2. MEPRS Management Improvement Group (MMIG) Strategic Plan Update TMA/MEPRS Program Office: Mr. Patrick Wesley Mr. Eric Meadows Mr. Herb Escobar

3. 2 Strategic Planning  A process  Used to focus /guide an organization  A map leading to a desired state

4. 3 OVERVIEW Why a Strategic Plan? – MHS Strategic Plan – MMIG Charter – Last Plan 2006 Conceptual Framework – Purpose of managerial cost accounting – Annual Operational Plan Initiatives in progress – Consolidated Cost Report – RVU Based Allocation Study Way Forward – Finalize the plan – Implement the plan I f you are planning for a year… plant rice If you are planning for a decade… plant a tree If you are planning for a life … Educate the People Unknown

5. 4 Why a Strategic Plan? The Quadruple Aim Readiness Ensuring that the total military force is medically ready to deploy and that the medical force is ready to deliver health care anytime, anywhere in support of the full range of military operations, including humanitarian missions. Population Health Reducing the generators of ill health by encouraging healthy behaviors and decreasing the likelihood of illness through focused prevention and the development of increased resilience. Experience of Care Providing a care experience that is patient and family centered, compassionate, convenient, equitable, safe and always of the highest quality. Per Capita Cost Creating value by focusing on quality, eliminating waste, and reducing unwarranted variation; considering the total cost of care over time, not just the cost of an individual health care activity.

6. 5 Why a Strategic Plan? MEPRS Management Improvement Group (MMIG) – Tri-Service Working Group responsible for developing, implementing, and managing MEPRS policies, procedures and business practices, and for integrating the collection, processing and reporting of standard workload, financial, and labor data in the Expense Assignment System (EAS) April 2009 Updated MMIG Charter: – Develop and update the MHS MEPRS Strategic Plan – Derive from the Strategic Plan Annual Operational Plans citing then current requirements for accomplishment. A Goal without a Plan is … a Wish Larry Elder

7. 6 Why a Strategic Plan? FY2006 MEPRS Strategic Plan Status: Don’t mistake activity for achievement John Wooden

8. 7 So What’s the Plan? Conceptual Framework – Purpose of managerial cost accounting – New MEPRS Strategic Plan – Annual Operational Plan Failing to Plan is … Planning to Fail Alan Lakein

9. 888

10. 9 Draft FY2011 MEPRS Strategic Plan Goal 1: Enhance data quality by systematically eliminating data compilation errors to include mathematical errors, large variances, and significant year-end adjustments. Goal 2: Sustain and enhance Tri- Service data uniformity, integrity, consistency and compliance with DoD MEPRS policy. Goal 3: Transform MEPRS to produce managerially relevant data to support the MHS Strategic Goals and Senior MHS Stakeholders' operational objectives. Goal 4: Support financial reporting and product cost management through linked databases.

11. 10 Draft FY2011 MEPRS Strategic Plan EAS Data Quality External Reporting Integrated Cost System Managerial Relevance Innovation and Information for Financial Statements Information for Decisions Management Information to Motivate and Evaluate Managers Six Sigma MEWACS MERHCF PPS UBO Rates MEPRS Web Portal DQ CC Statement EAS IV Repository M2 MDR CHCS/AHLTA Svc Fin Sys EHR-WA DMHRSi MEPRS Conf MADI/5M2U MEPRS Manual PCMH Front-End Objectives--Inputs (Policy, System, Business Rules etc.) Back-End Objectives--Outputs (DQ Surveillance, Analytics, Education etc.) Standardization of FCCs, PECs, and SEECs Re-look at DMHRSi LCA Business Rules Implement Patient Groups Level of Cost Accounting EASIV migration to utilization of weighted workload Comply with DoD FMR guidelines for cost accounting Develop the Consolidated Cost Report (CCR) Develop Personnel Report Research Industry Accepted Performance Factors Develop financial ratios and vertical analysis tools Analyze impact of overridden warnings and errors Operational Plan

12. 11 Initiatives Consolidated Cost Report—Data quality Tool Relative Value Unit Allocation Study—External Reporting

13. 12 Consolidated Cost Report (CCR) MEPRS Consolidated Cost Report (CCR)

