2. Value Over Volume: Paying for Quality  March 28, 2012  Ellen Andrews, PhD  CT Health Policy Project  CSG/ERC

3. Health care spending Sources: National Health Accounts, CMS, accessed 3/20/11, Fiscal Survey of States, NASBO, Fall 2010

4. Annual Growth Rates, Gross Domestic Product (GDP) And National Health Expenditures (NHE) Calendar Years 2009–20. Keehan S P et al. Health Aff doi:10.1377/hlthaff.2011.0662 ©2011 by Project HOPE - The People-to-People Health Foundation, Inc.

5. Life expectancy vs. health care spending, OECD countries 2007 Analysis of OECD Health Data 2010

6. We are all getting less recommended care than we should Source: RAND Compare

7. Quality question Only 39% of American adults are confident that they can get safe, effective care when needed Americans get only 55% of recommended care on average One in three Americans reports getting unnecessary care or duplicate tests. Almost one in five Medicare patients discharged from the hospital are readmitted within 30 days

9. Current incentives Pay the same for high and low quality services Consumers have no information and no incentive to choose higher quality/higher efficiency services or providers Encourages overuse, misuse of services Higher spending not correlated with higher quality Higher spending not correlated with better patient satisfaction

10. Fee-for-service misaligned incentives Fee for service encourages: More services Less coordination Incentives for duplication Few incentives for prevention Stifles innovation Only pays for selected services - not email, group visits, phone calls No link to quality Incentives to increase high profit services/patients and avoid low profit

11. Rewards better outcomes Payments based on value -- quality balanced with cost Data driven Remove incentives for more services Reward providing the right services to the right patient at the right time in the most effective setting Flexibility for providers to customize care Reward patient satisfaction Remove fragmentation and conflicting incentives Align provider, payer and consumer incentives to reward quality, effectiveness and efficiency Quality-based purchasing

12. Consumers support quality-based purchasing 96% of Americans feel it is important to have information about the quality of care provided by different doctors and hospitals 89% feel it is important that they have information about the costs of care to them before they actually get care 85% want public and private payers to reward high quality doctors and hospitals

13. Why should states implement VBP? State employee groups usually one of largest groups in state – 42 states self-insure Medicaid programs – covers one in five Americans States regulate insurers, license providers, CON Trusted source for consumer education, data collection, research Public health collaborations Innovators – medical home, HIT, coverage programs Provider training – promote primary care, emphasis on accountability, transparency Convener – can get people to the table, anti-trust protections

14. Options: Payment system overhaul Never events Transparency Pay for performance (P4P) Market share – tier and steer Shared savings Episodes of care, bundled payments Global capitation

15. Options: Transparency Data reporting, definitions are a challenge Report cards evolving, mixed results o Improving science of how to effectively convey information Coalitions with other payers, providers for joint reporting o All payer data aggregation State employee, Medicaid use in contracting Moves providers to improve quality and/or re- consider pricing

16. Options: P4P Widespread, but mixed results Process vs. outcome measures Benchmarks vs. improvement Medicaid P4P in 28 states Federal Medicaid limits on incentive payments in risk-based systems Target health plans and/or providers Outcomes vs. process and teaching to the test/cookbooks Provider resistance, low Medicaid participation rates Coordinate and join with other payers to make payments salient to providers

17. Options: bundled payments Also called episodes or buckets of care One payment for full range of services associated with a specific event, e.g. knee replacement Common now for physicians in general surgery and obstetrics, DRGs in Medicare Similar to DRGs in Medicare Places providers at some financial risk Incentives to coordinate care, nontraditional supports, reduce duplicate services No incentive to prevent illness in the first place ACA pilots for Medicare and Medicaid

18. Options: shared savings Allow providers to “share” some part of reductions in cost per patient To avoid incentives to deny care, tied to quality standards Medicare demonstration had mixed results o Took five years to implement, with ten sophisticated groups o Quality improvements good o Did not reach expected savings targets ACA includes more opportunities for Medicare and Medicaid Medicare ASOs

