Steven F. Schutzer, MD Medical Director, …...Steven F. Schutzer, MD Disclosures • Medical...
91
Steven F. Schutzer, MD Medical Director, Connecticut Joint Replacement Institute President, Connecticut Joint Replacment Surgeons, LLC
Transcript of Steven F. Schutzer, MD Medical Director, …...Steven F. Schutzer, MD Disclosures • Medical...
Steven F. Schutzer, MDMedical Director, Connecticut Joint
Replacement InstitutePresident, Connecticut Joint Replacment
Surgeons, LLC
Steven F. Schutzer, MDDisclosures
• Medical Director, CT Joint Replacement Institute
• President, CT Joint Replacement Surgeons, LLC
• Investor, Renovis Surgical Technologies
• Unpaid Consultant, Renovis Surgical Technologies
• Editorial staff, J. Arthroplasty
• Principal, Novel Healthcare Solutions, LLC
The entrepreneurial spirit of the
independent private practice surgeon,
working at an arms length relationship
with a hospital partner, can more rapidly
and effectively create sustainable
healthcare value than other contemporary
alignment models.
Bias
“He who is not courageous enough to take risk, will accomplish nothing in life.”
Muhammad Ali
Adapted from NEJM 361:16 8/9/09 Bohmer and Lee
“An important transition has begun in payment for health
care delivery in the US: organizations that have long been
paid for transactions, such as visits or procedures are
beginning to be paid for producing outcomes for populations.”
Traditional healthcare contracting
1. Cost shifting
2. Bargaining clout
3. Restricting choice/access
4. Dispute resolution via Court System (tort)
“Zero Sum Competition”
Traditional healthcare contracting
1. Cost shifting
2. Bargaining clout
3. Restricting choice/access
4. Dispute resolution via Court System (tort)
“Zero Sum Competition”
Provider financial success = Patient success
Professor Porter:“Create the right kind of competition”
“Positive Sum Competition”
Based on creation of healthcare value and marketcompetition aligned with outcomes/cost for a specific medical condition.
How can you achieve healthcare value?
1. Integrated Practice Units
2. Integrated delivery networks
3. Scale it up
4. IT platforms
5. Measure outcomes and cost
6. Manage risk
7. Bundled Payments
What is a “bundled payment”
“single package price for a comprehensive and specific set of healthcare services that provides a positive margin for services delivered to a patient by multiple providers over a defined period of time (episode)”
Bundled Payment: why is CMS interested in this option?
“The enemy is fragmentation. We just don't seem to form the coalitions (read: alignments), nor the communities we need to make progress”.
Bundled Payments:the hypothesis
Create financial motivation to collaborate/integrate/align and to implement effective care redesign strategies:
1. coordinate patient care
2. reduce variability
3. improve operational efficiencies
4. reduce low volume services
2 key re-alignments necessary for sustainable healthcare value
1. Providers, Payers…and Patients
2. unit of reimbursement with the unit of healthcare value delivered to the patient
Bundled Payments…the most effective strategy?
What is the evidence that Bundling works in healthcare?
1. Medicare 5 year CABG Demonstration
2. 2009 NEJM article
3. Prometheus models/pilots
4. Provencare experience
5. Medicare ACE Demonstration project
6. CJRI data
Medicare ACE demonstration for Orthopedic Surgery
• 5 Hospitals, In-patient costs (THA and TKA) combined Part A & B
• Pilot began 2009• Surgeon incentives (reimbursement up to
125% of Medicare fee) • Patient incentives:
“Medicare will share 50 percent of the savings it gains under the demonstration with the Medicare beneficiary up to a maximum of the annual Part B premium, currently $1,259”.
