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Powering Quality Improvement via Value Based Payments: Silver Linings in Healthcare Reform Joanne Conroy, MD Chief Health Care Officer, AAMC Carolyn Simpkins,

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Presentation on theme: "Powering Quality Improvement via Value Based Payments: Silver Linings in Healthcare Reform Joanne Conroy, MD Chief Health Care Officer, AAMC Carolyn Simpkins,"— Presentation transcript:

1 Powering Quality Improvement via Value Based Payments: Silver Linings in Healthcare Reform Joanne Conroy, MD Chief Health Care Officer, AAMC Carolyn Simpkins, MD, PhD Clinical Director, BMJ

2 Disclosures Disclosure of Conflicts of Interest for Joanne Conroy and Carolyn Simpkins: We have no commercial or personal conflicts to disclose. This presentation has not received financial support from any commercial organization. This program has received in-kind support from our employers the Association of American Medical Colleges and BMJ Learning. 2

3 What We Will Cover The Patient Protection and Affordable Care Act (ACA) was enacted….what happened? Why do other countries care? What are we learning? Some of our baggage Path forward 3

4 What We Will Cover The Patient Protection and Affordable Care Act (ACA) was enacted….what happened? Why do other countries care? What are we learning? Some of our baggage Path forward 4

5 The ACA: Improving Healthcare Quality, Efficiency, and Accountability Beyond insurance reforms, the ACA begins to realign the healthcare system for long-term changes in healthcare quality. There will be broad changes in Medicare and Medicaid that empower both the Secretary of Health and Human Services (HHS) and state Medicaid programs to test new models of payment and service delivery. The ACA aims to: 1) encourage changes to the healthcare system by creating clinically integrated teams; 2) publically measure the quality for all providers; 3) target preventable hospital admissions and readmissions. 5

6 The ACA: Improving Healthcare Quality, Efficiency, and Accountability Develop a National Quality Strategy. Build on the Health Information Technology for Economic and Clinical Health Act to leverage EMRs. Create the Patient Centered Outcomes Research Institute (PCORI) to promote the type of research essential to identifying the most appropriate and efficient means of delivering healthcare. The ACA offsets these expenditures through curbs on Medicare and Medicaid spending, new taxes on high cost plans, and tax shelters used most heavily by affluent families. 6

7 ACA Implementation (What Happened?): Bundled Payment for Care Improvement (BPCI) Purpose: breakdown payment silos and reward providers for improving coordination, quality and efficiency of care. HHS Secretary to develop five year voluntary pilot by 2013. CMMI unveiled its Bundled Payments for Care Improvement Initiative (BCPI) in 2011; 48 conditions (bundles) that represent 70% of spending. Tasks: select one or more of the above episodes, identify variation over time and across care sites, map pathways of care and physician practice patterns, adhere to target price. 7

8 Lessons Learned from AAMC facilitator-convener experience: In 2012, AAMC partnered with 10 teaching hospitals who became the academic medical center(AMC) pioneers of bundled payment in BPCI. Our early observations were: The AMC innately understood which bundles to pursue, even without national data. They knew where their clinical expertise was located and optimal outcomes occurred. Having access to CMS data that provided information across the continuum of care sites and over time served to reinforce their clinical, operational, and financial judgment. Analyzing the data allowed them to make decisions about program participation, condition selection, episode duration, and key partner identification. The data revealed essential details about the association of chronic conditions with higher costs, higher readmit rates, patterns of utilization, and the resulting challenges inherent in bundling these conditions, regardless of episode duration. Scientific literature on evidence-based practices in care redesign over a 90 day continuum is limited. ACA Implementation (What Happened?): Bundled Payment for Care Improvement (BPCI) 8

9 BPCI Themes Health systems are:  Deploying many interventions during hospitalization and immediate post-discharge periods but far fewer are connecting acute, primary care, and post-acute settings.  Developing and implementing patient level risk assessment tools across the continuum.  Using standardized pathways and processes of care.  Hiring care coordinators, disease managers, and others to facilitate out-of-hospital interventions for bundled patients.  Emphasizing organization-wide staff education and re-training on new care processes. 9

