REDESIGNING HEALTH CARE FROM THE BOTTOM UP INSTEAD OF FROM THE TOP DOWN Supporting Collaborative Regional Approaches to Sustainable High-Value Healthcare Harold D. Miller President and CEO Center for Healthcare Quality and Payment Reform www.chqpr.org
Are We Making Progress on the Road to Higher-Value Healthcare? PAST FUTURE High Healthcare Costs Mediocre Quality Care Unhealthy People???? Affordable Insurance Premiums High Quality Care Healthy People 2
Are We Making Progress on the Road to Higher-Value Healthcare? PAST FUTURE High Healthcare Costs Mediocre Quality Care Unhealthy People NO???? Affordable Insurance Premiums High Quality Care Healthy People 3
Health Care is NOT More Affordable Family Insurance Premiums Increased $3,000 (22%) More Than Inflation 4
Quality Has NOT Improved Source: NCQA: The State of Health Care Quality 2015 5
Quality Has NOT Improved Over One-Third of Diabetic Patients Aren t Receiving Adequate Care Source: NCQA: The State of Health Care Quality 2015 6
It s Not Just Diabetics, It s Everybody Over One-Third of All Patients With High Blood Pressure Aren t Receiving Adequate Care Source: NCQA: The State of Health Care Quality 2015 7
Value is Lower Today Than 6 Years Ago Higher Cost Poor Quality 8
California Isn t Doing Any Better Over One-Third of Diabetics in California Aren t Getting Adequate Care Health Insurance Premiums in California Are Higher Than The U.S. Average 9
Spending is Growing Rapidly Regardless of Payer Commercial Insurance 18% > CPI Medicare 19% > CPI Medicaid 35% > CPI 10
Quality Is Poor & Stagnant Regardless of Payer Source: NCQA: The State of Health Care Quality 2015 11
Most Value-Based Payment is P4P for PCPs and Hospitals PAYERS P4P P4P PCP Care Hospital Care 12
P4P Has Been Studied to Death and 13
P4P Has Been Studied to Death and It Doesn t Work 14
Value-Based Payment Doesn t Really Change PAYERS P4P P4P PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care 15
P4P Increases Admin. Costs and Doesn t Reduce Spending PAYERS HIGHER ADMIN COST P4P P4P ADMIN COST PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists ADMIN COST Hospital Care Rehab & Home Care 16
The Result: Higher Premiums for Employers EMPLOYERS/PURCHASERS HIGHER PREMIUM$ PAYERS HIGHER ADMIN COST P4P P4P ADMIN COST PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists ADMIN COST Hospital Care Rehab & Home Care 17
If P4P Doesn t Work, Are ACOs the Answer? ACO PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care 18
Medicare s Shared Savings ACO Program Isn t Succeeding 2013 Results for Medicare Shared Savings ACOs 46% of ACOs (102/220) increased Medicare spending Only 24% (52/220) received shared savings payments After making shared savings payments, Medicare spent more than it saved Net loss to Medicare: $78 million 2014 Results for Medicare Shared Savings ACOs 45% of ACOs (152/333) increased Medicare spending Only 26% (86/333) received shared savings payments After making shared savings payments, Medicare spent more than it saved Net loss to Medicare: $50 million 2015 Results for Medicare Shared Savings ACOs 48% of ACOs (189/392) increased Medicare spending Only 30% (119/392) received shared savings payments After making shared savings payments, Medicare spent more than it saved Net loss to Medicare: $216 million 19
Private Shared Savings ACOs Are Also Floundering 20
Why? Everybody is Still Paid PAYERS ACO PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care 21
Savings Used to Pay for IT Systems and Care Coordination IT Systems PAYERS Shared Savings ACO Administration Care Coordinators $ $ $ PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care 22
No Real Change in Care Delivery, No Reduction in Premiums EMPLOYERS/PURCHASERS HIGHER PREMIUM$ IT Systems PAYERS Shared Savings ACO Administration Care Coordinators $ $ $ PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care 23