Medicare ACE demonstration for Orthopedic Surgery
1. Closer ties with surgeons (changed behavior)
2. Significant investment necessary (2.5 FTE)
3. Profits arise from spillover benefits
4. Savings from device cost reductions
5. Substantial quality benefits
Ardent Health
ABC White paper, Jan. 2012
Physician/Hospital alignment strategies
1. Co-management modelsa. True “Co-management” modelsb. Consultant Agreement without gain sharing c. Consultant Agreement plus gain sharing
2. Bundled Payment modelsa. Pure gain sharingb. Consultant Agreement without gain sharingc. Consultant Agreement plus gain sharing
3. Employment models a. Performance bonusb. Gain sharing
Provider alignment strategies:Bundled payment
Under BP contracts (without gain sharing) alignment is achieved by tying Physician reimbursement for services with compliance with consensus based best practices/EBM protocols.
Connecticut Joint Replacement Surgeons, LLCincorporated November, 2006
• 10 “community” Arthroplasty surgeons from 5 different private orthopedic practices
• Shared vision…create a world class Institute for Joint Replacement surgery• Commitment to “standardization”• Commitment to “data driven” decision
making
CJRS, LLCincorporated November, 2006
5 Core principles of our MOU:1. Surgeon management2. Dedicated multidisciplinary staff3. Separate line of business4. “hospital within a hospital”5. Research investment (4 FTEs and Registry)
CJRS, LLCincorporated November, 2006
• Consulting Services Agreement signed July 27, 2007
• CJRS, LLC manages CJRI (an Arthroplasty service line)
• Our work has been valued by an outside source• The LLC receives a monthly stipend for it’s work• No gain sharing• First case done July 31, 2007
The Bundled Payment program at CJRI: “Step Ahead” plan
Three “Parties” (Anesthesia, Saint Francis, CJRS) started negotiations in July, 2009.
Our “Basket of Care” Agreement was signed in August, 2010.
Implementing a Bundled Payment program: essential elements
1. CEO/Hospital Administration
2. Physicians Leaders/Physicians
3. Trust and transparency
4. Savvy Legal Counsel
5. Robust quality and cost monitoring systems…clean data
6. Mature service line
7. Adequate case volume
8 Steps to Development of a Bundled Payment program
1. Build the dedicated team
2. Define the episode
3. Define performance measures (Cost and Quality)
4. Develop the Care Models
5. Cost reduction opportunities
6. Price the Bundle
7. Gain-sharing or other methods of compensation
8. Develop Continuous Process Improvements
9. Align with Post-acute providers
1. Build the dedicated team
For the effort to succeed, there needs to be a “cultural transformation” focused on creation of a new healthcare delivery model
Building the Dedicated Team
Overcoming “Institutional Memory”
1. Build the dedicated team
Surgeon Co-Medical DirectorsAnesthesiologistsExecutive DirectorProgram DirectorHospital COOHospital CFOHospital CNOLegal Representation
2. Define the Episode
Detailed definitions:
1. which Parties involved2. duties of each Party3. define the “bundle” 4. define the time frame (EOC)
2. Define the Episode
5. warranty (define covered service and time frame)
6. cost over runs
7. best practices and EBM
2. Define the EpisodeDuties of each Party: Hospital
Provide the infrastructure necessary to operate the program and service line including facilities, staff, support services, marketing, data resources, Registry…and billing and collection for all 3 Parties.
2. Define the EpisodeDuties of each Party: Surgeon
1. Appropriateness for surgery2. Perform surgery3. Routine post-op in-patient care4. Adhere to any and all guidelines and
protocols5. Coordinate daily patient care6. Strategic leadership in development and
implementation of the Program and best practices
2. Define the EpisodeDuties of each Party: Anesthesia
1. pre-op patient review to determineeligibility and risk stratification (“none or minimal systemic disease”)
2. Customary Anesthesia services
3. Adhere to best practice and protocols
4. Post-op pain management
The “Step Ahead” program at CJRI is offered to patients less than 70 years of age who are candidates for standard primary THA or TKA with either none or minimal systemic disease (would also exclude patients with certain conditions)
2. Define the Episodeexpenses and excess costs
• Cash reserves:
(a) Operating reserve
(b) Claim reserve
• Cost over runs: shared and not shared
• Claims: Low claim, High claim, Insured claim
• Stop Loss coverage
2. Define the Episodeexpenses and excess costs
• Cash reserves:
(a) Operating reserve
(b) Claim reserve
• Cost over runs: shared and not shared
• Claims: Low claim, High claim, Insured claim
• Stop Loss coverage
Excess costs: not shared
“Excess costs resulting from unwarranted or deliberate deviation from the approved protocols.”
