Impact of Health Payment Reform on Health Information Management

ProfessionalsAnn Chenoweth, MBA, RHIA

Senior Director of Industry Relations3M Health Information Systems

NYHIMA 2014 Annual Meeting - June, 2014

Objectives

• Review payment reform initiatives impacting healthcare providers today

• Examine Information Governance concepts• Review research results on the impact of

payment reform on the HIM professional• Examine emerging opportunities for HIM

professionals

PAYMENT TRANSFORMATION

VOLUME-BASED SYSTEM VALUE-BASED SYSTEM

Our system is becoming more complex as it moves from rewarding volume to delivering value

Employers Exchanges

ACO

PCP

SpecialistPCP

Payer 1 Payer 2

ACO

PCP

Specialist

PCP

Medical Home

PCP

Specialist

PCP

Payer 3

SYSTEM

CLINICIAN

PATIENT

Payer 3

Specialist

Payer 1

PCP

PATIENT

Payer 2

PATIENT PATIENT

Providing Services

Managing Health

© Treo Solutions, LLC 2013Proprietary and Confidential Proprietary and Confidential

With Access to Capital Insurers Could Purchase Providers

AcquiresWest Penn

Allegheny Health Systems

andJefferson

Regional Medical Center

Concentra Urgent Care

CareMore Clinics

Weill CornellPhysicians

Organization

Acquires

Acquires

Acquires

Acquires

Aggregate Hospital Payment‐to‐Cost Ratios for Private Payers, Medicare, and Medicaid, 1990 – 2010

Distribution of Hospital Cost by Payer Type (% of Total Cost)

Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2010, for community hospitals. (1)Includes Medicaid Disproportionate Share payments.(2)Uncompensated care represents bad debt expense and charity care, at cost.(3)Non‐patient represents costs for cafeterias, parking lots, gift shops and other non‐patient care operating services and are not attributed to any one payer.

Hospitals who do not prepare for healthcare’s fiscal cliff may not survive

Micro Economic Challenge: Loss of Volume in Profitable Segments Will Break Hospital Business Model

Traditional hospital cost shift increases expense to insurers and employers to pay for losses on governmental programs.

Decreasing employer/insurer volume and increasing governmental volume ends traditional cost shift. Healthcare reform accelerates this trend.

• Cuts and/or lack of increases to keep pace with medical inflation

• Increased reluctance to raise premiums will narrow hospital margins

• Significant exposure to preventable volume

• Demographics and reform will push Commercial lives into Medicaid and Medicare

Challenges and Opportunities as Focus Shifts from Volume to Value

• Common pilot programs not yielding long term, sustainable solutions

• Investments in HIT not producing significant change

• Medical Home selection bias

• Few scaled successes• Data to support success

still not readily available • Not all vendors make the

grade

• Providers use new contracting models to grab market share

• IPAs forming ACOs to increase steerage pressure

• Providers build market presence via physician & facility acquisitions

• Difficulty of managing actuarial risk for risk-based population contracts

• Payers may buy providers

• 25+M new commercial enrollees by 2019

• Potential for extensive innovation within small group and individual markets

• Disruption of existing distribution channels (Brokers)

• APCD explosion

Challenging Economics

Unfulfilled Promise

Market Consolidation

Introduction of Exchanges

Fees

Incentive alignment:Providers need a new business model for sustainability

Source: Charles Kennedy, M.D. Aetna HIMSS 2013

ACO – Shared Savings, Settling Up

Attribution and Each of the Spending Numbers Need to be Established and Should be Risk Adjusted

Quality Needs to be Protected and Improved

Data

Insights• Data does not

guarantee insights

Decisions• Insights do not

guarantee decisions

Actions• Decisions do not

ensure actions• Learning

A Stepped Approach: Move beyond data to insights, decisions, and actions to realize value

Adapted from PWC “Advancing healthcare informatics, the power of partnerships”

Industry and analytics skill sets are required to create hypotheses

and valuable insights

The “last mile” of action requires alignment of workflow,

personalized decisions and incentives

AnalyticsCapabilities

Analytics value

Switching from managing individual services for individual members to managing population health as part of an accountable care program poses new questions and requires new tools.

Which patients?

What services?

Which providers?

How is data shared?

What data is shared?

With whom is data shared?

New Questions, New Tools

Putting it all together locally - LEADERSHIP

Data & Analytics Transparency Human

Capital Process Value-Based Success

Aligning Incentives

CURRENT STATE-LEVEL ACTIVITY

Is it Working? Maryland PPC Payment Experience

• Inpatient complications payment reform– 0.5 percent of total hospital budget put at risk– Hospital payment reduction based of number of excess

inpatient complications– 49 types of complications included in payment

adjustment– In 2008, 53,000 of the 800,000 discharges had one or

more of the 49 complications• Results from first two years

– At the end of second year complication rate dropped by 15 percent

– Total savings over first two years $ 105.4 million

Is It Working? Minnesota Reducing Avoidable Readmissions Effectively (RARE) Program

• Collaborative statewide effort across healthcare organizations spearheaded the Minnesota Hospital Association, Institute for Clinical Systems Improvement and Stratis Health

• The 82 hospitals participating represented 85%of the annual statewide hospital readmissions in Minnesota

• Participating hospitals received clinically meaningful risk adjust reports and benchmarks identifying, comparing, and forecasting preventable readmissions

• Participating hospitals receive intensive support including technical assistance and best practice tools focusing on discharge planning, medication management, patient/family engagement, transition care support, and transition communication

• In 2011 and 2012 readmissions were reduced by over 20% by preventing 5,441 readmissions avoiding more than 16,000 bed days and saving over $40 million

• The RARE program received the 2013 John M. Eisenberg Patient Safety and Quality Award from the National Quality Forum and The Joint Commission

States are Moving Forward – New York• NY Hospital fee for service payment transformation

– 2008 APGs for OP services– 2009 APR DRGS for IP services

• Based on NY Regulations, Medicaid payment adjustments for five potentially preventable events are being implemented for fee-for-service and managed care– 2012 Readmissions, complications– 2014 Admissions, ER visits, ancillaries

• NY Dept. of Health and CMS negotiated an $8 billion waiver amendment to restructure the State’s health care delivery system (2014)– Foundation: Delivery System Reform Incentive Payment program– Goal: To reduce statewide avoidable hospital use by 25% over 5 years

• Statewide quality and care coordination initiatives open to large public hospital systems and to a wide array of safety-net providers (PPE and AHRQ measures)

States are Moving Forward

• Minnesota– Moving from short term contracts with focus on unit of

payment to long term relationship focused on collaborating on cost reduction through quality improvement and cost

– Payment adjustments to the 11 dominant ACOs are being implemented

• 2013 Readmissions, complications, admissions

• Texas– Based on Texas Law, Medicaid payment adjustments

for all five potentially preventable events are being implemented across all delivery organizations including fee-for-service, managed care, ACOs and medical homes

• 2013 Readmissions, complications• 2014 Admissions, ER visits, ancillaries