10 Primary Reasons for Not Pursuing Bundled Payments 10

11 Utilization Trends at 30 Days Post Discharge from 10 Teaching Hospitals 30 day aggregate data in the 10 AAMC participating teaching hospitals showed that: There were 14,283 eligible cases in 9 condition bundles; these accounted for 11% of all Medicare admits. The readmit rate overall was 18%. Two-thirds of these admissions returned to the index admission hospital and one-third to other hospitals. The Emergency Department (ED) rate was 9%; yet, only 52% of cases had an office visit within 30 days of the index admission, ranging from 42% for joint replacement to 50% in CHF. The readmission cost, on average, was 5% of the total episode allowed amount overall. It accounted for 17% for CHF episodes but only 2% for joint replacements. Post acute care (PAC) cost accounted for about 24% of the total episode allowed amount overall but 38% for CHF and joints. 11

12 Utilization Trends at 90 Days Post Discharge from 10 Teaching Hospitals The readmit rate overall was 35% (compared with 18% at 30 days). Two-thirds of these admissions returned to the index admission hospital and one-third to other hospitals. The ED rate was 18%. Only 50% of cases had an office visit within 30 days of the index stay. The readmission cost was only 9% of the total episode allowed amount overall. It accounted for 30% of CHF episodes but only 3.5% for joint replacements. PAC cost accounted for about 35% of the total episode allowed amount overall but 50% of all costs for CHF and joints. 12

13 Leadership & Operational Team  Engage leadership at multiple levels  Assess physician champions and competing priorities  Ensure a mix of clinical, legal, and finance staff participate in the management and implementation of bundle(s)  Dedicated operational team to manage the bundled payment initiative  Understand the applications outside of the immediate bundle that allows leveraging the lessons and investments Clinical Approach  Risk stratify patients and track bundled payment patients throughout the episode  Implement clinical pathways across continuum and assure effective discharge planning  Manage care transitions with discipline  Monitor patient clinical status and coordinate medication management across the acute and post-acute settings  Utilize interoperable health IT and decision support systems Financial Considerations  Be able to deliver, or contract for, the entire bundle of services to be rendered  Understand risk exposure  Manage medical complications and go at risk for readmissions  Have the necessary financial systems to administer payment across multiple entities  Examine cost accounting and payer data to identify opportunities for savings and revenue protection  Assess capabilities of financial system (claims warehouses, payment distribution tools, data analytics, utilization reporting tools, etc). Systems must integrate current fee-for-service claims systems and determine: (1) when episodes are triggered, (2) which claims are part of the bundle and which are not, and (3) how much to reimburse based on patient-specific risk factors. Quality Measurement  Assure the ability to track quality indicators and patient outcomes across an array of services and settings  Identify required measures  Assess current reporting capabilities and gaps relative to new requirements  Determine partners’ quality reporting capabilities Patient Engagement  Identify target population and current population risk metrics  Assess processes and systems to identify patients proactively and a process for concurrent identification  Develop targeted strategies for engagement (e.g., communication plans, education materials, health IT tools)  Consider patient portals for communication and creating a patient advisory committee Detailed Considerations for BPCI Success Adapted from Center for Post-acute Studies (2009). Bundling Payment for Post-acute Care: Building Blocks and Policy Options. Washington, DC: National Rehabilitation Hospital. 13

14 The Most Inspiring BPCI Experiences The health systems/teaching hospitals who joined BPCI could have continued to engage in fee-for-service payments in their markets but decided to pursue learning population health as an organizational goal. They engaged in a candid assessment of organizational strengths and weaknesses. They encouraged growth in their physician leaders and the new partnerships between clinical and operational teams. They demonstrated a strong commitment to knowing real costs. They paid attention to increasing the strength of their analytics to succeed in new payment environments. They committed to understanding and partnering with PAC providers. They recognized that their future in fee-for-service payment is limited, and now with national expansion of BPCI, they are expanding their commitment to new bundles. 14

15 Lessons from the Front Line: University of California San Francisco  One of the nation’s top 10 hospitals by US News & World Report  38,000 admissions  770,000 patient visits  8,000 employees  $1.6B in revenue  690 beds  NIH Research funding: $521.3 million in total through contracts and grants (2 nd highest nationally) 15