Excess costs: shared
a. Low claim-cost over runs under $5K come off the top
b. High claim-cost over runs in excess of $5K (but less than $10K) are deducted from the claim reserve
c. Insured claim-cost over runs in excess of $10K
“Step Ahead” Stop Loss policy
Provided by our Med Malpractice carrier
$250,000 annual contract limit
$10K deductible per claim
Shared excess costs greater than $10K become an “Insured claim”
2. Define the EpisodePatient Warranty
Negotiable terms
Re-admissions for surgical site complications:
wound complications (hematomas,
infections, cellulitis, dehiscence)
peri-prosthetic fractures
instability
3. Define Performance Measures:
Cost
Outcomes and Quality
Patient Reported Outcomes
Achieving the Triple Aim
PopulationHealth
Per CapitaCost
41
Patient care experience
3. Define Performance Measures:Cost
Hospital cost/case
Surgeon’s cost for services
Anesthesia cost for services
Cost/case for re-admissions
3. Define Performance Measures:Outcomes and Quality
Re-admissions (30, 60 90 day)
Complications (30, 60, 90 day)
HCAHPS scores
SCIP measures
Press Ganey scores
LOS
Post-acute discharge (home vs ECF)
Data Sources
Billing Database(SFS)
O.R. Database(CPM)
Hospital EMR(CareLink)
Data Warehouse(HPM)
CJRI Registry
Physician Assistants’ Complication Log
Surgeon Self Report
Incident Reports
60 Day Follow-Up Phone Calls
Functional OutcomeInstrument Database
Outpatient Office NoteSystem
Press GaneyHCAHPS
4. Develop the Care Models
A unique opportunity to map out, end to end, the patient experience and then perform a complete care re-design of your program
4. Develop the Care Models
1. pre-op documentation (5)
2. Intra-op documentation (6)
*use of an approved prosthetic implant
3. Post-op In-patient documentation (4)
4. Discharge documentation (4)
5. Post-discharge documentation (3)
22 Clinical Protocols and Best Practices:
Physician Agreement and Acknowledgement
Each Orthopedic surgeon and Anesthesiologist that performs BP surgery will participate in an in-service that outlines in detail their specific responsibilities, the protocols/best practices, and their own personal financial risks for non-compliance.
Patient Agreement and Acknowledgement
Patient responsibilities:
1. follow post-op instructions
2. report complications to surgeon
3. seek emergency care at our hospital
5 - 6. Cost reduction opportunities and pricing the bundle
While re-designing care plans, drill down on the direct cost associated with each step to eliminate waste, duplication and unnecessary services…cost reduction.Determine the “base cost” of the hospital component of the Bundle…first step in pricing the bundle.
5 - 6. Cost reduction opportunities and pricing the bundle
History and PhysicalLaboratoryMedical supplies (including prosthetic implants)NursingDMEPharmacyRadiology (hips only)Physical TherapySurgical supplies
Hospital Base cost per case
“Fair market value”
Physician base cost per case:
1. Time, resources, expenses
2. The warranty provided to the patient or purchaser for post-acute complications
3. The financial risk assumed by the Party
4. Current “market” reimbursement rates
5 - 6. Cost reduction opportunities and pricing the bundle
Surgeon Base cost per case
Calculate Surgeon’s practice cost/hour
Calculate the Surgeon’s time involved with each step of patient flow from initial visit to the 3 month post operative office visit = total hours of care
Surgeon’s practice cost/hour x total hours
5 - 6. Cost reduction opportunitiesand pricing the bundle
Our Anesthesiologists were asked to undertake the same analysis to determine their base component of the package price.
