1. Mike Dinneen, MD, PhD Strategic Planning and Business Development Office of the Assistant Secretary of Defense for Health Affairs Why MEPRS Matters More Than Ever

2. Objectives Understand Department of Defense Strategic Direction and how expense reporting fits in. Understand the MHS Strategic Plan and how MEPRS fits in. Understand the critical importance of MEPRS Time allocation in achieving performance based management. Understand how MEPRS accounting will be modified to enable collection of cost and workload data in a manner that resembles best civilian practices.

3. The DoD BSC Strategic Framework for Change Historical World ViewFuture Objectives Central PlanningToAdaptive and Dynamic Planning Fixed, Predictable ThreatToCapabilities Against Shifting Threats Mature Business and OrganizationToMix of New and Mature Organizations Inputs Based Management – Focus on Programs ToOutput Based Management – Focus on Results Appropriated Funds – “Cost is Free”ToMore Market-like and price based Segmented Information – Closed Architecture ToNetworked Information – Open Architectures Stovepiped and Competitive Organizations – “Zero sum Enterprise” ToAligned Organizations with common and shared objectives

4. Historical World ViewFuture ObjectivesMHS Initiatives Central PlanningAdaptive and Dynamic PlanningMHS Business Planning Process Fixed, Predictable ThreatCapabilities Against Shifting Threats Medical Readiness Review Mature Business and Organization Mix of New and Mature Organizations BRAC Inputs Based Management – Focus on Programs Output Based Management Focus on Results MHS Office of Transformation – LAWG Appropriated Funds – “Cost is Free” More Market-like and price based Prospective Payment System Segmented Information Closed Architecture Networked Information – Open Architectures CHCS II, IM/IT in support of business operations Stovepiped and Competitive Organizations – “Zero sum Enterprise” Aligned Organizations with common and shared objectives BRAC, Joint Operations MHS Alignment with DoD Strategic Initiatives

5. The Mission and the Transformation: Medical QDR To continue to provide the Joint Force with best-in-the world Operational Medicine/Force Health Protection (FHP) and high-quality health care for beneficiaries, four things must be done—  Transform the medical force so that future medical support—  Is fully aligned with joint force concepts and provides optimum combat service support to the joint force  More rapidly responds to the needs of the changing national security environment  Transform the infrastructure of the Military Health System—  Implement BRAC recommendations to reduce excess capacity/infrastructure and operate jointly in Multi-Service Markets  Transform the business operating model to —  A fully customer-focused and performance-based organization, with--  Effective processes that anticipate and respond to the changing nature of health care  Transform the TRICARE benefit—  To reinforce appropriate use of resources and demand for services  To engage the individual to actively manage his/her health

6. Patient Care, Sustain Skills and Training Promote & Protect Health of the Force Deploy to Support the Combatant Commanders to Military Health System Mission and In Peace & War 9 Manage Beneficiary Care Deploy Healthy Force Manage Beneficiary Care Deploy Healthy Force Deploy Medical Force Manage Beneficiary Care

7. The MTFs Support all 3 Mission Elements * Disease and Non-Battle Injury Force Health Protection (FHP)Beneficiary Health Care Both FHP and Beneficiary Health Care Clinical care not associated with FHP training Individual Medical Readiness DNBI* Prevention Other health care services not associated with FHP training Military-Unique Training for the Medical Force Health Care that Supports FHP Training Personnel Deployment Homeland Defense

8. The “Fog” in MTF Performance The system cannot accurately define, measure and value the FHP and mission essential services performed by MTFs Individual Medical Readiness Military-Unique Training for the Medical Force Health Care that Supports FHP Training Clinical care not associated with FHP training Other health care services not associated with FHP training Being defined and measured Primary basis for MTF funding Issues exist in coding and accounting Performance and costs not well defined or measured DNBI Prevention Deployment

9. $1 for inpatient care buys* 59 cents of inpatient care, at the CMAC reimbursement rate 41 cents of an unknown combination of-- - Force Health Protection capability - Non-CMAC reimbursable health care - Inefficiency $1 for outpatient care buys* 42 cents of outpatient care, at the CMAC reimbursement rate 58 cents of an unknown combination of-- - Force Health Protection capability - Non-CMAC reimbursable health care - Inefficiency The Price of the “Fog” System cannot separate legitimate FHP efforts, non- reimbursed/able healthcare, and inefficiency * Based on ASD(HA) Study, Perspectives on Efficiency in the Direct Care System

