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Emergency Medicine and Value- Driven Healthcare Reform EDPMA, April 2013 Brent R. Asplin, MD, MPH President and Chief Clinical Officer Fairview Health.

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Presentation on theme: "Emergency Medicine and Value- Driven Healthcare Reform EDPMA, April 2013 Brent R. Asplin, MD, MPH President and Chief Clinical Officer Fairview Health."— Presentation transcript:

1 Emergency Medicine and Value- Driven Healthcare Reform EDPMA, April 2013 Brent R. Asplin, MD, MPH President and Chief Clinical Officer Fairview Health Services Minneapolis, MN E-mail: basplin1@fairview.org

2 Goals Overview of Healthcare Macroeconomics Overview of Healthcare Macroeconomics –Drivers of “population health” Value Based Purchasing and Payment Reform Value Based Purchasing and Payment Reform Disruptive Innovation Disruptive Innovation Strategic Landscape for EM Strategic Landscape for EM

3 US Gross HC Spending

4 2010 Healthcare Spending as a Percent of GDP

5 Average Annual Premiums for Single and Family Coverage, 1999-2012 * Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. $ 15,745 *

6 Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings, 1999-2012 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2012; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2012 (April to April).

7 Variations in practice and spending 1. The paradox of plenty 2. What’s going on? 3. What might we do? 4. Is there reason for hope? The Dartmouth Atlas

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10 NO BANNER + NO LOGO Mortality Amenable to Health Care—Global * Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections. See Appendix B for list of all conditions considered amenable to health care in the analysis. Data: E. Nolte, RAND Europe, and M. McKee, London School of Hygiene and Tropical Medicine, analysis of World Health Organization mortality files and CDC mortality data for U.S. (Nolte and McKee, 2011). Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011. Deaths per 100,000 population*

11 Implications for Us 1966 19721978 198419901996200220082014202020262032203820442050 0 5 10 15 20 25 Actual Projection 2.5 Percentage Points 1 Percentage Point Zero Differential of: Percent of GDP Total Federal Spending for Medicare and Medicaid Under Assumptions About the Health Cost Growth Differential Tax rates 2050: 10% 26% 25% 66% 35% 92%

12 Leadership in a New Age for Healthcare What needs to happen? What needs to happen? Who is going to make it happen? Who is going to make it happen?

13 Paul Starr’s account of the rise of the American medical industry during the 20 th century Paul Starr’s account of the rise of the American medical industry during the 20 th century

14 Value-Based Reimbursement What is Value? What is Value? Value is a function of quality (safety, outcomes, service) divided by cost over time Value is a function of quality (safety, outcomes, service) divided by cost over time

15 Strategic Bets of Value Based Purchasing Fee for service reimbursement drives inflation in the system Fee for service reimbursement drives inflation in the system If you want different performance, you have to change financial incentives If you want different performance, you have to change financial incentives For a population, high quality care (i.e. care that eliminates unnecessary utilization) costs less than low quality care in any given year For a population, high quality care (i.e. care that eliminates unnecessary utilization) costs less than low quality care in any given year Global payments will drive efficiencies Global payments will drive efficiencies

16 Value Based Purchasing Pay for performance Pay for performance –PQRS –Value-based Modifier Episodes of care & bundled payments Episodes of care & bundled payments Hospital readmissions Hospital readmissions Accountable care organizations (ACOs) Accountable care organizations (ACOs)

17 What is the Value Based Modifier? The Affordable Care Act requires that Medicare phase in a value-based payment modifier (VM) that would apply to Medicare Fee for Service Payments starting in 2015, phase-in complete by 2017. The Affordable Care Act requires that Medicare phase in a value-based payment modifier (VM) that would apply to Medicare Fee for Service Payments starting in 2015, phase-in complete by 2017. The VM assesses both quality of care and the costs of care. The VM assesses both quality of care and the costs of care. CMS applies the VM to physician payment in all groups of 100 or more eligible professionals starting in 2015, based on your calendar year 2013 claims! CMS applies the VM to physician payment in all groups of 100 or more eligible professionals starting in 2015, based on your calendar year 2013 claims! Meant to encourage shared responsibility and systems-based care for multi-specialty group practices Meant to encourage shared responsibility and systems-based care for multi-specialty group practices Attempt to “align” with Medicare Shared Savings program and Accountable Care Organizations (ACOs) Attempt to “align” with Medicare Shared Savings program and Accountable Care Organizations (ACOs)