Anesthesiologist Base cost per case
Total Bundled Payment for Primary THA and TKA
Hospital base cost + margin*
Surgeon’s base cost + margin*
Anesthesia base cost + margin*
Small % added to package price for two cash reserves
PLUS
PLUS
= total package price for BP services% package = % risk for shared over runs
*same for all 3 Parties
PLUS
5 - 6. Cost reduction opportunities and pricing the bundle
Emergency Department protocol:
Within 90 day post-op period, establishes a mechanism to determine appropriateness for additional treatment or re-admission for all BP patients. The Orthopedic PAc is the designated point person.
Focus on Hospital Re-admissions
7. Gain-sharing Incentives (or other methods of compensation)
CJRI Service Line Co-Management model:
Shared risk would be looked upon favorably by the OIG but not shared savings…
…we are already compensated for identifying cost savings for the service line.
…This particular model is not a Gain-sharing arrangement
8. Develop a Continuous Process Improvement Plan
•Data Registry
•Standard/consistent clinical protocols
•Shared IT for cost/quality analysis
•Shared financial risk
(a) Clinical Integration
8. Develop a Continuous Process Improvement Plan
1. Annual review of clinical protocols
2. Monitor compliance
3. Provide feedback for variances
4. Quarterly quality data review
5. Annual review of cost of services and opportunities for additional savings
(b) Utilization Review
Process Improvement
measure
assess
change
protocolimplement
adjust
protocol
Process Improvement
measure
assess
change
protocolimplement
adjust
protocol
Blood Transfusion
Based on FOCUS trial, transfusion for symptomsImplemented May 2011
Transfusion rate for TKA and THA cases reduced to 4%
Transfusion rate for THA and TKA 21%
Process Improvement
Blood Transfusion
• Between May, 2011 (new protocol instituted) and January, 2012…
• 21% Transfusion rate reduced to 4%• Saved @550 units of RBCs/year• About @$550,000 cost savings
9. Develop relationships with Post-acute providers
1. ECFs
2. Homecare Agencies
Both participated in our TDABC project with the Harvard Business School
Implementing Bundled Payments:Value added?
Health outcomes
Cost of delivering the outcomesValue =
Implementing Bundled Payments:Value added?
Health outcomes
Cost of delivering the outcomesValue =
Implementing Bundled Payments:Value added?
Length of stay
HCAHPS/Press Ganey scores
Re-admission rates
Implant costs
Cost per case
Contribution margin
outcomes
cost
CJRIJuly ‘09 – July ‘10
LOS: 17.5%
CJRIJuly ‘09 – July ‘10
LOS: 17.5%
HCAHPS: 84th 98/99th percentile
CJRIJuly ‘09 – July ‘10
LOS: 17.5%
HCAHPS: 84th 98/99th percentile
Readmission rate: 6-7% 2-3%
CJRIJuly ‘09 – July ‘10
LOS: 17.5%
HCAHPS: 84th 98/99th percentile
Readmission rate: 6-7% 2-3%
Implant cost: THA 7.5% TKA 19%
CJRIJuly ‘09 – July ‘10
LOS: 17.5%
HCAHPS: 84th 98/99th percentile
Readmission rate: 6-7% 2-3%
Implant cost: THA 7.5% TKA 19%
Average Direct C/C: 9.9% 5.0%
CJRIJuly ‘09 – July ‘10
LOS: 17.5%
HCAHPS: 84th 98/99th percentile
Readmission rate: 6-7% 2-3%
Implant cost: THA 7.5% TKA 19%
Average Direct C/C: 9.9% 5.0%
CM/case: 89% 62%
CJRI
Review of Surgeon and Anesthesiologist compliance with Bundled Payment clinical protocols…
100% compliance with no variances
Accounting/ Claims
Accounts Payable
Distribution
of
FundsSurgeons
Office
OR Booking
Registration
Pre Assessment
Surgical Screening
Center
Provider
Step Ahead Administration
at CJRIat CJRI
Life cycle of a Bundled Payment claim
Accounting/ Claims
Accounts Payable
Distribution
of
FundsSurgeons
Office
OR Booking
Registration
Pre Assessment
Surgical Screening
Center
Provider
Payment to all Parties by 42
daysCJRI
Life cycle of a Bundled Payment claim
The “Step Ahead” Planat CJRI
Six “prongs” to our Marketing efforts:
1. Commercial Payers
2. CMMS/CMMI
3. Large self-funded Employers/TPAs
4. Medical tourism industry
5. Large PCP groups or ACOs
6. Uninsured or underinsured patients
The “Step Ahead” Planat CJRI
One signed commercial contract with Connecticare (June, 2012) with just over 300 patients under contract to date.