10. Some of the Keys to Transforming the Business Model and “seeing through the fog” Standard Application of MEPRS across all Services Standard triservice business processes for the collection of labor expenses Full transparency of performance data, including MEPRS labor cost allocation Why? –Because we need to know where we are investing our most valuable assets –Because we want each MTF commander to have the tools to maximize effectiveness and return on investment

11. Level of Effort Full Time Equivalents and funds by project (initiative) Capital Investments Level of Effort Full Time Equivalents and funds by project (initiative) Capital Investments Joint, interoperable deployable medical capabilities BRAC – Joint MTFs and joint training Performance based management Reshaped benefit Joint, interoperable deployable medical capabilities BRAC – Joint MTFs and joint training Performance based management Reshaped benefit Fit and Protected Force Improved Satisfaction Reduced Growth in Health Care Costs for DoD Healthy Communities Fit and Protected Force Improved Satisfaction Reduced Growth in Health Care Costs for DoD Healthy Communities  Value Creation  Relevant Organization  Viable Enterprise/Entity Measures Critical Few Inputs Outputs Outcomes Level of Effort Full Time Equivalents and funds by functional activity or program element Level of Effort Full Time Equivalents and funds by functional activity or program element Trained deployable medical units IMR RVUs / RWPs Trained medical staff Trained deployable medical units IMR RVUs / RWPs Trained medical staff Medical units deployed Healthy Communities Beneficiary Satisfaction Reduced cost per enrolled beneficiary Committed workforce Infrastructure Maintained Medical units deployed Healthy Communities Beneficiary Satisfaction Reduced cost per enrolled beneficiary Committed workforce Infrastructure Maintained Measures Many InputsOutputs Outcomes Strategic Transformation Business Planning/ Operations Long-term Outcomes Resources Integrating MHS Strategic Transformation and Business Planning/Operations

12. Stakeholder Perspective Customer Perspective Internal Perspective Learning & Growth Perspective Medically Ready and Protected Force and Homeland Defense for Communities Sustain the Benefit by Managing DoD Health Care Costs (ROI) Mission Centered Care Continuous, efficient health status monitoring focuses health improvement activities Reduce death, injuries and diseases, and restore function during and after military operations Improve satisfaction with health care Resources are predictably available Patient Centered Care “It feels like the Military Health System was designed just for me.” “I am a partner with my healthcare team. They know me and care about improving my health.” Create healthy communities DoD BeneficiariesCommanders and Service Members Resource Perspective “I have responsive, capable & coordinated medical services anywhere, anytime.” “One Stop Shopping” for IMR activities that improves health and enhance performance “The MHS supports me in achieving individual medical readiness and enhancing performance.” Forces are medically ready to deploy, their performance is enhanced through medical interventions, and both the force and communities are protected from medical threats Improved Homeland Defense “Total Customer Solution”“Product Leadership” Manage and Deliver the Health Benefit Evidence based medicine is used to improve quality and manage demand Our health care processes are patient centered, effective and efficient Knowledge about beneficiary health and their customer requirements is readily accessible Beneficiaries partner with us to improve health outcomes Deployable Medical Capability New products, processes and services are rapidly deployed to support the mission – “Bench to Battlefield” The electronic medical record supports continuous tracking and medical surveillance Joint, interoperable processes efficiently move patients and staff and deliver care anytime, anywhere Responsibility and accountability are aligned throughout MHS Personnel are recruited, trained, and retained to meet requirements DoD Biomedical R&D is coordinated and focused on militarily relevant issues IM/IT is leveraged to enhance capabilities Culture of jointness and interagency cooperation The MHS embodies performance based management and a culture of innovation focused on results Employee s create success for customers Infrastructure is maintained and improved to optimize performance Information CapitalHuman CapitalOrganization & Culture MHS Mission: To enhance DoD and our Nation’s security by providing health support for the full range of military operations and sustaining the health of all those entrusted to our care. Financial Perspective

