London Health and Care Leaders Forum 11th March 2014

Payment Innovation Break-out

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There are 3 major complementary payment models being deployed in US

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Full alignment of payment to outcomes

Most applicable for:

Episode-based payment

Retrospective Episode Based Payment (REBP)

Bundled payment

Pay for value

▪ Bonus payments tied to quality

▪ Bonus payment tied to value

Population-based payment

▪ Capitation

▪ Care for people with long term condition (e.g., managing diabetes, CHF) and elderly

▪ Primary prevention for healthy

▪ Acute procedures (e.g., CABG, hips, perinatal)

▪ Most inpatient stays including post-acute care, readmissions

▪ Acute outpatient care (e.g., broken arm, URI, some cancers, some behavior health)

▪ Discrete services provided by entity with limited influence on upstream or downstream costs (e.g., MRI, prescription, medical device, Health Risk Assessment)

These models deliver significant net savings

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Beacon Pioneer ACOCare First PCMH

Group HealthBCBSMA AQCSouth Carollina

Geisinger PCMHMinnesota Health Partners

BCBSM MichiganCareOregon

Sacramento ACOMontefiore ACO

Oklahoma MedicaidCommunity Care NCFlorida Capital Health

Colorado Children's HealthNY Care Coordination Program

0 5 10 15 20 25 30

3-22% range

7-10% most

Сost savings as %

Speakers

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• Dr. Philip Ozuah

• John Wardell

• Ric Marshall

Payment Innovation

Philip O. Ozuah, MD, PhDChief Operating Officer

Montefiore Health System

National Health Expenditures Per Capita1980-2007

Health Expenditures as % of GDP

Byzantine Medicare Inpatient Payment

Hospital Adjusted

Operating & Capital Base

Payment Rate2009

Operating & Capital

Base Payment

Rate2008

Update

Wage Index

MS-DRG Weight

(Medical Severity

Adjusted* Diagnosis

Related Group weight **)

Hospital Adjusted

Base Payment

Rate2009

* Principal Diagnosis, Procedure, Complications & co-morbidities** 745 individual DRG weights

Direct (pass-through) & Indirect Medical

(Interns, Residents/bed) Education Pmt.

Disproportionate Share Payments (if Medicaid &

SSI Pt Days >15% of total)

Other Policy Payments (Critical Access

Hospital>35 mi, Medicare-dependent>60%)

Outlier Payments (Est. Cost > Loss Threshold)

Reduction for Early Transfer (LOS <mean

LOS-1)

Reduction if Quality Indicators not Provided

PAYMENT RATE FOR AN INDIVIDUALPATIENT’S

ADMISSION

Mean ‘08 Payment$9,278 all hospitals$13,499 large teaching $6,026 small rural

Copyright 2008, J.B. Silvers, Weatherhead School of Management. Case Western University

Complicated Medicare Physician Payment

Limitation

Adjusted for geographical cost factors

Conversion Factor2009

Conversion Factor2008

Update

Relative Value Units (RVU)* -work -practice expense -malpractice expense

Physician Payment Rates by

procedure2009

* Determined for 10,000 proceduresas defined by Healthcare Common Procedure Coding System (HCPCS)

UPDATE ADJUSTMENT FACTOR (UAF)

SUSTAINABLE GROWTH RATE (SGR)

Growth rate that reflects inflation, enrollment, real GDP per capita and policy changes

Change required to recoup (or pay extra) the cumulative difference between actual changesand max allowable under SGR (=< 7%)

Copyright 2008, J.B. Silvers, Weatherhead School of Management. Case Western University

Cost Shifting Approach To Financial Sustainability

*Source: http://publications.milliman.com/research/health-rr/pdfs/hospital-physician-cost-shift-RR12-01-08.pdf, shows hospital operating margins by payer from 2006, based upon American Hospital Association survey data

