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Health Reform, Medicaid Expansion and Challenges for Providers
Jeff MoserVice President, Sg2
May 31, 2012
Market UpdateRedesigning Care
Agenda
Confidential and Proprietary © May 2012 Sg2 3
2012 Outlook: A Year Like No Other
Unprecedented ThreatsMarket share battles intensifyBad debt driven by deductibles/co-pays/tiered networksRisk-based payments pushed at providersMargin improvement paramountRole of the consumer IT implementation costs create riskNew market entrants challenge modelsHealth care mandates looming
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The Timeline of Health Care Reform Marches on, for Now
Constitutionality challenge?Republican-led rollbacks?Health insurance exchanges?
2010–2013 2014–2017
The Prelude Market Expansion
Regulation and Restructuring
2018–2020
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2014–2017: The Industry Is Getting Prepared
Market Expansion
Select Initiatives Within Health Reform Law, 2014–2017
DSH = disproportionate share hospital; FPL = federal poverty level.
Hospital Payment Cuts
Insurance Market Reforms Coverage Expansion
Medicare DSH payments cut by 75%Avoidable admissions
Guaranteed issueEssential benefit package definedInsurance industry moves to regulation
Medicaid expanded to 133% of FPL, estimated 16 million coveredState-based insurance exchangesIndividual mandate to purchase (subsidies up to 400% of poverty level)
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What Won’t Change: The Era of Risk-Based Reimbursement Is Here
Oct 2010
Oct 2020
Hospital Medicare Payment at Risk, Year by Year
Value-Based Purchasing
30-Day Readmissions
Hospital-Acquired Conditions
1
%
1
%
3
%
3
%
3%3%
Oct 2011
Oct 2012
Oct 2013
Oct 2014
Oct 2015
Oct 2016
Oct 2017
Oct 2018
Oct 2019
1%1%
1%1% 2%2%
TOTAL 2
%
2
%
6%6%5%5%
2
%
2
%
Source: Sg2 Analysis, 2011.
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Sg2 Perspective on the Growth of Risk Contracting, 2012–2020
2012 2013 2014 2015 2016 2017 2018 2019 2020
Medicare
Medicaid
Dual Eligible
Commercial
Self-Pay
Patients in Provider Risk Contracts
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Emerging Payment Models Will Take Various Forms
High
HighLow
Scope of Risk
Fee for service
Inpatient case rates (DRGs)
Bundled episodes (inpatient only)
Clinical integration program
Insurance product
ACO
Bundled episodes (pre- and post-care included)
Global capitation
P4P/value-based purchasing
Disease-specific capitation
ACO = accountable care organization; P4P = pay for performance; DRG = diagnosis-related group.
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Risk Readiness Varies Widely From Market to Market
Decision ScaleHighAbove AverageAverageBelow AverageLeastData Not Available
Leve
l of
Rea
dine
ss
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What Does This Mean for a Typical Health System?
Focused on inpatient businessStrong physician referral channelED as the “front door” for majority of admissionsExcels at revenue cycle, LOS managementFew System of CARE linkagesLots of inappropriate utilization and readmissionsCFO pushed 5% cost reduction over the past 3 years
ED = emergency department; LOS = length of stay; CARE = Clinical Alignment and Resource Effectiveness.
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Fast Forward to 2016
CMS = Centers for Medicare & Medicaid Services; PCP = primary care physician; PAA = potentially avoidable admission.
Hospital is a success!Hospital is growing and profitable.Physicians are happy.System wins best employer award.Weaker aspects of performance do not affect market or financial results.
Hospital is a success!Hospital is growing and profitable.Physicians are happy.System wins best employer award.Weaker aspects of performance do not affect market or financial results.
2011 2016CMS docks hospital 5% of revenues for PAAs, readmissions.Hospital is excluded from private payers’preferred tier networks.Patients shop to manage their out-of-pocket liability.PCPs redirect cases away to maximize their incentives/reduce penalty exposure.Profitability and market share erode.
CMS docks hospital 5% of revenues for PAAs, readmissions.Hospital is excluded from private payers’preferred tier networks.Patients shop to manage their out-of-pocket liability.PCPs redirect cases away to maximize their incentives/reduce penalty exposure.Profitability and market share erode.
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Start by Asking New Questions
How are volumes?
How are volumes?
Should we become an
ACO?
Should we become an
ACO?
New
How good is our product?How good is our product?
How are we changing the total cost of care?
How are we changing the total cost of care?
Old
What is our product?What is our product?
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The Scope of Your Strategy Must Encompass the System of CARE
Retail Pharmacy
Wellness and Fitness Center
Diagnostic/ Imaging Center
Urgent Care Center
HospitalAcuity
Community-Based CareAcute Care
Post- Acute
Care
Physician Clinic
Ambulatory Procedure Center
OP Rehab
IP Rehab
SNF
CARE = Clinical Alignment and Resource Effectiveness; IP = inpatient; OP = outpatient; SNF = skilled nursing facility.
Home
Home Care
Market UpdateRedesigning Care
Agenda
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Outpatient (OP) Growth Opportunities Will Overwhelm Inpatient (IP) Decline
Population-Based Forecast
Sg2 Forecast –3%
+18%
Forecast excludes 0–17 age group and psychiatry and obstetrics service lines.Sources: Impact of Change® v10.0; NIS; Pharmetrics; CMS; Sg2 Analysis, 2011.
Population-Based Forecast
Sg2 Forecast +32%
+15%
Millions Billions
Adult IP Forecast
US Market, 2011−2021Adult OP Forecast
US Market, 2011−2021
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Patients Are Coming From Mars, Physicians Are Leaving for Venus
Dr Jones, I’m having knee pain. I can’t keep up with my child anymore.
