Volume to Value: Quality Based Purchasing for Policymakers

Trish Riley, DirectorGovernor’s Office of Health Policy and Finance

www.maine.gov/healthreform

Council of State Governments / Eastern Regional Conference

August 17, 2010Portland, ME

“You Get What you Pay For”

• US spends 2X other developed nations but does not get better health or quality

• More surgery, without better outcomes

• Physicians see more patients and are paid more despite same distribution of generalists: specialists

• 10% fewer in-patient beds but pay 4X other nations per bed

Source: McKinsey Global

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“Every System is Perfectly Designed to Get the Results it Gets”

Maine: $400 M in potentially avoidable hospitalizations

30% higher ED use than U.S.

1.3 M People; 39 Hospitals

Fee for service environment

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Where are we headed?

Integrated system capitation

Global DRG fee: hospital, post- acute, and physician inpatient

Global DRG fee: hospital only

Global ambulatory care fees

Global primary care fees

Blended FFS and medical home fees

FFS and DRGs

Hospital system

Integrated delivery system

Outcome measures; large % of total payment

Preventive care; management of chronic conditions measures; small % of total payment

Care coordination and intermediate outcome measures; moderate % of total payment

Less Feasible

More Feasible

Primary care MD group practice

Small MD practice: unrelated hospitals

Multi-specialty MD group practice

3Source: Commonwealth Fund

How are we getting there?

• Provider & Payer Demos & State Initiatives • Maine Health Management Coalition• Patient Centered Medical Homes – 26 Sites

• Policy Approaches• State Health Plan• Capital Investment Fund (Supply drives demand)• Hospital Cooperation Act• CON Criteria – Must address health care variation

and ED use

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Legislature established Payment Reform Workgroup and endorsed principles for

reform- Part of Advisory Council on Health

Systems DevelopmentCharge:1) Consider research & Implications for payment reform.2) Assess merits of reform against principles.3) Develop consumer awareness. 4) Identify statutory and regulatory changes needed to advance

models for payment reform5) Design a 3-yr. demo to advance payment reform models

Report to Jt. Committees on Health and Human Services and Insurance and Financial Services – 1/15/2011

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Core Principles of Payment Reform

A. Support integrated, efficient and effective systems of care delivery and payment

B. Promote a patient centered approach to service payment and delivery

C. Encourage and reward prevention and management of service

D. Promote the value of care over volume to measurably lower costs

E. Promote payment and processes that are transparent, easy to understand and simple to administer for patients, providers, purchasers and other stakeholders

F. Balance the interests of patients, providers and payers while pursuing necessary change. 6

Payment Reform and the ACA

• Numerous opportunities for demonstrations

• Exchange as new marketplace – vehicle to advance payment reform

www.maine.gov/healthreform

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