Letter of Intent pending with one National Payer.
Negotiating with commercial TPAs.
Uninsured and under-insured patients.
The reality of Implementing a Bundled Payment program
1. Time commitment
2. Financial commitment
3. Financial risk
4. Legal and Regulatory obstacles
5. Contracting challenges
The reality of Administrating a Bundled Payment program
1. Calculating cost of manual processing
2. Calculating cost of monitoring over runs
3. Double billing issues
4. “retro eligibility” issues - hospital absorbs the loss
5. Collection of Co-Pay and deductibles - hospital
absorbs the loss
Bundled Payment plans:Pitfalls and Risks
1. Unclear definitions and time frames 2. Imperfect risk adjustments3. Financial loss related to risk bearing 4. Does it support “low level” of care?5. Does it encourage “un-bundling” and delay
in treatment6. Administrative burden > anticipated7. What are we going to do with the excess
capacity?
Bundled Payment plans:Risks
8. Caution: Is it just another way for the Commercial Payers to make more money by shifting risk and administrative burden?
Bundled Payment plans:Benefits of implementation
1. Changes culture of distrust
2. Aligns incentives and goals
3. cuts the “fat” and waste
4. Keeps the patient at the “top of the pyramid”
5. Preserves entrepreneurial spirit
6. Encourages healthy re-alignments
Bundled Payment plans:Benefits of implementation
7. The entire process drives operational efficiencies…
“A total of 95% of excessive costs of elective surgical procedures were due to inefficiency and only 5% were due to higher-than-predicted adverse outcomes rates.”
Fry, DE et al. JACS, 2011
Bundled Payment Plan
We recently completed a re-evaluation of our BP program including post-acute services together with the Harvard Business School and IHI’s JRLC using Time-Driven Activity Based Costing methodology.
Professors Porter and Kaplan“Value measurement in Healthcare”
• Time
• Patience
• Discipline
• Steady Physician leadership
• Real $$ cost
• Opportunity cost
Elements of a successful Value journey
Conclusions
• Despite movement towards restructuring healthcare delivery, competing agendas and misaligned priorities still remain between payers and providers
• Broad adoption of the Value Agenda will not be easy
• Performing TDABC, embedding PFCC and implementing bundled payments adds considerable value nonetheless
• YOU must be a player in this space!
Bundled Payment Plan
The end game for your entity will be a re-alignment of incentives amongst all Participants toward delivering the highest quality of care at the lowest cost to the patient and purchaser. This will allow you to compete in the new Healthcare market…
based on Value.
This was done by a bunch of “community” Orthopedic surgeons
“Healing is an Art, Medicine is a Science…Healthcare is a business”
Thank you for your attention and good luck with this work
91
Streamlining Orthopedic Episodes of Care
www.wellbe.me
