REDESIGNING HEALTHCARE PAYMENT AND DELIVERY FOR HIGHER QUALITY, LOWER COST CARE OF PATIENTS WITH DIABETES

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1 REDESIGNING HEALTHCARE PAYMENT AND DELIVERY FOR HIGHER QUALITY, LOWER COST CARE OF PATIENTS WITH DIABETES Harold D. Miller President and CEO Center for Healthcare Quality and Payment Reform

2 The Problem of Bad Outcomes & High Spending 2

3 A Quarter-Trillion Dollar Impact on the Economy $176 Billion in Healthcare Spending $69 Billion in Reduced Productivity $245 Billion Total Cost Bad Outcomes & High Spending Source: Economic Costs of in the U.S. in 2012, Care (Volume 36) April

4 What s America s Strategy for Addressing This Problem?? $176 Billion in Healthcare Spending $69 Billion in Reduced Productivity $245 Billion Total Cost Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 4

5 Occasional 15 Minute Visits PCP 15 Minute $73/visit Medications With Overworked PCPs $176 Billion in Healthcare Spending $69 Billion in Reduced Productivity $245 Billion Total Cost Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 5

6 With Limited Time & Resources, Is It Surprising Quality is Low? PCP 15 Minute $73/visit Medications Quality Metrics Blood Sugar Cholesterol Blood Pressure Tobacco Use Aspirin Use Eye Exams Kidney Exams D5 <40% Bad Outcomes & High Spending Source: Average D5 Composite Measures in Cincinnati and Minnesota Quality of Life Low Cost of Care Productivity 6

7 PCP 15 Minute $73/visit Medications Why Don t PCPs Do a Better Job? Quality Metrics Blood Sugar Cholesterol Blood Pressure Tobacco Use Aspirin Use Eye Exams Kidney Exams D5 <40% Bad Outcomes & High Spending Source: Average D5 Composite Measures in Cincinnati and Minnesota Quality of Life Low Cost of Care Productivity 7

8 More Time With s Cuts Total Revenues to PCP Practice PCP 15 Minute Longer Medications 20 minutes per $73 Level 3 E&M= 25% Less Revenue 25 minutes per $108 Level 4 E&M= 11% Less Revenue Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 8

9 Proactive Outreach to s PCP 15 Minute Longer Phone Call or Medications to Improve Quality? $0 Payment Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 9

10 Group Visits to Deliver Care PCP 15 Minute Longer Phone Call or Group Visit Medications at Lower Cost? $0 Payment Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 10

11 Hire a Nurse/ Educator to Help s Manage Health? PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Medications $0 Payment Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 11

12 Call an Endocrinologist to Help PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Medications With Complex s? $0 Payment Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 12

13 No Payment for Coordination of PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP PCPs and Specialists $0 Payment $0 Payment Bad Outcomes & High Spending Medications Quality of Life Low Cost of Care Productivity 13

14 Payers Do Pay for s PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Endocrinologists. $ Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 14

15 Long Waits Due to Many Visits for Issues That Needed Only a Call PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications $ Month Wait for Visit Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 15

16 And the Extra Copay May Deter the From Making the Visit PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications $ Month Wait for Visit Extra Copay Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 16

17 If s Can t Afford Meds, All the Rest May Be in Vain PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay High Copay High Cost-Share Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 17

18 So Is It Any Surprise that Quality is Poor and Spending is High? PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay High Copay Quality Metrics Blood Sugar Cholesterol Blood Pressure Tobacco Use Aspirin Use Eye Exams Kidney Exams D5 <40% Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 18

19 What Are Medicare and Private Health Plans Doing to Fix This? PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay High Copay Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 19

20 Strategy 1: Force PCPs to Buy an EHR PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay High Copay Requiring EHRs Increases expenses for PCP practice Takes time away from office visits patients PCP EHR and endocrinologist EHR may not be able to exchange data even if HIPAA barriers can be overcome Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 20

21 Strategy 2: Bonuses/Penalties for Quality PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay High Copay $ P4P/VBP Quality Metrics Blood Sugar Cholesterol Blood Pressure Tobacco Use Aspirin Use Eye Exams Kidney Exams No additional resources to address the barriers preventing higher quality Unintended consequences of over-focus on metrics Bad Outcomes & High Spending & Death Due to Overtreatment Quality of Life Low Cost of Care Productivity 21