What About Capitated Groups in California and Other Areas? Capitation Capitated Physician Group HMOs IT Systems Care Coordinators PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care 24
Most Providers Are Still Paid, Now With Two Layers of Admin $ Capitation Capitated Physician Group IT Systems P4P PMPM HMOs Care Coordinators P4P PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care 25
Result: Slightly Better Care and Slightly Lower Premiums EMPLOYERS/PURCHASERS SLIGHTLY LOWER PREMIUM$ Capitation Capitated Physician Group IT Systems P4P PMPM HMOs Care Coordinators P4P PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care 26
Current VBP Doesn t Address Drivers of Higher Spending 29% Increase in Spending $240 Billion 27
Biggest Increases are Hospitals & Insurance Administration/Profit Insurance Admin. Other Services Drugs Physician & Clinical Services Hospitals Insurance Other Drugs Phys/Clin. Hospitals 28
Half of the Growth in Spending Has Been for Hospital Services Insurance Admin 30% Increase 12% of Total Other Svcs 24% Increase 11% of Total Drugs 20% Increase 10% of Total Physician & Clinical Services 19% Increase 18% of Total Hospital Svcs 41% Increase 49% of Total 29
Isn t It Time to Do Things DIFFERENTLY? 30
The Wrong Approach to Value-Based Payment HOW PAYMENT REFORMS ARE DESIGNED TODAY Medicare and Health Plans Define Payment Systems Providers Have To Change Care to Align With Payment Systems Patients and Providers May Not Come Out Ahead 31
Providers Need to Design Payments to Support Good Care HOW PAYMENT REFORMS ARE DESIGNED TODAY Medicare and Health Plans Define Payment Systems Providers Have To Change Care to Align With Payment Systems Patients and Providers May Not Come Out Ahead THE RIGHT WAY TO DESIGN PAYMENT REFORMS Providers Redesign Care and Identify Payment Barriers Payers Change Payment to Support Redesigned Care Patients Get Better Care and Providers Stay Financially Viable 32
What Does a True Alternative Payment Model Look Like? 33
Step #1: Identify Avoidable Spending in $ FEE FOR SERVICE AVOIDABLE SPENDING OPPORTUNITIES TO REDUCE TOTAL SPENDING Avoidable Hospital Admissions/Readmissions Unnecessary Tests and Procedures Use of Lower-Cost Settings Use of Lower-Cost Treatments Preventable Complications of Treatment Prevention & Early Identification of Disease NECESSARY SPENDING 34
Institute of Medicine Estimate: 30% of Spending is Avoidable 35
25% of Avoidable Spending is Excess Administrative Costs 36
Physicians Have Identified Many Opportunities to Reduce Spending 37
Creating Qualified Entities to Provide Multi-Payer Data 38
Step #2: Identify Barriers in $ FEE FOR SERVICE AVOIDABLE SPENDING NECESSARY SPENDING UNPAID SERVICES LOSS OF REVENUE BARRIERS IN CURRENT SYSTEM No payment for high-value services Phone calls, e-mails with physicians Services delivered by nurses, community workers Communication between PCPs and specialists Non-medical services, e.g., transportation Palliative care for patients at end of life Inadequate payment for patients who need more time or resources Inadequate revenue to cover fixed costs when utilization of services is reduced 39
You Can t Reduce Spending if You Don t Remove the Barriers $ FEE FOR SERVICE AVOIDABLE SPENDING NECESSARY SPENDING UNPAID SERVICES LOSS OF REVENUE 40
$ FEE FOR SERVICE Step #3: Remove the Barriers ALTERNATIVE PAYMENT MODEL AVOIDABLE SPENDING NECESSARY SPENDING ADEQUATE, FLEXIBLE PAYMENT FOR HIGH- VALUE SERVICES Upfront payment to support improved delivery of care UNPAID SERVICES LOSS OF REVENUE 41