18 Value Based Modifier for Groups of ≥ 100 Eligible Professionals CY 2013 Claims Eligible Professionals = physicians, PAs, NPs, etc Eligible Professionals = physicians, PAs, NPs, etc “Group” ≥ 100 “eligible professionals” reporting under one TIN “Group” ≥ 100 “eligible professionals” reporting under one TIN Bonus or Ding –> TIN Physician Payments only Bonus or Ding –> TIN Physician Payments only

19 Value-Based Modifier and the Physician Quality Reporting System Groups of ≥100 Eligible Professionals (MDs, DOs, PAs, NPs) Satisfactory PQRS ReportersNon-satisfactory PQRS Reporters (including those who do not report) Elect Quality Tiering Calculation No Election Upward or Downward Adjustment Based on Quality Tiering 0.0% No adjustment -1.0 % VBM Adjustment -1.5 % PQRS Adjustment -2.5 % Total Adjustment

20 Interaction Between PQRS & Value-Based Modifier To avoid -1.5% payment adjustment in 2015, based on CY 2013 claims must successfully report PQRS To avoid -1.5% payment adjustment in 2015, based on CY 2013 claims must successfully report PQRS To avoid all penalties, groups ≥ 100 eligible professionals must report at the group level To avoid all penalties, groups ≥ 100 eligible professionals must report at the group level If the group reports at the individual level instead, they will all be subject to the value modifier of -1.0% If the group reports at the individual level instead, they will all be subject to the value modifier of -1.0% Total Failure to Report PQRS = -2.5% (2015 payment adjustment, based on CY 2013 claims) Total Failure to Report PQRS = -2.5% (2015 payment adjustment, based on CY 2013 claims) Total Failure to Report PQRS = -3.0% (2016 payment adjustment, based on CY 2014 claims) Total Failure to Report PQRS = -3.0% (2016 payment adjustment, based on CY 2014 claims)

21 21 CMS Readmission Measures 2013  Hospital Readmission Reduction Program  HRRP  “Program is designed to reduce CMS payments to hospitals with higher than expected risk-adjusted readmission rates.”  Baseline period 6.1.2008 – 6.30.2011  Began 10.1.2012  Reductions of 1% increasing to 3% in 2015  Acute Myocardial Infarction  Heart Failure  Pneumonia

22 CMS Inpatient Proposed Rule (released 4/26/13) Adds knee and hip implants and COPD admissions to the readmissions reduction program starting in 2015 Adds knee and hip implants and COPD admissions to the readmissions reduction program starting in 2015 Pays for the 2013 physician “SGR fix” with $11B in hospital cuts over 4 years Pays for the 2013 physician “SGR fix” with $11B in hospital cuts over 4 years

23 Accountable Care Organizations Provider-led organizations with a strong primary care base that take accountability for the full spectrum of healthcare services for a defined population Provider-led organizations with a strong primary care base that take accountability for the full spectrum of healthcare services for a defined population Financial incentives tied to: Financial incentives tied to: –Total cost of care –Quality and patient satisfaction

24 CMS ACO Programs (260 Participating Organizations) Physician Group Practice Transitions Program Physician Group Practice Transitions Program –Six organizations (started Jan 2011) Pioneer ACO Program Pioneer ACO Program –32 organizations (started Jan 2012) Medicare Shared Savings Program Medicare Shared Savings Program –27 organizations began in April 2012 –89 organizations began in July 2012 –106 organizations announced in Jan 2013

25 Interesting ACOs “Diagnostic Clinic Walgreens Well Network” “Diagnostic Clinic Walgreens Well Network” –All of Florida “Scott and White Healthcare Walgreens Well Network, LLC” “Scott and White Healthcare Walgreens Well Network, LLC” –Texas