22 More Admits/Deaths Today Due to Low Blood Sugar Than High Hypoglycemia 1 Yr Mortality: 19.9% 30 Day Readmits: 16.3% Hyperglycemia 1 Yr Mortality: 17.1% 30 Day Readmits: 15.3% Source: National Trends in US Hospital Admissions for Hyperglycemia and Hypoglycemia Among Medicare Beneficiaries, 1999 to 2011 JAMA Internal Medicine May 17,

23 PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay High Copay Strategy 3: Shared Savings Shared Savings $ $ No additional upfront resources to address the barriers preventing higher quality care Puts physicians at risk for services and costs they cannot control Non- Spending Quality of Life Low Cost of Care Productivity 23

24 Strategy 4: -Centered Medical Home PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay High Copay (Small) Monthly Payment Per PCMH/ PMPM Monthly payment may be to small or inflexible to overcome service barriers No support for specialists Quality improvement or shared savings requirements may be unreasonable given size of monthly payment Bad Outcomes & High Spending Quality of Life Low Cost of Care Productivity 24

25 A Better Way: Condition-Based Payment PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay CONDITION-BASED PAYMENT -Related Costs Quality of Life Low Cost of Care Productivity 25

26 Flexibility to Deliver Care Without Restrictions of FFS PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay CONDITION-BASED PAYMENT FLEXIBILITY ABOUT WHICH SERVICES TO DELIVER TO HELP PATIENTS STAY WELL -Related Costs Quality of Life Low Cost of Care Productivity 26

27 Accountability to Ensure Outcomes and Costs Improve PCP 15 Minute Longer Phone Call or Group Visit Nurse or Educator Call to Specialist Endocrinologist Call w/ PCP Min. Medications Low Copay CONDITION-BASED PAYMENT FLEXIBILITY ABOUT WHICH SERVICES TO DELIVER TO HELP PATIENTS STAY WELL ACCOUNTABILITY FOR MANAGING AVOIDABLE COSTS RELATED TO DIABETES AND IMPROVING OUTCOMES -Related Costs Quality of Life Low Cost of Care Productivity 27

28 Most of the Money Today is Going to Hospitals, Not Doctors Source: Economic Costs of in the U.S. in 2012, Care (Volume 36) April 2013 Hospital Admissions (43%) Physicians (9%) 28

29 Could We Afford to Spend 20% More on Better Care Management? Hospital Admits Physicians +20% 29

30 A Small Reduction in Expensive Complications Saves A Lot of $$$ Hospital Admits -6% Physicians +20% 30

31 20% More $ on Care Mgt + 6% Fewer Admits = Lower Total $ -1% Hospital Admits -6% Physicians +20% 31

32 Upfront Investment Is Needed, Targeted by Docs to Achieve Impact -1% Hospital Admits -6% Physicians +20% 32

33 Example of Condition-Based Payment Employers Unions West Michigan Payment Design Workgroup Primary Care Physicians Specialists Health Plans 33

34 Current Payment for Primary Care CURRENT PAYMENT PRIMARY CARE Preventive Services s for Preventive Services Payer Payer Payer s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues 34

35 Current Non-Payment for Primary Care CURRENT PAYMENT PRIMARY CARE Preventive Services s for Preventive Services Payer Payer Payer NO PAYMENT NO PAYMENT Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues 35

36 What Is Not Paid For Is Exactly What s Needed to Improve Quality CURRENT PAYMENT PRIMARY CARE Preventive Services Payer Payer Payer NO PAYMENT NO PAYMENT s for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues Preventive Care Quality Chronic Disease Mgt Quality 36

37 A Better Approach: Flexible Payment Instead of E&M Payment PRIMARY CARE Preventive Services PROPOSED PAYMENT s for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues Monthly Core Primary Care Services Payment Payer Payer Payer 37

38 SIZE OF MONTHLY PER-PATIENT PAYMENT High Payment for Small # of s Size of Monthly Payment Should Differ Based on Health Small Payment for Large # of s No Chronic Disease and No Major Risk Factors Larger Payment for Subset of s Needing More Proactive Care One Chronic Disease or Major Risk Factors Still Larger Payment for Subset of s Needing Even More Proactive Care Two Chronic Diseases or One Chronic Dis. and Major Risk Factors PATIENT HEALTH ISSUES Complex and High-Risk s 38