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

-14.70%-9.40%

23%

Medicaid Medicare CommercialHospital Operating Margins by Payer*

3.8% overall margin

Cross-subsidization

Alternative to Cost Shifting

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

-14.70%

-9.40%

23%

Medicaid Medicare Commercial

Focus on efficiency and rooting out waste to improve operating margins

The challenge

Traditional Fee-for-Service

Pay-for-Performance

BundledPayments

SharedSavings

PartialRisk

FullRisk

Episodic Cost Accountability Total Cost Accountability

Minimal SubstantialSavings Potential for Health Plans and Customers

Source: The Advisory Board Company: Accountable Care Forum-Briefing for Health Plan Executives

Montefiore’s model is evolving…

From To

Fee-for-service Risk & shared savings

One market Multiple markets

Scale for volume Scale for covered lives

Centralized Networked

Owned entities Partnerships

More employed MDs More voluntary MDs

Evolving model…

This is payment and delivery

system reform

London Health and Care Leaders Forum 14th March 2014John WardellDeputy Chief OfficerTower Hamlets Clinical Commissioning Group

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Tower Hamlets before networks 8 Networks1 were formed in the borough during 2009

Why networks?• Focus on population health across a geography• Collaborative relationships with wide range of partners (e.g. Borough, schools, charities)• Sufficient scale for specialisation of staff, ability to access rare skills and ensure access, resources (e.g. equipment)• Integration with estates plan

Understanding the development of federated networks

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1 23 4

56

89

10

7

1112

15

13

16

14

1718

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242122

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23

25

2627

2829

30

3132

33

34

35

36

65

1 23

4

56

89

10

7

1112

15

13

16

14

1718

19

242122

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23

25

2627

2829

30

31

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Pop: 29,892

Pop: 18,027

Pop: 29,801

Pop: 35,720Pop: 28,995

Pop: 33,186

Pop: 27,839

Pop: 31,975

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35

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• 8 LAPs• 36 practices• Total population

of ~245,000• Practice list sizes

of 3,000 to 11,000

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Case for change…• Wide variation in clinical practice and outcomes for diabetes

patients• Economies of scale • Poor uptake of diabetes education and retinal screening• Need to do things differently • The right people to do the right tasks at the right time• Specialist support • Transparency of data• Putting the patient at the centre of their care

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How did it work…Care packages are: Networks:

• Focus on population health across a defined area

• Have collaborative relationships with a wide range of partners (e.g. Borough, Schools, Charities)

• Provide sufficient scale for:– Specialisation of staff– Ability to access rare skills– Resources (e.g. equipment)– Ability to ensure access

• Integrate with estates plan

Organisational development Information and technology

What supports it all?

Payment Model Contracted at network level 70% upfront and 30% on performance

• Reducing variability through the use of evidence based pathways

• Ensuring the right people to do the right tasks at the right time

• Enabling transparency of data at individual patient, clinician, practice, and network level

• Facilitating an integrated and coherent approach

• Costing of care packages

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Outcomes

Improving MMR vaccination rates: herd immunity is a realistic goal. Cockman P, Dawson L, Mathur R, Hull S, BMJ2011;343doi: 10.1136/bmj.d5703

MMR Immunisation 2006-10

Maintaining MMR improvement

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• Good clinical leadership and engagement of specialists• Emphasis on quality of care and outcomes for patients• Contracting and paying for outcomes• Organisational development • IT and information sharing• Presentation of the right data regularly• Geographical network boundaries (not based on historical

practice relationships with one another)

Critical success factors

Behaviour change

Guideline Education IncentivesComparative

Feedback

Practice networks

Belief Act Motivate

Organisation changeIT

Equity audit

IT Dash-board

IT Review & recall

IT Prompts & Decision support

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Integration Going Forward

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Forward Plan

2015/16 and 16/17 shadow capitation

2014/15 and 15/16 local provider consortia

Current state and14/15

2016/17fully capitated

Enablers for end state

Payor/provider configuration

Local CCGs provider consortia for all IC services

Local CCGs provider consortia for all IC services

Local CCGs provider consortia for all IC services

Local CCGs provider consortia for all IC services

Reimbursement model Capitated modelPay for performance modelPay for performance modelPay for performance model