16 Lessons from the Front Line: Duke University Medical Center  One of the nation’s top 10 hospitals by US News & World Reports  38,200 admissions  996,000 patient visits  9,963 employees  $2.6B in revenue (for Duke Health)  957 beds  NIH Research funding: $295 million 16

17 Video 17

18 A leadership committed to innovation …at all levels of the organization …executive to frontline clinical workers An engaged frontline clinical staff taking ownership of initiatives and generating ideas for improvement is the most powerful force for ongoing change What motivates physicians to get involved and become champions? … financial survival... competition with their peers But they are most driven by their fundamental commitment to their patients: to ensure they are delivering the best possible care to their patients 18

19 Environmental Challenges 19

20 JAMA. 2012;307(14):1513-1516. doi:10.1001/jama.2012.362 RAND Estimates 21% to 47% of Health Care Spending is Waste 20

21 Our Challenge Over 75% of spending in the Medicare program is associated with patients under treatment for five or more medical conditions and virtually all the growth in Medicare spending since 1987 has come from patients with multiple chronic conditions. Despite these fiscal facts, traditional, fee-for-service Medicare does not provide coordinated care for chronically ill patients. Such care requires “team-based care” that includes transitional care, comprehensive medication management, health coaching, and a care coordinator among other elements. 21

22 Targeting Interventions to Population High Risk Rising Risk Usual Risk 10% of Population 52% of Payments 30% of Population 39% of Payments 60% of Population 9% of Payments 22

23 Unintended Consequences of the ACA Market moving faster than the legislation. Physician engagement lags. Fight over Medicaid expansion. Development of narrow networks within the public and private exchanges. How employers are cutting costs: continued movement to defined contribution from defined benefit in health plans. 23

24 Market Moving Faster than Legislation: BPCI In a KPMG poll of 190 healthcare providers, largely represented by large physician groups, hospitals and health systems … 24

25 KPMG report: Where do you see the largest challenge of bundled payments? 25 Market Moving Faster than Legislation: BPCI

26 Physician Engagement Lags Physician employment does not automatically lead to physician integration, a new American College of Physician Executives survey found.American College of Physician Executives Healthcare reform is meant to make hospitals and physician offices more efficient, but that is proving to have its costs.  Other factors, such as increased workloads, electronic medical records and physicians' apprehension to work for hospitals, add to the underlying stress. 26

27 “Fight” Over Medicaid Expansion 27

28 Post ACA Bright Spots 28

29 Centers for Medicare & Medicaid Innovation (What Happened?): Where Innovation is Happening Statewide Local 29

30 Patient Centered Medical Home (PCMH) Adoption as Measured by NCQA Certification (What Happened?) Percent of Primary Care Physicians NCQA Certified, 2011 MN OK CA NC 30

31 University of Pittsburgh Medical Center CharacteristicFeatures Cost Management/ Quality of Care UPMC Health Plan contracts with primary care providers using a PCMH/shared savings arrangement. Specialty physicians are incentivized to develop high quality, lower cost services as PCPs will gravitate toward specialists who are low cost and high-quality. UPMC Primary Care Practices: Supported by the UPMC Health Plan Referrals to High-Performing Specialists Specialists are developing clinical pathways and other tools to improve quality and lower costs. Specialists are incentivized by referrals; primary care physicians incentivized through shared savings targets. Both primary care physicians and health plan benefit financially. 31

32 Consumers Open to an Expanded Role for Nurse Practitioners/Physician Assistants Copyrighted and published by Project HOPE/Health Affairs as Michael J. Dill, Stacie Pankow, Clese Erikson, and Scott Shipman. “Survey Shows Consumers Open to A Greater Role for Physician Assistants And Nurse Practitioners.” Health Affairs, 32, no.6 (2013): 1135-1142. The published article is archived and available online at" 32

33 What We Will Cover The Patient Protection and Affordable Care Act (ACA) was enacted….what happened? Why should other countries care? What are we learning? Some of our baggage Path forward 33