39 A Better Benefit Design For s BENEFIT DESIGN enrolls as a member of the primary care practice, but has no restrictions on other care has no copays for visits related to either preventive care or chronic disease care from this practice only pays cost-sharing for acute issues PRIMARY CARE Preventive Services s for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues Monthly Core Primary Care Services Payment PROPOSED PAYMENT Payer Payer Payer 39

40 Better Payment for the Medical Neighborhood (Specialists) SPECIALIST PMT Payments for telephone calls & s for PCP consults specialists they work Sharing of the monthly core payment if the specialist is co-managing the patient the PCP Transfer of monthly payment to specialist for some patients PRIMARY CARE Preventive Services s for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues Monthly Core Primary Care Services Payment PROPOSED PAYMENT Payer Payer Payer 40

41 Accountability for Spending and Quality That PCPs Can Control ACCOUNTABILITY Monthly payment would be adjusted up or down based on quality and avoidable utilization Quality of preventive care Quality of chronic disease care Avoidable ER utilization High-tech imaging Specialty referrals PRIMARY CARE Preventive Services s for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues Monthly Core Primary Care Services Payment PROPOSED PAYMENT Payer Payer Payer 41

42 This is Different Than Current PCMH Programs Current PCMH Model NEW MODEL P4P/Shared Savings PMPM for Care Management Preventive Services s for Preventive Services s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues Acute Issues s for Acute Issues Chronic Disease Mgt Preventive Services Performance Adjustment Core Primary Care Services Payment 42

43 It s Also Different from Traditional PCP Capitation Programs Current PCMH Model NEW MODEL PCP Capitation P4P/Shared Savings PMPM for Care Management Preventive Services s for Preventive Services s for Chronic Disease Issues Chronic Disease Mgt s for Acute Issues Acute Issues Acute Issues s for Acute Issues Chronic Disease Mgt Preventive Services Performance Adjustment Core Primary Care Services Payment P4P Primary Care Capitation 43

44 It s Better Than Current PCMH or Capitation Current PCMH Model P4P/Shared Savings Most practice revenue still comes from office visits Fewer office PMPM for Care Management Preventive visits = lower Services revenue, even s for Preventive PMPM Services s still for Chronic discouraged Disease Issues Tests from& Procedures office visits for Chronic by copays Disease Mgt s s must forbe attributed Acute Issues based Tests on & claims Procedures for Acute Issues NEW MODEL (PARTIAL CAPITATION) Tests PCP & Procedures for Acute practice Issues receives predictable, s for flexible Acute Issues payment Tests for & patient Procedures mgt for Chronic Disease Mgt Tests Higher & Procedures payment for Preventive for patients Services greater needs Employer only pays more if patient needs or Performance Adjustment receives more Core Primary Care Services servicespayment enrolls only for prev. & chronic care PCP Capitation P4P No incentive for PCP practice to see patient for acute needs Payment is the same for patients high needs as low needs Primary Care Employer Capitation is paying even if patient needs few services s must enroll for all services 44

45 How Does This All Fit Into ACOs? PATIENTS Heart Disease Back Pain Pregnancy 45

46 Each Should Choose & Use a Primary Care Practice PATIENTS Heart Disease Back Pain Pregnancy Primary Care Practice 46

47 Which Takes Accountability for What PCPs Can Control/Influence MEDICARE/HEALTH PLAN PATIENTS Heart Disease Back Pain Pregnancy Accountable Medical Home Primary Care Practice Accountability for: Avoidable Avoidable Unnecessary Tests Unnecessary Referrals 47

48 With a Medical Neighborhood to Consult With on Complex Cases MEDICARE/HEALTH PLAN PATIENTS Heart Disease Back Pain Pregnancy Accountable Medical Home Primary Care Practice Endocrinology, Neurology, Psychiatry Accountable Medical Neighborhood Accountability for: Unnecessary Tests Unnecessary Referrals Co-Managed Outcomes 48