Service configuration

Services contracted through consortia

Services contracted through consortia

Services contracted through consortia

Services contracted individually

Health and social care

Pooled social and health fundingJoint working agreedJoint working agreedSeparate social and health

funding

Outcome linked reward/risk

Provides control/sharefull risk for activity andoutcomes

Providers share more risk for activity and outcomes

Providers share more risk for activity and outcomes

Commissioners bear risk for activity and outcomes

Might need to break PbRfor target population

Indicative individual budgets with shadow capitation model

Indicative individual budgets

Agreement on reimbursement models to be implemented

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What are we commissioning for integrated care WELC will provide nine key interventions for its population underpinned by five components and enablers

Health and social carenavigation

Self-care, behaviour,and expectation management

Care planning

Specialist input In thecommunity

Discharge support from acute to community

Discharge support formental health patients fromsecondary to primary care

Rapid response with shortteam reablement

Mental health liaison (RAID)

Areas of interventions Essential components

Information sharing platform

Evidence-based pathways & care packages (e.g. last years of life, diabetes, COPD, CHD. falls,alcohol and substance misuse)

Joint health & social careassessment

Creation of new roles withinthe workforce:• Case manager• Hybrid health & social worker• Health & social care coordinator• Discharge coordinator based in acute

wards

Organisation of practices into networks

Enablers

Patient engagement

Joint decision makingand accountability

Clinical leadership andculture development

Information sharing anddecision support

Aligned incentives andreimbursement models

Care coordination

Ensuring people are in the most appropriate setting of care

Self-care

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Case management

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Contracting approach – Standard NHS Contracts

CCG

Mental Health Liasion (RAID)

Discharge ManagementRapid response Social servicesCare Co-

ordination

Integration function delivered collectively by all providers in collaboration

Generic schedule

for all

Provider specific schedules Provider specific schedules

Provider assurance processIndicative summary provider development approach to commissioning integrated care services

Prospectus• Brings key documents together• Adds detail to provider letter• Signals what might be in future phases

Payment mechanism• Sets out approach to payment on outcomes• Outlines incentives for providers to work

together to provide integration of services

Provider letter• Lists for each provider the services we anticipate

they will provide in 14/15• Signals 70/30 split for 14/15 • Outlines next steps (below comes from CCG)

KPIs• Sets out individual

services and system side performance measures

SEP + + +

6-9 month procurement process

Stage 1 assessment• Individual providers outline how they will provide services against the borough integrated care services specifications• Also asked about how they will integrate with others

OCT

Stage 2 assessment• Providers given feedback to Stage 1• Providers asked jointly to outline how they will ensure services are integrated• Asked if they are revising responses to Stage 1 in the light of and feedback or work done with other providers to dateN

OV-

JAN

Provider collaborative interview• Providers given feedback to Stage 2 and questions to answer at interview• Presentation and interview on collaboration governance arrangements and plans to deliver jointly on KPIs

JAN

Evaluation• Further dialogue with providers about plans and clarification of detailsFE

B

Formal tender process• Likely to be competitive dialogue• Likely to be 6-9 monthsM

AR

Not approvedContracting process• Service specification and integration written into existing contracts with providers• Payment on outcomes 14/15

Approved

Dashboard

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Monitoring• Development of 15/16 contract begins for similar process to start in Sept 2014

Questions?

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London Health and Care Leaders Forum 14th March 2014Ric MarshallDirector of PricingMonitor

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Contents

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• The Health & Social Care Act 2012

• What next for 2014?

The Health & Social Care Act 2012 sets out the approach for pricing and the roles for NHS England and Monitor

What next for 2014?

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Thank you…..• Any questions please?

• Further information:

• http://www.monitor-nhsft.gov.uk/sites/default/files/publications/MakingThePaymentSystemDoMore%20-%2028Feb.pdf