Surviving the Evolution/Revolution in Healthcare Reimbursement
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1 Surviving the Evolution/Revolution in Healthcare Reimbursement William (Bill) M. Herman 1 The Slide US not Oncology to be share Network and/or is copied supported without by McKesson written permission Specialty from Health. WM Herman 2015 McKesson Specialty Health. All rights reserved.
2 The Foundation of this Workshop Progress in any human endeavour is a product of a understanding of the circumstances in play, the tools available to address the factors, and the resolve to take actions required. 2
3 This Talk s Objectives: Define the current Healthcare situation Tools/initiatives being utilized to affect change Impact of these initiatives Responses to these initiatives 3
4 This Talk s Objectives: Define the current Healthcare situation Tools/initiatives being utilized to affect change Impact of these initiatives Responses to these initiatives 4
5 Total health expenditures have increased substantially over the past several decades Total National Health Expenditures, US $ Trillions, $3,500.0 Total National Health Expenditures In Constant 2012 Dollars $3,000.0 $3.0 Trillion $2,500.0 $2,000.0 $1,500.0 $1,000.0 $500.0 $364.4 Billion In 2014 Dollars $74.6 Billion $ Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group
6 Health spending growth has outpaced growth of the U.S. economy 20% 18% Total National Health Expenditures as a Percent of Gross Domestic Product, % 16% 14% 12% 10% 8% 6% 6.9% 4% 2% 0% Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group
7 Payers have consolidated to survive 53M lives 33M lives 46M lives 7
8 Performance of providers is becoming public Performance Historical Emerging Measures Physician productivity Care team productivity Tests ordered Procedures performed Patient outcomes and experience Complications encountered Decreasing unexplained clinical variation in care Improvement Orientation Increasing revenue/profit Improving individually oriented financially grounded metrics Outcomes, eliminating waste Total cost of care Defined performance metrics team oriented Measurer Internal External 8
9 This Talk s Objectives: Define the current Healthcare situation Tools/initiatives being utilized to affect change Impact of these initiatives Responses to these initiatives 9
10 Factors that create progress in healthcare delivery Quality Outcomes Science Technology Application/execution Effectiveness Research Capital Data Costs Healthcare Costs Utilization Price Efficiency Access Reimbursement Data
11 A market shift towards redefining value QUALITY VALUE Achieve better outcomes Increase safety Improve satisfaction COST Reduce avoidable medical spending Decrease total cost of care
12 The transition to value-based care is complex and well underway Different Types of Payment Models Fee for service P for P Gain Share Shared Risk Bundled Payments Episode based payments Partial or Full Cap Global Budget Payment Per unit Payment and administrative complexity grows as risk is shared Payment for outcomes 12
13 Payment model trajectory Commercial payers leading the way McKesson Sponsored Research Conducted February 2014 by ORC International with 350 providers and 114 payers participating 13
14 Setting value-based payment goals HHS efforts to improve U.S. Health care* Our goal is to have 85% of all Medicare fee-forservice payments tied to quality or value by 2016, and 90% by Perhaps even more important, our target is to have 30% of Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% of payments by the end of *Sylvia M. Burwell, US Secretary of HHS. N Engl J Med 2015; 372: , March 5, 2015 Transforming Medicare from a passive payer to an active purchaser of high quality, efficient healthcare - CMS
15 This Talk s Objectives: Define the current Healthcare situation Tools/initiatives being utilized to affect change Impact of these initiatives Responses to these initiatives 15
16 Health spending growth has slowed, and is now on pace with economic growth Average annual growth rate of GDP per capita and total national health spending per capita, % 12% 12.0% GDP Health Spending 10% 9.3% 10.0% 8% 6% 4% 6.9% 4.2% 5.3% 6.0% 2.9% 3.1% 3.2% 2% 0% 1970s 1980s 1990s 2000s Source: OECD (2013), "OECD Health Data: Health expenditure and financing: Health expenditure indicators", OECD Health Statistics (database). doi: /data en (Accessed on February 9, 2016).