26 Private Exchanges and Narrow Network Products Don’t underestimate how quickly markets will move toward value-based insurance products Don’t underestimate how quickly markets will move toward value-based insurance products –Partnerships between payers and delivery systems –Many of the providers are Independent Practice Associations (IPAs)

27 27 New payer/provider partnerships are emerging in the Twin Cities market ProvidersRelationship Payer New products 50% ownership; new products New product Merger

28 The Paradox of ACOs (public and private) Every dollar of waste in healthcare is somebody’s dollar of revenue Every dollar of waste in healthcare is somebody’s dollar of revenue Hospitals stand to lose the most from reductions in TCOC Hospitals stand to lose the most from reductions in TCOC –Admissions for chronic diseases –Readmissions –ED visits

29 Implications for Emergency Medicine Reduction of avoidable ED visits is a goal for every one of the 260 ACOs and private insurance products in the US today Reduction of avoidable ED visits is a goal for every one of the 260 ACOs and private insurance products in the US today Contrary to what you may hear, this is based on sound economics Contrary to what you may hear, this is based on sound economics Every smart ACO should try to partner with EDs to coordinate care and create alternatives to admissions/readmissions Every smart ACO should try to partner with EDs to coordinate care and create alternatives to admissions/readmissions

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32 Types of Business Models Solution shops Solution shops –“All things to all people” –Fee for service reimbursement –E.g. consulting firms, hospitals Value added process (VAP) business Value added process (VAP) business –Reliable, rules-based processes –Fee for outcome reimbursement –E.g. MinuteClinic, Shouldice Hospital

33 Types of Business Models Facilitated networks Facilitated networks –Businesses where people exchange things with one another –Fee for membership –E.g. Insurance

34 Disruptive Innovation An innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network. An innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network. A “value network” is the collection of upstream suppliers, downstream channels to market, and ancillary providers that support a common business model in an industry. A “value network” is the collection of upstream suppliers, downstream channels to market, and ancillary providers that support a common business model in an industry.

35 Requirements for Disruptive Innovation Technological enabler Technological enabler –E.g. the microprocessor Business model innovation Business model innovation –Ability to profitably deliver the new technological innovation Value network Value network –A commercial infrastructure of constituencies that reinforce and support the new business model

36 Control Data vs. IBM Both were supercomputer giants of the 1970s Both were supercomputer giants of the 1970s Enjoyed huge profit margins on mainframe supercomputers Enjoyed huge profit margins on mainframe supercomputers Responded very differently to the advent of the microprocessor and personal computing Responded very differently to the advent of the microprocessor and personal computing

37 The Hospital Value Network Emergency medicine is integrally tied to the hospital business model Emergency medicine is integrally tied to the hospital business model Much of the criticism of the economics of emergency medicine is tied to the hospital business model in which it lives Much of the criticism of the economics of emergency medicine is tied to the hospital business model in which it lives

38 Source: Christensen et al. The Innovator’s Prescription

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40 Disrupting Healthcare A simple question: A simple question: Will your economics be disrupted or will you do the disrupting? Will your economics be disrupted or will you do the disrupting?

41 ED Acute Care Framework (Peter Smulowitz, MD and colleagues) Source: Smulowitz et al. Annals of EM. 2012 Opportunity #2 Opportunity #1

42 Acute Unscheduled Care Patient Satisfiers Biggest drivers of satisfaction for most acute unscheduled conditions: Biggest drivers of satisfaction for most acute unscheduled conditions: –Timely access –Low cost

43 Marginal Cost of Acute Care for Low Acuity Conditions Regardless of setting, the marginal cost of producing acute care is relatively low Regardless of setting, the marginal cost of producing acute care is relatively low –How expensive is it for you to diagnose acute otitis in your ED? This is much different than the cost incurred by the payer (i.e. patient, health plan, government) This is much different than the cost incurred by the payer (i.e. patient, health plan, government) –Widely variable depending on the location

44 Medicare Reimbursement ED vs. Office Visit Source: Smulowitz et al. Annals of EM. 2012 (In Press)

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46 The Strategic Opportunity We already know how to deliver acute unscheduled care quickly and at a low marginal cost We already know how to deliver acute unscheduled care quickly and at a low marginal cost Why are we content to do this in an environment that has: Why are we content to do this in an environment that has: –Long waiting times due to hospital boarding; and –High fixed hospital costs that drive a non- competitive business model?

