Bundled Payments AMGA September 25, 2013 Who Are We AGENDA Our Business Challenge Episode Process Experience 1
Cleveland Clinic is transforming Fee for service Fee for value 3 Fast Facts 41,200 employees 4.6 million total visits 160,600 hospital admissions 2,857 physicians and scientists 1,318 residents and fellows in training Over 5 locations worldwide 4 2
Cleveland Clinic Bundling Experience 10+ years Inpatient acute episodes Specialty payers or situations (i.e., transplant, regional players) Manual process Fraught with opportunity for errors 5 Who Are We AGENDA Our Business Challenge Episode Process Experience 3
Health Status Two Paradigms in Health Care Reform Managing population health 1 2 Managing episodes of care Baseline Episode 7 Environmental Realities Unsophisticated market both externally and internally High variability in prices, quality and outcomes 8 4
Evolution of the Value Equation Traditional Definition Value = Outcomes Cost Value = Quality + Patient Experience + Functional Status* Event + Episode + Ongoing Care Cost reduction 5-10% per case Cost avoidance 10-15% of cases *Return to work and quality of life 9 Developing Capabilities to Scale our Value-Based Care Programs CMS BPCI CMS Bundled Payments Care Improvement Initiative Commercial Payer Episodes Distance Travel Employer Programs Bundled pay programs with commercial payers for specific episodes Out-of-area patients who gain access to the Clinic through our programs for advanced medical care Transplants Administration of various Centers of Excellence transplant programs 10 5
Who Are We AGENDA Our Business Challenge Episode Process Experience Our Vision: Manage Episode- Based Model of Care Pre-Op Surgery Post-Op Primary Care visit Specialist visit Diagnostic services Lab fees Anesthesia Surgery Rehab Specialist Pharmacy 12 6
Episodes Link Clinical Decisions with Financial Implications Goals Coordinate care to reduce expenses associated with care episode Increase accountability for cost and quality Financial alignment between various providers Benefits Right thing to do for the patient Learning opportunity Financial reward 13 Current State Process Managing episode model of care accurately and effectively 14 7
Components of an Episode What is the product we are trying to sell? Who are our suppliers? How will we sell our product? Who will we sell to? Products Networks Channels Clients 15 Taking an Episode to Market Define the clinical attributes of a bundle, effectively administer the flow of claims and payments, and report on the effectiveness of the bundle Define Episodes Process Transactions Report Performance Create care pathway Set price Identify patient Bundle claims Adjudicate provider claims Post-episode payment Remit provider payments Clinical outcome Clinical process Financial 16 8
Keys to Success Standard method for bundle definition Enables fair and accurate payment Recognizes the contribution of different providers Adjusts for differences in patient risk Right incentive structure Allocates spending to optimize health outcomes Offers sufficient risk and reward to drive efficient, high-quality care Aligns incentives across providers and promotes care Enabling technology and infrastructure Enables providers to negotiate rules of engagement Maintains the technology to administer payment and clinical operations Analytics and information Allows timely access to appropriate clinical information Provides transparent and actionable information about provider performance 17 We Found a Partner in Optum Financial and clinical performance reporting Bundle modeling and pricing Payment distribution Care redesign and standardization Bundle case indentification and notification Bundle claim aggregation 18 9
Who Are We AGENDA Our Business Challenge Episode Process Experience A Bundled Payment Approach for our Value-Based Programs 1 2 CMS BPCI Commercial Payer Episodes 3 Distance Travel Employer Programs 20 10
CMS BPCI 1 Center for Medicare & Medicaid Innovation (CMMI) Bundled Payment for Care Improvement (BPCI) Model 1: Retrospective Acute Care Hospital Stay Model 2: Retrospective Acute Care Hospital Stay & Post-Acute Care Model 3: Retrospective Post- Acute Care Model 1 Model 2 Model 3 Model 4 Model 4: Prospective Acute Care Hospital Stay 21 Questions we asked ourselves Is this the right thing to do for patients? Will this allow us to share in the savings? Will this be a learning experience to prepare us for the future? 22 11
CMS Bundled Payment Care Initiative Awarded to one of the Cleveland Clinic community hospitals Post Acute Period 30 days Discount 3% Total hip/knee replacements Bundle (MS DRGs 469 & 470) Patient Population Medicare FFS patients Duration of contract 3 years, starting on 10/1/13 Includes all post-acute care 30 Duration of episode days after discharge 23 We Redesigned Care Across the Episode Preoperative identification Discharge planning Support and home environment 24 12
Including the post-acute care period is critical 25 Commercial Payer Episodes 2 We are working to define and price episodes for the commercial population 26 13
We Started with Our Own Employees Episode: Hip/knee (30 days prior, 90 days post) Launched: August 2013 Prospective flat rate billing Narrow network 27 Exploring Options with Commercial Health Plans Multiple payers, local and national Major areas of interest: - Total knee and hip replacement - Bariatrics - CABG & PCI - Spine 28 14
Distance Travel Employer Programs 3 Employers Cleveland Clinic Contracting directly with Cleveland Clinic allows you to: Offer #1 Heart Care* to employees AND Realize efficiencies and savings while avoiding variability in outcomes 29 Employers are Faced with a Huge Challenge 20% 80% 80% Costs 5% 95% 50% Costs High Acuity & Catastrophic Care Cardiovascular surgery Spine surgery Orthopedics Cancer Care Population Population 30 15
Offering Episodes to Our Employer Partners What providers must do: Offer episode guarantees Quantify savings Provide robust network What employers must do: Change benefit design to Engage employee participation financially Provide claims history for value analysis 31 Value of the Episode is Driven Through Quality outcomes Experience with the most complex patients Improved longterm functional status Reduced total cost of care High patient satisfaction Price transparency Coordinated care Reduced administrative expenses 32 16
Next Steps Continue to expand our episode offering Develop and operationalize transplant bundles Continue to refine our approach with employers Expand analytics and reporting 33 17