14. 13 CCR is a detailed MEPRS data quality and reporting tool, building on the usefulness of prior “MEPRS-1 Reports” by adding enhancements such as: – Interactivity – Automated variance detection – Accessibility – Service-specific Reports – Integration with other MEPRS tools and resources Overview

15. 14 Presently in advanced development phase Integrated enhancements based on TMA/MEPRS internal reviews and user feedback from hands-on demonstrations at 2010 UBO/UBU Conference. 14 Next Steps: 2010 UBO/UBU Conference demonstrations MMIG demonstration and feedback (June 2010) MEPRS Conference demonstration and hands-on user feedback (July 2010) Limited field testing (August 2010) Deployment via MEPRS.info web portal (October 2010) Status

16. 15 Features Service-specific Executive Summary metric identifying specific MTFs, 1 st Level FCCs, and Fiscal Months deserving immediate attention. Built-in documentation listing data sources, dates of data extracts, and explanation of metrics. Links to external tools including MEWACS and S2M3, learning resources, policy documents, etc. Service-specific interactive displays of 4 th Level FCC data by MTF and Fiscal Month including automated variance detection. 15

17. 16 Automated Variance Detection Negative Total Post-Stepdown Expenses 4 th -Level FCCs with expenses, but no workload Ancillary or Support Expenses remaining after step-down is complete For 4th-Level FCCs accounting for 80% of total MTF expenses (Pareto Principle or 80-20 rule), individual workload and expense components deviating by more than ±3 Standard Deviations from historical average (accounting for workload fluctuations) 16 CCR uses multi-step criteria to automatically flag data values by MTF, 4 th -Level FCC, and Fiscal Month that should be validated or corrected. Criteria include:

18. 17 MEPRS Consolidated Cost Report (CCR) Demonstration 17

19. RVU-Based Expense Allocation R&D Study 18

20. 19 Background The underlying MEPRS expense allocation approach has remained largely unchanged since the mid ‘80’s. MEPRS expense allocation algorithms are not aligned with industry best practice -- some MEPRS expenses are commonly “un-allocated” and redistributed before application in TMA metrics, measures, and programs (i.e., PLCA, MERHCF, etc.). Currently about 12% of Total Direct Care expenses are distributed in MEPRS through the stepdown process on the basis of raw workload counts – Dispositions, Total Visits, etc. (over $1.1 Billion in FY07) Expense allocation based on relative value workload units enhances final expense assignments by linking resource consumption to workload intensity. 19

21. 20 Study Goals  Employ simulation analysis to quantify the impact of using Total RVU as the basis of expense allocation where Total Visits are presently used – outpatient cost pools (B*X), outpatient depreciation (EAB), outpatient TRICARE administration (EKA).  Compare Simulated Total Expenses to Current MEPRS values by:  Functional Cost Center  General Product Line  MTF Peer Group  Service  Serve as the basis for potential MEPRS policy and EASIV allocation algorithm updates designed to move MEPRS closer to widely accepted industry rules and practice. 20

22. 21 Approach 1.Harvest detailed expense data from the EASIV Repository by FY, FM, Child DMISID, and 4 th -level FCC 2.Harvest Total RVU measures from M2 by FY, FM, Child DMISID, and 4 th -level FCC 3.Unwind EASIV expense allocation process 4.Combine EASIV expenses and RVUs by FY, FM, Child DMISID, and 4 th -level FCC 5.Re-allocate expenses based on Total RVUs 6.Compare original and simulated expenses by FCC, PPS Product Line, MTF Peer, and Service 21

23. 22 Preliminary Results Summary by PPS Product Line Percent Change in Total Expenses, Simulated vs. Actual 22 Consistent results across MTF Peer Groups, Service and MTFs Impact on top 3 Product Lines (PC, Orthopedics, & ER) is subtle: < ±1%. On average, greatest impact on Hearing Conservation (-10.1%) and Optometry (+7.7%)

24. Way Forward – Finalize the plan – Implement the plan – Track progress/Accountability 23 Strategic Plan Way Forward 23 If you don’t know where you are going, you’ll wind up some where else. Yogi Berra