47 Disruptive Alternatives to ED Care Free-standing centers Free-standing centers Target complexity is above standard urgent care Target complexity is above standard urgent care Rapid throughput and lower cost Rapid throughput and lower cost Not hospital-based (no EMTALA) Not hospital-based (no EMTALA)

48 Disruptive Alternatives to ED Care

49 Disruptor vs. Disruptee? We have already solved the most difficult challenge of acute unscheduled care: We have already solved the most difficult challenge of acute unscheduled care: The 168 Hour Work-Week! There are important opportunities to step out of the hospital (literally and virtually) to capture demand for low-cost alternatives to ED care There are important opportunities to step out of the hospital (literally and virtually) to capture demand for low-cost alternatives to ED care

50 The Cycle of Disruption Original Provider Hospital OR Hospital OR Inpatient Stay Inpatient Stay Surgical Specialists Surgical Specialists Specialty Care Specialty Care Primary Care Primary Care Retail Clinics Retail Clinics The Hospital ED The Hospital ED Disruptive Alternative Ambulatory Surgery Ambulatory Surgery ED Observation ED Observation Non-Surgical Specialists Non-Surgical Specialists Primary Care Primary Care Retail Clinics Retail Clinics Virtual Care Virtual Care Free-Standing EDs plus which of the above??? Free-Standing EDs plus which of the above???

51 ED Acute Care Framework (Peter Smulowitz, MD and colleagues) Source: Smulowitz et al. Annals of EM. 2012 Opportunity #1

52 The Value of Emergency Care The most expensive routine decision in healthcare The most expensive routine decision in healthcare The more “accountability” we take for reducing potentially avoidable admissions and re-admissions, the more “value” we will create for the system The more “accountability” we take for reducing potentially avoidable admissions and re-admissions, the more “value” we will create for the system

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54 Hub of the Enterprise? “Accountability” + “Value” = ? “Accountability” + “Value” = ? A new revenue stream for emergency medicine? A new revenue stream for emergency medicine? Why wouldn’t you become part of risk based products? Why wouldn’t you become part of risk based products? –Private insurance, ACOs, Medicare Advantage plans, etc….

55 Opportunities for an Emergency Care Hub Coordination of transitions Coordination of transitions Reducing avoidable admissions and readmissions Reducing avoidable admissions and readmissions Rapid complex diagnostic evaluations Rapid complex diagnostic evaluations –Especially for patients with complex conditions Communication interface with other care delivery hubs Communication interface with other care delivery hubs –PCMH and geriatrics

56 The Irony of Emergency Medicine and Value Based Healthcare We are often pushed to the fringe as a provider to avoid rather than pulled into the middle of the operation We are often pushed to the fringe as a provider to avoid rather than pulled into the middle of the operation Providing better care for complex patients is the answer---won’t happen without better coordination in the ED Providing better care for complex patients is the answer---won’t happen without better coordination in the ED

57 Primary Care Patient-Centered Medical Home Geriatric Services Continuum The Emergency Care System Hubs for Managing Population Health Behavioral Health Capabilities

58 Leadership in a New Age for Healthcare What needs to happen? What needs to happen? Who is going to make it happen? Who is going to make it happen?

59 A Short List of Health Policy Imperatives Move away from fee for service payment for the majority of services Move away from fee for service payment for the majority of services –Global payments tied to population outcomes and cost (i.e. value) Re-orient care delivery and financing toward a health outcomes framework Re-orient care delivery and financing toward a health outcomes framework –Across entire population spectrum Engage consumers in dramatically different ways Engage consumers in dramatically different ways

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61 Discussion E-mail: basplin1@fairview.org E-mail: basplin1@fairview.org


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