17 Administrative costs have risen 9% 8% 7% 6% Net cost of health insurance and administration, as a share of total health expenditures, % 5% 4% 3% 2% 3% 1% 0% Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group
18 On average, larger shares of household budgets are devoted to health expenses than 10 years ago 6.0% Average portion of household budget devoted to health (nonelderly families), Total health expenses: 5.0% 4.0% 3.0% 4.4% 5.2% Insurance premiums: 3.1% 2.0% 1.0% Out-of-pocket costs: 2.1% 0.0% Source: Kaiser Family Foundation analysis of Consumer Expenditure Survey
19 To creation of abundance of quality metrics CMS uses over 1,700 to measure/pay for quality National Quality forum 630 National Committee for Quality Assurance 81 Joint commission reported publicly HHS 61 metrics for smoking cessation 113 for HIV 19 for obesity 68 for Perinatal health Estimated to cost to collect = 1% of net patient revenue (Meyer et all., 2012)
20 This Talk s Objectives: Define the current Healthcare situation Tools/initiatives being utilized to affect change Impact of these initiatives Responses to these initiatives 20
21 Alignment and creating win-win strategies with payers is paramount Physician-centric PCP ACOs Shared objectives Value-based Oncology Value-based Cardiology Value-based Orthopedic Aligned incentives Right care Right place Delivering Right time
22 Oncology Care Example 22
23 Although the mortality rate for cancers has been falling in the U.S. and across comparable countries Age-adjusted neoplasms mortality rate per 100,000 population Comparable country average United States Source: OECD (2013), "OECD Health Data: Health status: Health status indicators", OECD Health Statistics (database). doi: /data en (Accessed on November 6, 2014). Notes: Break in series in 1987 and 1997 for Switzerland; in 1995 for Switzerland; in 1996 for Netherlands; in 1998 for Australia, Belgium, and Germany; in 1999 for United States; in 2000 for Canada and France; and in 2001 in the United Kingdom. All breaks in series coincide with changes in ICD coding.
24 Oncology costs/value is a challenge 1000% 900% 800% 700% Rapidly Rising Aggregate Costs Cancer Drugs 600% 500% 400% 300% 200% 100% Cancer Medical Healthcare US GDP Inflation 0% Variations in Care Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health Cost Guidelines 2009, Fitch K, Iwasaki K, Pyenson B. Cancer Patients Receiving Chemotherapy: Opportunities for Better Management. March 30 th, 2010, Milliman
25 Understanding the cost of cancer care
26 Resulting in new oncology payment models that emphasis value and shift risk Pathways / Care Mgmt Episodes Oncology Medical Home Pre-defined, evidence-based recommendations for delivering care specific to patient presentations Reimbursement dependent on adherence to pathway Single upfront payment for each episode Drugs reimbursed at ASP+0% Episode payment can increase if outcomes improve or total cost of care decreases Comprehensive program of payment reform, care redesign, and measurement Reimbursement may include care management fee, drug costs, infrastructure payments, enhanced service fees, and shared savings Examples: Example: Example: 26
27 27 Customers/patient expectations rising Loyalty Score* Treatment Experience 60% driver of Loyalty Care provided by physician and nurse Courteousness of physician Explanation of diagnosis and treatment plan by physician Understanding of financial responsibility Gap=.25 Market Perceptions 24% Conducts clinical trial research Has high quality nurses and support staff * Statistical results from over 7,500 patient survey Practice Administration 17% Responsiveness to concerns/complaints Courteousness/helpfulness of receptionist Time between appointment scheduling and actual visit 27
28 Requiring a comprehensive oncology toolkit Clinical Quality Benchmarking Level I Pathways Program Research Trials Peer Review Tool Kit Patient Support Services Advance Care Planning Culture of Continuous Improvement Clinically AND Financially Strong Lean Six Sigma Process Improvement Loyalty Surveys
29 That provide solutions to manage outcomes and costs Pathways Survivorship Value Based Palliative Care
30 Market a value oriented oncology program to payers and customers Diagnosis Prescription Treatment Follow-Up Correct Diagnosis = Correct Treatment 95% Evidenced Based Treatment Community Practice Respecting The Patient s Wishes Pathways endorsed by NCCN for outcomes & cost effectiveness Community Practice 5% Hospital Specialized Pathology /tissue registry Specific reference lab for advance hematology and oncology needs Diagnostic image read by Radiologists who specialize in oncology Tumor board participation Assess to expansive research trials Evidence based Care Paths capsulizing IOM s Proactive Patient Surveillance Program Symptom management 24/7 proactive patient management Tiered drug pricing program Patient Value based end of life program Survivorship program Genetics programs
31 IOM grounded treatment plan 31
32 Detail processes: patient surveillance example Objectives: - Lower patient anxiety - Care team coordination - Cost management Key Tools/Best Practices - Patient check in process - Follow-up protocol & scripts - High risk patient screen - Pain mgmt protocol Key Data Elements - Number of ED visits - Reconcile medication - ESAS status updates Key IT Needs - Call and tracking log - Communication Critical Success Factors - Clarity and acceptance to roles and responsibility - Execution discipline Who - Delivery: Clinical Team - Outbound Calls: RN/MA - Follow-up visits: APP Centralization Opports. - All outbound calls - Forum for feedback and improvement 32
33 To get favorable contracting results Value Based Contracting Structures Metric based P4P program Episodes of care rates Case rates/bundled payments Oncology medical home ACO partnerships tied to managing total cost of care Preferred status No pre-authorizations Bonus Fee per member per month Exclusivity Actual Wins
34 Recapping progress in healthcare Patients: are now consumers and more engaged in their care Legacy fee for service is fading away The value based shift emphasizes quality and cost over volume Alignment is required among payers and providers of resources and information around populations Focused on full continuum of care versus episodes Better Health, Better Care, Reduced Cost 34
35 Thoughts? 35
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