49 ..And Specialists Accountable for the Conditions They Manage PATIENTS Accountable Medical Home MEDICARE/HEALTH PLAN Accountability for: Unnecessary Tests Unnecessary Procedures Infections, Complications Cardiology Group Heart Episode/ Condition Pmt Heart Disease Primary Care Practice Orthopedic Group Back Episode/ Condition Pmt Back Pain Pregnancy Endocrinology, Neurology, Psychiatry Accountable Medical Neighborhood OB/GYN Group Pregnancy Management Pmt 49

50 That s Building the ACO from the Bottom Up PATIENTS Accountable Medical Home MEDICARE/HEALTH PLAN Accountable Payment Models Cardiology Group ACO Heart Episode/ Condition Pmt Heart Disease Primary Care Practice Orthopedic Group Back Episode/ Condition Pmt Back Pain Pregnancy Endocrinology, Neurology, Psychiatry Accountable Medical Neighborhood OB/GYN Group Pregnancy Management Pmt 50

51 Most ACOs Today Aren t Truly Reinventing Care or Payment Fee-for-Service Payment PATIENTS Heart Disease Back Pain Pregnancy Primary Care MEDICARE/HEALTH PLAN Endocrine Neurology Psychiatry Cardiology Expensive IT Systems ACO Orthopedics Shared Savings Payment Shared Savings Bonus Nurse Care Managers OB/GYN 51

52 A True ACO Can Take a Global Payment And Make It Work PATIENTS Accountable Medical Home MEDICARE/HEALTH PLAN ACO Risk-Adjusted Global Payment Cardiology Group Heart Episode/ Condition Pmt Heart Disease Primary Care Practice Orthopedic Group Back Episode/ Condition Pmt Back Pain Pregnancy Endocrinology, Neurology, Psychiatry Accountable Medical Neighborhood OB/GYN Group Pregnancy Management Pmt 52

53 Only So Much Can Be Done Once the Has PCP+ Specialist Quality of Life Low Cost of Care Productivity 53

54 We Need to Also Focus on Preventing Healthy Children and Adults Obesity PCP+ Specialist Healthy Weight out Quality of Life Low Cost of Care Productivity 54

55 That Means Upstream Investment to Combat Obesity Healthy Children and Adults Pediatrics Adult Primary Care Endocrinology Healthy Foods and Walkable Communities Obesity Healthy Weight out PCP+ Specialist Quality of Life Low Cost of Care Productivity 55

56 True Population-Based Payment Has to Have a Long-Term Focus Healthy Children and Adults Population-Based Payment Pediatrics Adult Primary Care Endocrinology Healthy Foods and Walkable Communities Obesity Healthy Weight out PCP+ Specialist Quality of Life Low Cost of Care Productivity 56

57 Current Shared Savings Models Penalize Long-Term Prevention Healthy Children and Adults Population-Based Payment Pediatrics Adult Primary Care Endocrinology Healthy Foods and Walkable Communities Obesity Healthy Weight out PCP+ Specialist Quality of Life Low Cost of Care Productivity $$$ INVESTMENT MANY YEARS FOR RETURN ON INVESTMENT SAVINGS 57

58 A Public-Private Partnership Will Be Needed For Investment Healthy Children and Adults Population-Based Payment Pediatrics Adult Primary Care Endocrinology Healthy Foods and Walkable Communities Obesity Healthy Weight out PCP+ Specialist Quality of Life Low Cost of Care Productivity $$$ INVESTMENT Employers MANY YEARS FOR RETURN ON INVESTMENT Medicare SAVINGS 58

59 In Summary Most current reforms (pay for performance, value-based purchasing, and shared savings) don t solve the real problems care delivery and may make things worse True payment reform can be a win-win-win: Better care for patients Lower spending for payers Financially viable PCP and endocrinology practices that attract new physicians Condition-based payment for diabetes can be an important building block for successful ACOs Medicare and commercial health plans need to implement new payment models designed by physicians Multi-year contracts and public-private partnerships will be needed to adequately invest in prevention for long-term savings and better outcomes 59

60 Learn More About Win-Win-Win Payment and Delivery Reform Center for Healthcare Quality and Payment Reform 60

61 For More Information: Harold D. Miller President and CEO Center for Healthcare Quality and Payment Reform (412)