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1 The Future of Health Care Financing Dec 5, 2014 WPA Meeting Kohler, WI Tim Bartholow, MD.

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Presentation on theme: "1 The Future of Health Care Financing Dec 5, 2014 WPA Meeting Kohler, WI Tim Bartholow, MD."— Presentation transcript:

1 1 The Future of Health Care Financing Dec 5, 2014 WPA Meeting Kohler, WI Tim Bartholow, MD

2 How will WI citizens who make $25K to $50K per year secure their health care into the near future? What is the obligation of organizations which purchase health care to enhance health care delivery? What is our duty to our entire population of members as compared to our duty to each individual member? Key Questions

3 Provider Economic Model Cost to Revenue Providerto Provider Commercial Ins++++ Medicare++ Medicaid++ +Uninsured (Charity)+0 “Revenue”

4 Like Others, WI Population Grows Older…and Will Need Intense Resources 4

5 5

6 International Comparison of Spending on Health, 1980–2008 Average spending on health per capita ($US PPP) Source: OECD Health Data 2010 (June 2010).

7 7 Paul Fischbeck: US-Europe Comparisons of Health Risk for Gender Specific Groups

8 Avik Roy, Forbes, 4/23/12 The Trustees of the Medicare program have released their annual report on the solvency of the program. They calculate that the program is “expected to remain solvent until 2024, the same as last year’s estimate.” But what that headline obfuscates is that Obamacare’s tax increases and spending cuts are counted towards the program’s alleged “deficit-neutrality,” Medicare is to go bankrupt in 2016. And if you listen to Medicare’s own actuary, Richard Foster, the program’s bankruptcy could come even sooner than that.have released their annual report Trustees: Medicare Will Go Broke in 2016, If You Exclude Obamacare's Double-Counting

9 Medicare Trustees Report, 2013 Part A (Hospital) Trust Fund

10 Medicare Trustees Report, 2014 Part A (Hospital) Trust Fund 2007 2015

11 Patrick Conway, MD: Chief Medical Officer for CMS, in the CMS Blog from November 14, 2013 The Affordable Care Act gave CMS many new tools to convert Medicare from a program that paid for decades on automatic pilot into one that deliberately pays to promote better health. In FY 2014, 1.25 percent of a hospital’s Medicare base-operating DRG payments go into a value-based purchasing pool. Depending on how well hospitals measured up to their peers on important health-care quality indicators during a prior performance period, they will either break even, get a bonus, or—if their performance is lower than average—get back less than what they contributed to the FY 2014 pool.

12 (Patrick Conway, Nov 14, 2013, cont’d) FY 2014 payments began October 1 About half of the hospitals participating in the program — over 1300 hospitals—will essentially break even (payment change of -0.2 % and +0.2 %) 630 hospitals—just under a quarter—will receive a bonus (+0.2% or more) 778 will receive an overall decrease in Medicare payment (-0.2 % or more)

13 Bonuses And Penalties For U.S. Hospitals, Partial List (Oct. 2012-Sept. 2014) Hospital NameCity Total VBP & Readmission Bonus/Penalty 2014 Mile Bluff Medical Center, IncMauston-0.81% St Joseph's Community Hospital Of West Bend, IncWest Bend-0.61% St Mary's Janesville HospitalJanesville-0.42% Fort HealthcareFort Atkinson-0.38% St Nicholas HospitalSheboygan-0.36% Wheaton Franciscan Healthcare- All SaintsRacine-0.34% Theda Clark Med CtrNeenah-0.32% St Vincent HospitalGreen Bay-0.32% St Marys Hospital Med CtrGreen Bay-0.26% Bay Area Med CtrMarinette-0.24% Columbia St Mary's Hospital Ozaukee, IncMequon-0.23% Columbia St Mary's Hospital MilwaukeeMilwaukee-0.21% Ministry Saint Joseph's HospitalMarshfield-0.20% Community Memorial HospitalMenomonee Falls-0.20% University Of Wi Hospitals & Clinics AuthorityMadison-0.19% Sacred Heart HospitalEau Claire-0.18% Holy Family Memorial IncManitowoc-0.16% Others truncated from this list….. A [1] means that Medicare did not calculate a payment adjustment for the hospital this year. A [2] means KHN could not calculate the annual change because one or both years lacked data. For details about the data, read the KHN methodology: http://www.kaiserhealthnews.org/Stories/2013/November/14/value-based-purchasing-medicaremethodology.aspx

14 Quality Cost Hospitals

15 Physicians

16 HHS, May 2014

17 330 ACOs in 47 states, 4.9 million beneficiaries. First year Shared Savings Program (SSP) results: 58 SSP ACOs held spending below their benchmarks by a total of $705 million and earned shared savings payments of more than $315 million. Another 60 ACOs had expenditures below their benchmark, but not by a sufficient amount to earn shared savings. Shared Savings Program: Dec 1, 2014

18 Providing more flexibility for ACOs Experienced ACOs that are ready to share in financial losses in return for the opportunity for a higher share of savings may elect to enter a two-sided model. Encouraging ACOs to take on greater performance-based risk and reward. create a new two-sided risk model, called “track 3,” which integrates some elements from the Pioneer ACO model, such as higher rates of shared savings and prospective attribution of beneficiaries Expanded use of telehealth, beneficiary attestation, and more flexibility around post-acute care referrals to help ACOs better coordinate care for beneficiaries Emphasis on primary care. refine assignment to an ACO to place greater emphasis on primary care services delivered by nurse practitioners, physician assistants and clinical nurse specialists and to allow certain specialists not associated with primary care to participate in multiple ACOs. Alternative methodologies for benchmarks: determining shared savings and losses to be gradually more independent of the ACO’s past performance and more dependent on the ACO’s success in being more cost efficient relative to its local market. Streamlining data sharing and reducing administrative burden. CMS Seeking Comment, Dec 2014