25. 24 SUMMARY Why a Strategic Plan? Conceptual Framework FY2011 TMA MEPRS Strategic Plan Way Forward Initiatives Under Development We all have a plan… until you get hit in the mouth. Mike Tyson

26. 25 QUESTIONS

27. 26 Back Up Slides

28. 27 Strategic Imperatives and the Quadruple Aim The MHS leadership recognized that our current strategic plan is aligned with four aims* and we have begun to use the term "Quadruple Aim ”. The four aims are: ─ Increased Readiness ─ Enhanced experience of care ─ Improved population health ─ Responsible management of per capita cost To achieve the Quadruple Aim, the MHS has developed a set of Strategic Imperatives: ─ Strategic Imperatives are the critical few things we must do to achieve the MHS Vision and the Quadruple Aim ─ Each Strategic Imperative has one or more performance measures; each measure will have a target for FY10, FY 12 and FY 14. ─ The difference between our current performance and target performance is our performance gap Reference: The Triple Aim: Care, Health, And Cost; Berwick, Donald, Health Affairs 27, no. 3 (2008): 759–769; 10.1377/hlthaff.27.3.759; May-June 2008

29. 28 Bibliography “Charting Your Course Through Hospital Medicare Cost Reporting.” HFMA Education Foundation. Spring Seminar. Baltimore, MD. March 19 – 22, 2007. EASIV Operational Requirements Document, 1998. Expense Assignment System, Version IV (EAS IV) Software Requirements Specification (SRS)Software Release 3.1. Number 102-059-007. Falls Church, VA: Park City Solutions, Inc., 2005. Finkler, Steven A., Ward, David, and Baker, Judith J. Essentials of Cost Accounting for Health Care Organizations. 3 rd Ed. Sudbury, MA: Jones and Bartlett Publishers, Inc., 2007. Hankins, Robert W. and Baker, Judith J. “Tools and techniques for Decision Support.” Management Accounting for Health Care Organizations. Sudbury, MA: Jones and Bartlett Publishers, Inc., 2004. MEPRS Senior Stakeholder’s Meeting Minutes. Falls Church, VA. Feb 2007. MMIG Strategic Plan. Falls Church, VA. Oct 2005. Nowicki, Michael. Financial Management of Hospitals and Healthcare Organizations.,4 th Ed. Chicago, IL: Foundation of the American College of Healthcare Executives, 2008. Medical Expense And Performance Reporting System for Fixed Military Medical and Dental Treatment Facilities Manual. DOD 6010.13-M. Office of the Assistant Secretary of Defense Health Affairs. April 7, 2008. “Prospective Payment System (PPS), Program Review and Evaluation.” Health Budgets and Financial Policy. Office of the Assistant Secretary of Defense Health Affairs. August 2008. Glass, Kathryn P. RVUs Applications for Medical Practice Success. Medical Group Management Association, 2003. Statement of Federal Financial Accounting Standards (SFFAS) No. 4, "Managerial Cost Accounting Concepts and Standards for the Federal Government", 1996 VHA Managerial Cost Accounting System. Veterans Health Affairs (VHA) Directive 2006-020. Washington, DC: Department of Veterans Affairs, April 25, 2006. “Patient-Centered Medical Home, Baseline View Across the Services and HA/TMA.” 2010 Military Health System Conference “The Quadruple Aim, MHS Game Plan for Improving Performance.” 2010 Military Health System Conference

30. 29 M2 - MHS MartDMHRSi - Defense Medical Human Resources System Internet MDR - MHS Data RepositoryMEPRS WebPortal - Medical Expense and Performance Reporting System Web Base Portal CHCS/AHLTA - Composite Health Care System/Armed Forces Health Longitudinal Technology Application EAS IVRepository – Expense Assignment System IV Repository Svc Fin Sys – Service Financial System DQ CC Statement – Data Quality Commanders Statement EHR-WA – Electronic Health Record - Way AheadSix Sigma - MEPRS Management Metrics (S2M3) MERHCF - Medicare Eligible Retiree Health Care Fund MEWACS - MEPRS Early Warning and Control System PPS - Prospective Payment SystemPCMH – Patient Centered Medical Home MADI/5M2U - MEPRS Application and Data Improvement/ Five Minute MEPRS University Acronyms