$ Step 4: Build in Accountability for Results FEE FOR SERVICE ALTERNATIVE PAYMENT MODEL AVOIDABLE SPENDING NECESSARY SPENDING LOWER AVOIDABLE SPENDING ADEQUATE, FLEXIBLE PAYMENT FOR HIGH- VALUE SERVICES Accountability for reducing avoidable spending Upfront payment to support improved delivery of care UNPAID SERVICES LOSS OF REVENUE 42
Healthcare Spending Accountability Must Be Focused on What Each Provider Can Influence Total Spending Per Patient Spending the Physician Cannot Control Other Spending the Physician Can Control or Influence Payments to the Physician e.g., PCPs can t reduce surgical site infections e.g., surgeons can t prevent diabetic foot ulcers e.g., rheumatologists can t prevent autoimmune disorders e.g., PCPs can help diabetics avoid amputations e.g., surgeons can reduce surgical site infections e.g., rheumatologists can reduce complications of autoimmune diseases 43
$ True Alternative Payment Models FEE FOR SERVICE AVOIDABLE SPENDING Can Be Win-Win-Wins ALTERNATIVE PAYMENT MODEL SAVINGS LOWER AVOIDABLE SPENDING Win for Purchaser: Lower Total Spending and Lower Premiums Win for Patient: Better Care Without Unnecessary Services NECESSARY SPENDING ADEQUATE, FLEXIBLE PAYMENT FOR HIGH- VALUE SERVICES Win for Provider: Adequate Payment for High-Value Services UNPAID SERVICES LOSS OF REVENUE 44
Better Care at Lower Cost for Crohn s Disease PHYSICIAN LEADER: Lawrence R. Kosinski, MD Managing Partner, Illinois Gastroenterology Group OPPORTUNITIES TO IMPROVE CARE AND LOWER COSTS Health plan spends $11,000/year/patient on patients with Crohn s >50% of expenses are for hospital care, most due to complications <33% of patients seen by physician in 30 days prior to hospitalization 10% of expenses for biologics, many administered in hospitals 3.5% of spending goes to gastroenterologists BARRIERS IN THE CURRENT PAYMENT SYSTEM No payment to support medical home services in gastroenterology practice: No payment for nurse care manager No payment for clinical decision support tools to ensure evidencebased care No payment for proactive telephone contact with patients RESULTS WITH ADEQUATE PAYMENT FOR BETTER CARE Hospitalization rate cut by more than 50% Total spending reduced by 10% even with higher payments to the physician practice Improved patient satisfaction due to fewer complications and lower out-of-pocket costs www.sonarmd.com 45
Better Care at Lower Cost for Cancer PHYSICIAN LEADER: Barbara McAneny, MD CEO, New Mexico Cancer Center OPPORTUNITIES TO IMPROVE CARE AND LOWER COSTS 40-50% of patients receiving chemotherapy are hospitalized for complications of treatment BARRIERS IN THE CURRENT PAYMENT SYSTEM No payment for triage services to enable rapid response to patient complications No payment for patient and family education about complications and how to respond Inadequate payment to reserve capacity for IV hydration of patients experiencing problems RESULTS WITH ADEQUATE PAYMENT FOR BETTER CARE 36% fewer ED visits 43% fewer admissions 22% reduction in total cost of care ($4,784 over six months) 46
No One Alternative Payment Model www.paymentreform.org Will Meet All Needs #1: Payment for a High-Value Service #2: Condition-Based Payment for a Physician s Services #3: Multi-Physician Bundled Payment #4: Physician-Facility Procedure Bundle #5: Warrantied Payment for Physician Services #6: Episode Payment for a Procedure #7: Condition-Based Payment 47
This is NOT a Good Framework for Alternative Payment Models 48
It s All Just + P4P with Fancy Names Pay for Performance Risk More Risk 49
Which Physician Would YOU Want to Care for You? Physician A is paid under. She makes less money if she keeps you healthy. Physician B is paid under P4P. She makes more money if she keeps her EHR up to date. Physician C has Downside Risk. She makes more money if she doesn't treat your problems. Physician D is paid through a Condition-Based. She s paid adequately to address your needs, and she makes more money if your health condition(s) improve. 50