19. Options: Global payment rates Massachusetts a leader, 20% of commercial payments Pay one risk-adjusted rate for each patient to cover all their care – in and outpatient, LTC, rehab, drugs Linked to Pay for Performance to ensure quality of care maintained, up to 10% of budget Year One mixed results o Quality up for some measures, not others o All groups met savings targets and received rewards o Savings from reducing prices, shift to outpatient care, not reduced utilization o But total savings did not equal total bonuses

20. Supportive options Patient-Centered Medical Homes Accountable care organizations EMRs, health information exchange Wellness programs with employee supports and rewards Workforce development, esp primary care Comparative effectiveness research

21. Patient-Centered Medical Homes About half of Americans report poor coordination of care 93% believe it is important to have one place or doctor responsible for primary care and coordinating care 86% support providers working in teams to improve patient care Patients linked to a team of providers that are responsible for their primary care, coordination, prevention, and supports for self-management Evidence that the model improves care, reduces overall costs Preferred by primary care providers More efficient use of scarce primary care resources Accreditation by national organizations Support for Medicaid PCMHs in ACA

22. Accountable Care Organizations Networks of providers collectively rewarded to slow cost growth for their patients while improving quality of care Patients can get care outside the network if they choose Quality standards must be met to get share of savings Some in one corporate entity, some are contractual networks Medicare and private payers, some Medicaid programs considering them Patients cannot be in Medicare ACO and any other state shared savings program o Providers may have incentives to guide patients based on their bottom line For dual eligibles, how will Medicare ensure that providers are not shifting costs onto Medicaid

23. Comparative Effectiveness Research New treatments, drugs, devices, procedures largest driver of rising health costs Little information on which are worth the expense over current care Even the research that is available takes years to enter practice patterns Large federal investments in research CEPAC – New England collaborative of clinicians, researchers and patient advocates deep dive into CER, votes on whether evidence is sufficient to recommend treatments o Medicare in our region changed authorization policy on treatment resistant depression vote

24. Federal payment reform Strong feature in national reform o Innovation Center, waivers o ACOs o Comparative effectiveness research o Medicare and Medicaid bundled payment pilots Medicare o 23 programs – P4P, pay for reporting, never events, medical home, gain sharing, removing regulatory barriers, e-prescribing, data aggregation o Premiere Demonstration – hospital P4P o Physician Group Demonstration o Implementing differential payments based on readmission rates

25. Medicaid payment reform Most states risk adjust managed care plan capitation rates o 22 adjust for health status 19 states include pay for performance in health plan payments o Withholds, bonuses, enhanced rates, shared savings, auto assignment, data reporting incentives, performance pools 8 of 31 states with PCCM programs include P4P Three-fourths of states with managed care plans publicly report on their quality o Some report on provider quality 16 states assess quality in their fee-for-service programs

26. Maine value-based purchasing State employee plan leadership in larger multi-payer collaborative – Maine Health Management Coalition 2005 adopted strategy to encourage consumers to make informed choices, incentives to access higher quality care, reward high quality providers, wellness programs with employee supports Hospital and physician tiering by quality, expanded program in steps over the years o www.getbettermaine.org www.getbettermaine.org Messaging to members, web-based, became a trusted source of information Engaged providers in development of standards, QI plans First year diabetes disease management participants averaged $1300 less in health care costs Transitioning from FFS to bundled payments

27. Vermont single payer reform Global budget for health care costs, new payment models Guaranteed coverage not linked to employment Single system of provider payments and administrative rules Health care system will remain privately owned Payment reform to link payment to quality Delivery reforms, workforce development Expect to save $500 million/year and operating in 2017 Planning through Green Mountain Care Board o Can set rates, CON controls, review insurance rates, hospital budgets

28. Lessons from others Collaborate first Go slowly Start small and with strongest partners Coordinate across payers -- standardize Fair and open process Everyone on same page, all have same understanding Be clear on goals, single-minded dedication Strong consumer education piece necessary Plan for transitions Don’t underestimate the power of disclosure and transparency, often stronger motivator than $$$ Be brave The time is right for transforming delivery and payment systems – the status quo is not sustainable

29. For more information: www.valueovervolume.org www.csgeast.orgeandrews@csg.org www.csgeast.orgeandrews@csg.org www.cthealthpolicy.organdrews@cthealthpolicy.org www.cthealthpolicy.organdrews@cthealthpolicy.org