Claims, Clinical &
Patient Data
Wellness &Adherence
RegionalHealth
ImprovementCollaborative
TechnicalAssistanceto Providers
EducationMaterials
110© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
...With Active Involvement of All Healthcare Stakeholders
RegionalHealth
Improve-ment
Collab.
HealthcareProviders
HealthcarePayers
HealthcareConsumers
HealthcarePurchasers
111© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Leading Regional Health Improvement Collaboratives
–Albuquerque Coalition for Healthcare Quality–Aligning Forces for Quality – South Central PA–Alliance for Health–Better Health Greater Cleveland–California Cooperative Healthcare Reporting Initiative–California Quality Collaborative–Finger Lakes Health Systems Agency–Greater Detroit Area Health Council–Health Improvement Collaborative of Greater Cincinnati–Healthy Memphis Common Table– Institute for Clinical Systems Improvement– Integrated Healthcare Association– Iowa Healthcare Collaborative–Kansas City Quality Improvement Consortium–Louisiana Health Care Quality Forum–Maine Health Management Coalition–Massachusetts Health Quality Partners–Midwest Health Initiative–Minnesota Community Measurement–Minnesota Healthcare Value Exchange–Nevada Partnership for Value-Driven Healthcare (HealthInsight)–New York Quality Alliance–Oregon Health Care Quality Corporation–P2 Collaborative of Western New York–Pittsburgh Regional Health Initiative–Puget Sound Health Alliance–Quality Counts (Maine)–Quality Quest for Health of Illinois–Utah Partnership for Value-Driven Healthcare (HealthInsight)–Wisconsin Collaborative for Healthcare Quality–Wisconsin Healthcare Value Exchange
Network for RegionalHealthcare Improvement
www.NRHI.org
112© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
Moving to Accountable Care
• There is no one-size-fits-all solution to healthcare transformation; each region will need to actually make it happen in its own unique environment. The best federal policy will support regional innovation.
• Payment reform is necessary, but not sufficient. Delivery system reform, changes in benefit design, and effective quality measurement are also essential. Everything needs to focus on improving outcomes.
• Physicians need to take the lead by agreeing to take accountability for reducing costs without rationing, creating organizational structures that enable them to do so, and demanding the payment changes needed to support them.
113© 2009-2011 Center for Healthcare Quality and Payment Reform, Network for Regional Healthcare Improvement
For More Information on Payment and Delivery Reforms
www.PaymentReform.org
For More Information:
Harold D. MillerExecutive Director, Center for Healthcare Quality and Payment Reform
andPresident & CEO, Network for Regional Healthcare Improvement
(412) 803-3650
www.CHQPR.org
www.NRHI.org
www.PaymentReform.org