34 Why Should Other Countries Care? Most countries, while committed to comprehensive access to care still struggle with cost. A number of countries have also experimented with bundled payments, most notably the Netherlands and Germany. We are finally learning from others that costs matter. No measureable commitment to population heath but we are all finally talking about it. We may together develop a strategy that is scalable across countries. 34

35 German Health Care System Challenges High and rising costs. Overcapacity and low reimbursement levels leading to excessive utilization.  High service utilization and costs are not producing better health outcomes. Large variation in quality across providers.  No systematic measurement of outcomes and costs. Fragmentation of services across inpatient and outpatient care. 35

36 Netherlands Bundled Payments A one-year evaluation found that almost all providers reported improved care delivery processes, including greater coordination and adherence to protocols. Transparency increased as providers faced stricter reporting requirements, though outdated information technology systems meant this was accompanied by a greater administrative burden. Prices for the care bundle varied dramatically and some subcontracted providers reported that care groups had distortive market power.  In particular, questions were raised about the potential conflict of interest for general practitioners, since they are both commissioning and providing care. de Bakker DH, et al, “Early Results From Adoption of Bundled Payment for Diabetes Care in the Netherlands Show Improvement in Care Coordination,” Health Affairs, February 2012 31(2):426-33. 36

37 International Bundled Payment Systems  Belgium IPPS ( 1995)  NHS Payment by Results (2003)  Italy IPPS (1995)  Japan Outpatient Dialysis Bundle (2006)  Sweden IPPS (1992)  Taiwan Hospital Case Payment ( 1997) 37

38 US Bundling History  Geisinger ProvenCare ( 2006)  Medicare CABG bundles (1991-1996)  Medicare Cataract Alternative Payment (1991- 1996)  Michigan Arthroscopic Surgery Blue Cross/Blue Shield ( 1987)  Medicare ACE Demo ( 2009-2012)  Medicare Inpatient Rehab, Home Health, Long Term Acute Care Prospective Payment 38

39 What We Will Cover The Patient Protection and Affordable Care Act (ACA) was enacted….what happened? Why do other countries care? What are we learning? Some of our baggage Path forward 39

40 What are We Learning? Americans are paying increasing amounts out of pocket for healthcare. Some systems are early adopters. Bundled payments and ACOs are our first steps toward accountability for value. The ACA, as of yet, did not drive as many uninsured into the insurance market as we had hoped. There are implications for the workforce. 40

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42 Patient Preferences 42

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44 Ways Companies Reduce Costs 1. Health improvement efforts (wellness/disease management, free preventive care, etc.) 2. Increased employee financial responsibility (High Deductible Health Plans (HDHP), higher copays, reduced subsidies for retiree/dependent coverage, etc.) 3. Plan design (consumer-directed health plans or utilization management to detect unnecessary care) 4. Network management (narrower networks, direct hospital/physician contracting, accountable care organizations, etc.) 5. Defined contribution (provision of predetermined amount of funding for employee use toward health plan purchased) 6. Reduced benefits/plan value (cuts to covered benefits) 7. Limit/control hours worked (reduce number of full-time equivalent employees) 44

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49 Estimate Through 2019, Given Implementation of Possible Approaches to Spending Reform. Hussey PS et al. N Engl J Med 2009;361:2109-2111. 49

50 Bundled Payments vs Capitation Debate Bundled payments focus the physician on the appropriate management of the patient yet maintain essential role of the insurer/organization to manage risk. However, if we focus on just performing more “bundles” we are not dealing with the issue of unnecessary care. Is the bundle a newer version of the DRG? Capitation (global payments) would make unnecessary care a cost rather than a profit center. 50

51 Bundled Payments vs Capitation Debate Current bundle selection is weighted more towards acute conditions rather than chronic care. In the current bundled payment model, the primary care physician is less engaged. Capitation works best with closed networks. How do you manage patient desire to move outside of closed networks for certain services? 51

52 52 Advantages and Disadvantages of Payment Currencies

53 Bundled Payments vs ACOs Accountable Care Organizations (ACOs) and bundled payments both require care redesign and the ability to adapt to a new payment model.  HOWEVER, organizations need to consider strategically which model to undertake and with which payer. ACOs mandate population health management with populations of patients typically attributed through primary care visits. Bundles offer the opportunity for focused care redesign on a particular condition or set of conditions over time. 53