Your blood pressure is high, and I am worried that you cannot walk up
a flight of stairs. Let’s have you come back
next week to talk about your knee.
The Complicated Universe of Ambulatory Care
I should schedule him for a treadmill in case he has silent
ischemia with his diabetes.
How could they schedule this man for a
15-minute visit?
I hope she doesn’t tell me I am fat.
My wife is really unhappy that I
lost my job.
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MDs Challenged With Aligning Patients’ Clinical Needs While Lowering Costs
ICU = intensive care unit; MLP = midlevel provider.
Care Customization
Team MLPPhysician
PhysicianMLP
MLPSocial workerNurse Physician
Nurse Social workerMLPPhysicianBehavioralists
Setting Office Office Multispecialty practice Multispecialty practiceExample Sprained
ankleMultiple issues, pick 1
Serious chronic condition(s)
Overweight smoker, uninsured
Ambulatory ICUPriority Delivery
Simple Visit
Social ICU
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Advantages Time saving (2 hours = 20 patients)Cost-effective (generate ~$15,000/physician/year)Addresses projected demandIncreased access to PCPs
Disadvantages Uncertain reimbursement coverage (eg, no CPT® code)Concerns over patient confidentiality Unclear how to document every patient encounterHigh attrition rates
Key to Customizing Priority Delivery Care: Increased Efficiency
Utilize group visits to manage patients with similar diseases. Utilize group visits to manage patients with similar diseases.
CPT is a registered trademark of the American Medical Association. CPT = Current Procedural Terminology. Source: Jaber R et al. Fam Pract Manag 2006;13:37–40.
EncounterExpectationCommunicationServiceSupply & Demand
EncounterExpectationCommunicationServiceSupply & Demand
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Segmenting Patients by Risk— Welcome to the “Ambulatory ICU”Ambulatory ICU aims to reduce costs and improve quality.
Multidisciplinary team approach to intensive care management for the highest-risk patients (80/20 rule) Eligible patients suffer from multiple chronic conditions.Dedicated care manager (eg, registered nurse, social worker)Strengthens primary care relationships and patient engagement through proactive outreach (eg, calls, emails, visits)Creation of personalized care planThorough education in disease self-managementPrompt access to care team for appointments and questions Use of evidence-based practices/medical assistance software to improve visit efficiency
Source: California Healthcare Foundation. The ambulatory intensive caring unit: early experiences. www.chcf.org/events/2010/cin-webinar-05-26-2010. Accessed October 2011.
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Segmenting Patients by Nonmedical Needs: Welcome to the “Social ICU”
Social ICU Addresses Nonhealth Factors Working Against Seamless Care
Model this after the ambulatory ICU (eg, multidisciplinary care team, patient education, proactive outreach).Focus on managing social factors that drive clinical conditions.
Care manager determines social barriers (eg, uninsured, domestic violence, depression, substance abuse, air quality in home, access to healthy food).Team works with community support network to address these issues.
Clinicians able to focus on treating disease after social issues are resolved.
SES = socioeconomic status. Sources: Schroeder SA. N Engl J Med 2007;357:1221–1228; Wilper AP et al. Ann Intern Med 2008;149:170–176; Partnership for Clear Health Communication. What is health literacy? www.npsf.org/pchc/health-literacy.php. Accessed October 2011.
Social ICU Patient
Personal Behaviors
EncounterExpectationCommunicationServiceSupply & Demand
EncounterExpectationCommunicationServiceSupply & Demand
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9,000 patients with high utilization were responsible for 42% of the net hospital losses.
Identified 4 patient classification for the programEstablished an expanded care team: physician, social worker, nurse practitioner, 4 community health aidsEmpowered care team to “do whatever it takes”Created a program phone line to be a direct point-of-contact
ResultsAnecdotal evidence shows a reduction in ED and hospital utilization.
Texas Hospital
System Optimization: “Extensivist” Clinic Created to Care for Uninsured Patients
Impact: Hospitals that create innovative care models can improve patient care–with the right patient, right setting and right care.
Impact: Hospitals that create innovative care models can improve patient care–with the right patient, right setting and right care.
Animated
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Consider the Rapidly Changing Role of Health System in Patient Engagement
BeforeGlucose readings reviewed quarterly in diabetes clinic.Handwritten logs incomplete, time consuming to analyzeDelays in insulin dose changes, phone tagDelayed gratification, poor complianceElevated hemoglobin A1cAdmitted for hyperglycemia
BeforeGlucose readings reviewed quarterly in diabetes clinic.Handwritten logs incomplete, time consuming to analyzeDelays in insulin dose changes, phone tagDelayed gratification, poor complianceElevated hemoglobin A1cAdmitted for hyperglycemia
NowOnline monitoring toolsFrequent care team contact via e-visitsContinuous glucose monitoring results sent electronicallyInsulin dosage changes made in real timeLower hemoglobin A1cNo hospitalizations for uncontrolled diabetes
NowOnline monitoring toolsFrequent care team contact via e-visitsContinuous glucose monitoring results sent electronicallyInsulin dosage changes made in real timeLower hemoglobin A1cNo hospitalizations for uncontrolled diabetes
14-Year-Old Patient With Diabetes
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Next Steps: Prepare for Care Redesign
Benchmark performance against competitors.
Understand market forecast for services.
Anticipate how quickly your market may move toward new payment models.
Identify diseases/service lines with subpar performance, high cost/low margins, quality variability, etc.
Target efforts to services that are key to the goals established in the organization’s strategic plan.
Assemble a team of physicians, clinical staff, administrators, operations staff, patient advocate, etc.
Address potential hurdles from the outset: physician resistance, questionable leadership support, insufficient IT, etc.
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