13. Stakeholder Perspective Customer Perspective Internal Perspective Learning & Growth Perspective Medically Ready and Protected Force and Homeland Defense for Communities Sustain the Benefit by Managing DoD Health Care Costs (ROI) Mission Centered Care Continuous, efficient health status monitoring focuses health improvement activities Reduce death, injuries and diseases, and restore function during and after military operations Improve satisfaction with health care Resources are predictably available Patient Centered Care “It feels like the Military Health System was designed just for me.” “I am a partner with my healthcare team. They know me and care about improving my health.” Create healthy communities DoD BeneficiariesCommanders and Service Members Resource Perspective “I have responsive, capable & coordinated medical services anywhere, anytime.” “One Stop Shopping” for IMR activities that improves health and enhance performance “The MHS supports me in achieving individual medical readiness and enhancing performance.” Forces are medically ready to deploy, their performance is enhanced through medical interventions, and both the force and communities are protected from medical threats Improved Homeland Defense “Total Customer Solution”“Product Leadership” Manage and Deliver the Health Benefit Evidence based medicine is used to improve quality and manage demand Our health care processes are patient centered, effective and efficient Knowledge about beneficiary health and their customer requirements is readily accessible Beneficiaries partner with us to improve health outcomes Deployable Medical Capability New products, processes and services are rapidly deployed to support the mission – “Bench to Battlefield” The electronic medical record supports continuous tracking and medical surveillance Joint, interoperable processes efficiently move patients and staff and deliver care anytime, anywhere Responsibility and accountability are aligned throughout MHS Personnel are recruited, trained, and retained to meet requirements DoD Biomedical R&D is coordinated and focused on militarily relevant issues IM/IT is leveraged to enhance capabilities Culture of jointness and interagency cooperation The MHS embodies performance based management and a culture of innovation focused on results Employee s create success for customers Infrastructure is maintained and improved to optimize performance Information CapitalHuman CapitalOrganization & Culture MHS Mission: To enhance DoD and our Nation’s security by providing health support for the full range of military operations and sustaining the health of all those entrusted to our care. Financial Perspective What parts of the Strategic Plan Rely on Accurate MEPRS Data?

14. MEPRS Process Improvements Simplify data capture for individuals –Lump, don’t split work centers –Standard naming of work centers –Standard time allocation rules –Simplified data entry –Show people their data –Align accountability with authority

15. Why invest the time and effort to improve MEPRS Processes We must MANAGE: –Provider availability for clinical care ? 36H –Provider productivity RVU per month (MGMA or other standard) –Clinic level “profitability” Total “revenue” minus total expenses We will be showing this data to EVERYONE. It will make the transition to DMHRSi much easier.

16. The Civilian Model of Institutional vs. Professional Charges Institutional Charges –Pays for hospital and some clinic expenses –Linked to DRG/RWP for IP care –Pays for ER and APV facility expenses Professional Charges –Pays for group practice expenses –Linked to RVUs earned by providers in all clinical settings (IP, OP and APV)

17. Why does this matter We are planning on fully implementing (over 3-5 years) a system of professional and institutional accounting. (QDR) How will this affect MEPRS? –Separate providers from other staff in order to create “group practices”. (Skill type 1 and 2) –Ensure that all support staff attribute time accurately to clinical work areas in order to account for institutional expenses.

18. Monthly Group Practice Profit and Loss Statement (Professional) Total "Revenue" 3000RVU*$40/RVU =$120,000 Support Staff Salary Expense (MEPRS )($45,000) Supply Expense($5,000) Travel Expense($4,000) Overhead Expense (E Stepdown)($20,000) Net Earnings$46,000 Provider Salaries($56,000) Profit (or loss)($10,000) Monthly Hospital Ward Profit and Loss (Institutional) Total "Revenue" 150RVU*$6000/RWP =$900,000 Support Staff Salary Expense (MEPRS )($325,000) Supply Expense($145,000) Travel Expense($10,000) Overhead Expense (E Stepdown)($300,000) Profit (or loss)$120,000 Hypothetical Examples of Professional and Institutional Monthly Financial Statements Note: Q: Where does the group practice “revenue” come from? A: All of the work done by the providers in the group practice regardless of where it is done! Note: Q: Where does the ward “revenue” come from? A: All of the work done by the ward only, (not the work that the physicians receive RVU value for).

19. What do you think?

20. Synopsis I will show how success in strategic transformation in the Department of Defense and the Military Health System depends on accurate and reliable expense data. I will then explain how minor changes and improvements in the methods for capturing and displaying MEPRS data will allow us to compare performance across MTFs and benchmark with civilian healthcare facilities. This section of the brief will include an overview of the concept of professional and institutional charges. Finally, I will try to show how success in simplifying and standardizing MEPRS 3 rd and 4 th level names and definitions will make the transition to DMHRSi much easier.