54 Bundled Payments vs ACOs ACOs are voluntary, and thus can’t be expanded nationwide. ACOs are not appropriate for many (rural) areas of the country. Bundled payments are easier to implement, require less upfront investment. ACOs take time to realize returns on investment. Bundled payments yield immediate price savings. 54

55 Bundling Participation Benefits Health Systems: Choice of payment (prospective vs. retrospective). Choice of episode length. Choice of episodes with option to add or delete quarterly. Episode families within clinical conditions that recognized patterns of clinical comorbidities. Inclusion of clinically related conditions but exclusion of cancer and trauma. Outlier protection and flexibility in risk tracks by episode. The model is not shared savings; once a 2-3% discount is paid, all remaining savings are returned to the provider. Payer is guaranteed savings through the discount, which allows for experimentation with one or multiple bundles. 55

56 Bundling Participation Benefits for Physicians Demonstrate clinical quality. Participate in the decision of evidence-based clinical initiatives and care paths. Enhance patient experience across the continuum. Benefit through the use of integrated infrastructure. Participate in gain-sharing arrangements that align the institution and practitioner. 56

57 Bundling Participation Benefits for Patients Better value for their health care dollar. More coordinated care with enhanced physician outreach. Improved outcomes. Better information to support choice. Should be seamless to the patient. 57

58 Some of our “Baggage” 58

59 Vast Majority of Those Who Need Care Can Get It 59

60 But That Leaves 15% or More Who Can’t 60

61 Access to Care Depends on Type of Insurance Coverage (June 2013) 61

62 For Those Who Cannot Get Care, Cost is the Most Common Culprit (June 2013) 62

63 New Health Insurance Marketplaces Enrolling Few Uninsured Americans, Two Surveys Find Only one in 10 uninsured persons who qualify for private plans through the new marketplaces enrolled as of last month. 23% of uninsured U.S. residents said they were not aware of the health insurance exchanges. The study found that low-income and uninsured adults were less likely to have heard about the exchanges than their respective peers. 3.3 million people have signed up for private insurance plans through the Affordable Care Act's exchanges. Another 6 million people have signed up for Medicaid. 63 Amy Goldstein The Washington Post, March 6, 2014

64 Haven’t We Been Here Before? 64

65 What We Will Cover The Patient Protection and Affordable Care Act (ACA) was enacted….what happened? Why do other countries care? What are we learning? Some of our baggage Path forward 65

66 The Path Forward The President’s budget summary: 1) Bundling is here to stay for a while. It will extend across post-acute care, to our health center’s inpatient rehab facilities and skilled nursing facilities. The bundles will get longer and wider. 2) Primary care training expansion and paying for ambulatory teaching. 3) Value Based Purchasing for all levels and types of providers. 66

67 Market changes Healthcare of the future will be system based. Will require strong and aligned governance, organization, and management systems. Growth and complexity of these systems requires enhanced profile for physician leaders and the evolution of the practice structures. Transparency in quality, performance, and financial information at all levels is central to high achievement. Competitive viability and long term mission sustainability will require a radically restructured operating model for cost and quality performance. Population health is here. 67

68 Conclusion The ACA and CMMI has created real innovation. Better value will be achieved through a blend of market forces, government regulation, and intense experimentation. The reality that we have to manage the cost of care is finally getting through! Reforms are still incremental instead of fundamental. The confluence of insurance reform, employers’ shift from defined health insurance benefit to defined contribution, price transparency and an emerging retail market will make health care very interesting over the next few years. 68

69 The Opportunities “Being challenged in life is inevitable, being defeated is optional.” -- Roger CrawfordRoger Crawford “A healthy attitude is contagious but don't wait to catch it from others. Be a carrier.” --Tom StoppardTom Stoppard “If you dislike change, you’re going to dislike irrelevance even more” -- Gen. Eric Shinseki 73

70 Ways to Stay Informed on Impact of ACA 70

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