Redesigning Care & Payment from the Bottom Up Instead of the Top Down
Start by Identifying Patient Needs and Opportunities to Improve Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 52
Pay PCPs to Help Patients Stay Healthy PAYERS PCP Flexible monthly payments, not tied to office visits Higher payments for patients with more conditions Accountability for services that PCPs can control PCP Care Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 53
PCPs Can t Treat Everything; Pay Specialists for Serious Conditions PAYERS PCP PCP Care Spec Endocrinologists Oncologists OB/GYNs Rheumatologists Spec Specialist Care Spec Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Payment for e-consults to help PCPs screen & diagnose Flexible payments to treat or manage conditions, not tied to office visits or specific procedures Higher payments for patients with more complex conditions Accountability for services and complications that specialists can control Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 54
Pay Hospitals Adequately to Maintain Essential Services PAYERS PCP PCP Care Spec Endocrinologists Oncologists OB/GYNs Rheumatologists Spec Specialist Care Spec Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hosp Hospital Care Adequate payment for fixed costs of standby services (ED, cath lab, trauma, stroke, etc.) Accountability for costs that hospitals can control Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 55
Pay for Services Designed to Help Patients Return to & Stay at Home PAYERS PCP Spec Spec Spec Hosp Other PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 56
Result: Better Outcomes for Patients PAYERS PCP Spec Spec Spec Hosp Other PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care BETTER PATIENT OUTCOMES FOR ALL CONDITIONS Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 57
Result: Lower Administrative Costs PAYERS LOW ADMIN COST PCP Spec Spec Spec Hosp Other LOW ADMIN COST LOW ADMIN COST LOW ADMIN COST LOW ADMIN COST PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care BETTER PATIENT OUTCOMES FOR ALL CONDITIONS Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 58
Result: More Affordable Health Insurance EMPLOYERS/PURCHASERS LOWER PREMIUM$ PAYERS LOW ADMIN COST PCP Spec Spec Spec Hosp Other LOW ADMIN COST LOW ADMIN COST LOW ADMIN COST LOW ADMIN COST PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care BETTER PATIENT OUTCOMES FOR ALL CONDITIONS Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 59
Healthcare Providers Can t Change If Every Payer is Paying Differently EMPLOYERS STATE GOV T CMS PREMIUM$ $ $ $ HEALTH PLAN MEDICAID MCOs MEDICARE ADV. MEDICARE PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 60
All Payers Need to Participate in Common Payment Models EMPLOYERS STATE GOV T CMS PREMIUM$ $ $ $ HEALTH PLAN MEDICAID MCOs MEDICARE ADV. MEDICARE PCP Spec Spec Spec Hosp Other PCP Care Endocrinologists Oncologists OB/GYNs Rheumatologists Specialist Care Orthopedic Surgeons Gastroenterologists Nephrologists Cardiologists Hospital Care Rehab & Home Care Diabetes Cancer Pregnancy PATIENTS Arthritis IBD CKD Heart Failure 61
Traditional Routes to Payment and Delivery Reform CMS Medicare Beneficiaries Payment Model to Support High-Value Care Delivery Health Plans Commercially- Insured Patients Medicaid MCOs Medicaid Patients 62
Roadblocks to Reform CMS Medicare Beneficiaries Payment Model to Support High-Value Care Delivery Health Plans Commercially- Insured Patients Medicaid MCOs Medicaid Patients 63
Routes Around the Roadblocks: PTAC CMS Medicare Beneficiaries Payment Model to Support High-Value Care Delivery PTAC Health Plans Commercially- Insured Patients Medicaid MCOs Medicaid Patients 64