19 Expenditures expected to quadruple by 2020 –From $87 Billion to $400 Billion Specialty Drug Challenge

20 UC Berkeley: James P. Allison and Matthew F. Krummel as part of Krummel’s PhD thesis work in Allison's lab, published in the journal Science. [38] University of Chicago: Jeff Bluestone published studies, with Krummel and Allison in collaboration with University of Minnesota: Mark Jenkin Peter Linsley’s group at Oncogen and then Bristol-Meyer Squib in Seattle. Bristol-Meyer Squib ultimately came to license the Allison/Leach/Krummel patent though their acquisition of Medarex and the fully humanized antibody MDX010 (which later became Ipilimumab, trade- name Yervoy). Wikipedia, Accessed July 7, 2014 Yervoy: Billed at $250K, Contract $168K, 340b Acquisition ~$69K

21 All Payer Claims Data Base, WI Health Information Organization (WHIO): $40B, 3.7 Million WI Residents by Major Practice Category (MPC) 21 Over 50% Of Expense Is Contained Within Few Illness Categories

22 Docs Control Most Of The Spending 22 Specialty Primary Care “Therapists”

23 23 “The Specialist” is 5 to 10% of Resource Use for These Expensive Areas. Can Physicians Judiciously Authorize the Other 90%? Episode Treatment Group: Ischemic Heart Disease with Angioplasty Inflammation of the Esophagus, without Surgery Joint Degeneration, localized - Knee and Lower Leg, with Surgery Mood Disorder, Depressed Total Episode Standard Cost, DMV4$243 M$195 M$287 M$499 M SpecialistCardiologyGastroenterologyOrthopedic SurgeryPsychiatry Total $$23 M$10 M$28 M$23 M % of Episode $9.5%5.1%9.8%4.6% Facility, IP & OP Total $$187 M$76 M$229 M$149 M % of Episode77%39%80%30% Primary Care Total $$3 M$13 M$2 M$22 M % of Episode1%7%1%5% Prescription Drugs Total $$5 M$63 M$2 M$174 M % of Episode2%32%1%35%

24 24 Facilities SpecialistsPrimary Care

25

26 Soap Gauze Knee Implant Hospital Day Physical Therapy Orthopedic Surgeon Today We Too Often Pay One Item At A Time, eg Knee Replacement

27 Soap Gauze Knee Implant Hospital Day Physical Therapy Orthopedic Surgeon = Knee Bundle (One price for all services necessary) Warrantee against infection for 90 days Perhaps other outcomes

28 Source: HFMA Presentation “Managing the Transition from Volume to Value”, August 22, 2013 Zone of Risk Sharing

29 Angioplasty, By County 29

30 Angioplasty, By Physician 30

31 31 Cardiology Practice Ownership Wisconsin Hospital Employment of Cardiologists: 20075% 201245%

32 32 Cardiology Practice Ownership National Wisconsin

33 “Appropriate Use” In Legislative Language For Sustainable Growth Rate In Each Of The 3 Committees Of Jurisdiction

34 “Public Reporting” Delayed until January 2015

35 35

36 1.Keep people well, members have a duty to maintain health 2.If not well be sure the patient receives what is “Appropriate,” and 3.Provide this care with as little variation as possible 4.Shared Decision Making with health challenges or intervention, including Advance Care Planning 5.Anticipate Care Needs Basic Tenets of Enhancing Value: The Value Agenda 36

37 1.Assist members to achieve the best health we can, members have a duty to maintain health 2.If not well be sure the patient receives what is “Appropriate,” and 3.Provide this care with as little variation between physicians as possible 4.Shared Decision Making with health challenges or intervention, including Advance Care Planning 5.Anticipate Care Needs The Value Agenda 37

38 For CT, MRI, PET, the Use of Appropriate Use Criteria at the point of service (Radport) in Minnesota in 2006 appears to have changed utilization 38 www.bhcag.com/.../%7B18F569D4-A334-4CBC-B4CB-649DF181FA03%7D.PPT

39 39 http://go.bloomberg.com/multimedia/mapping-coronary-stent-hot-spots/

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42 IHD with Angioplasty, Clinic A & B, DMV 2, Profile Service Category: Category 1 42

43 County Health Rankings: Interactive Maps http://www.countyhealthrankings.org/app/wisconsin/2013/rankings/outcomes/overall/by-rank 43

44 UW PHINIX: Uncontrolled A1c and Diabetes Prevalence 2007-9 44 High Poverty High Economic Hardship High Social Vulnerability Low FF&V Consumption High T2DM Prevalence Lower Good A1c Control Higher Uncontrolled A1c $3121 PMPM $2004 PMPM LP Hanrahan (Larry.Hanrahan@fammed.wisc.edu) and B Arndt, http://videos.med.wisc.edu/videos/42741 11/5/2012 and https://www.wisconsinmedicalsociety.org/_WMS/publications/wmj/pdf/111/3/124.pdfLarry.Hanrahan@fammed.wisc.edu http://videos.med.wisc.edu/videos/42741 11/5/2012 https://www.wisconsinmedicalsociety.org/_WMS/publications/wmj/pdf/111/3/124.pdf

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48 Conclusions Physicians must be aware of their economic impact to the system Models of payment that have the physician more responsible for the total cost of patient care are opportunities Medicare is demonstrating real savings with a carrots and stick approach Middle income patients have no additional disposable income for health care

49 Questions?


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