Physician-Focused Payment Model Technical Advisory Committee https://aspe.hhs.gov/proposal-submissions-physician-focused-payment-model-technical-advisory-committee 65
Routes Around the Roadblocks: Direct Contracts with Purchasers CMS Medicare Beneficiaries Payment Model to Support High-Value Care Delivery PTAC Health Plans Purchasers Commercially- Insured Patients Medicaid MCOs Medicaid Patients 66
Routes Around the Roadblocks: Exchanges as Active Purchasers CMS Medicare Beneficiaries Payment Model to Support High-Value Care Delivery PTAC Health Plans Purchasers Exchanges Commercially- Insured Patients Medicaid MCOs Medicaid Patients 67
Routes Around the Roadblocks: States as Active Purchasers CMS Medicare Beneficiaries Payment Model to Support High-Value Care Delivery PTAC Health Plans Purchasers Exchanges Commercially- Insured Patients Medicaid MCOs State Gov t Medicaid Patients 68
Purchasers/Payers Need A Better Product to Buy! CMS Framework P4P Risk More Risk 69
Providers Need to Design Better Payment/Delivery Models CMS Framework P4P Risk More Risk www.paymentreform.org TRUE ALTERNATIVE PAYMENT MODELS SAVINGS LOWER AVOIDABLE SPENDING ADEQUATE, FLEXIBLE PAYMENT FOR HIGH- VALUE SERVICES #1: Payment for a High-Value Service #2: Condition-Based Payment for a Physician s Services #3: Multi-Physician Bundled Payment #4: Physician- Facility Procedure Bundle #5: Warrantied Payment for Physician Services #6: Episode Payment for a Procedure #7: Condition-Based Payment 70
Many Things Necessary for Win-Win-Win Solutions Implementing Alternative Payment Models Successfully 71
All Healthcare Providers Need to Be Involved Implementing Alternative Payment Models Successfully Primary Care Specialists Hospitals Rehab & Home Care 72
Multiple Types of Data Needed to Design the Payment Model Claims Data Clinical Data Outcomes Data Cost Data Implementing Alternative Payment Models Successfully Primary Care Specialists Hospitals Rehab & Home Care 73
Purchasers and Payers Need to Support Implementation Claims Data Clinical Data Outcomes Data Cost Data Implementing Alternative Payment Models Successfully Primary Care Specialists Engagement of All Purchasers Alignment of All Payers Hospitals Rehab & Home Care 74
Patients Need to Be Engaged and Supportive Patient Education Value-Based Choice Wellness & Adherence Claims Data Clinical Data Outcomes Data Cost Data Implementing Alternative Payment Models Successfully Primary Care Specialists Engagement of All Purchasers Alignment of All Payers Hospitals Rehab & Home Care 75
This is Only Feasible at the Regional Level, with a Facilitator Patient Education Value-Based Choice Wellness & Adherence Claims Data Clinical Data Outcomes Data Cost Data REGIONAL HEALTH IMPROVEMENT COLLABORATIVE Primary Care Specialists Engagement of All Purchasers Alignment of All Payers Hospitals Rehab & Home Care 76
CMS Cost-Shifting Through Underpayment Employers Inability to Provide Coverage Instead of Win-Lose Strategies That Ultimately Harm Patients Drug & Device Firms Unaffordable Drugs & Devices WIN- LOSE Fragmented, Expensive Poor Quality Care Patients Inadequate Payment for High- Quality Care Consolidations and Closures Hospitals Hospitals Acquiring MDs Specialists Battle Over RVUs PCPs Inadequate # of PCPs 77
Collaborating to Create Sustainable High-Value Healthcare CMS Employers Savings for Medicare Savings for Employers Drug & Device Firms Innovation for High-Value Care WIN- WIN- WIN High Quality, Affordable Care Patients High Quality, Financially Viable PCPs, Specialists, & Hospitals Hospitals Specialists PCPs 78
For More Information: Harold D. Miller President and CEO Center for Healthcare Quality and Payment Reform Miller.Harold@CHQPR.org (412) 803-3650 www.chqpr.org www.paymentreform.org
Learn More About Win-Win-Win Payment and Delivery Reform www.paymentreform.org 80