CHOICES UNDER MACRA How to Achieve Better Care for ... · CHOICES UNDER MACRA How to Achieve Better...

CHOICES UNDER MACRAHow to Achieve

Better Care for Patients,Savings for Payers,

and Financially Viable Physician Practices & Hospitals

Harold D. MillerPresident and CEO

Center for Healthcare Quality and Payment Reform

www.CHQPR.org

2Center for Healthcare Quality and Payment Reform www.CHQPR.org

How Do You Control Growing

Healthcare Spending?

TOTALHEALTHCARE

SPENDING

TOTALHEALTHCARE

SPENDING

TOTALHEALTHCARE

SPENDING

TOTALHEALTHCARE

SPENDING

$

TIME


TOTALHEALTHCARE

SPENDING

TOTALHEALTHCARE

SPENDING

TOTALHEALTHCARE

SPENDING

TOTALHEALTHCARE

SPENDINGBY

PAYERS

Typical Strategy #1:

Cut Provider Fees for Services

$Cut

Provider Fees

SAVINGS


TOTALHEALTHCARE

SPENDING

TOTALHEALTHCARE

SPENDING

TOTALHEALTHCARE

SPENDING

Typical Strategy #2:

Shift Costs to Patients

$

HigherCost-Share &Deductibles

TOTALHEALTHCARE

SPENDINGBY

PAYERS

SAVINGS


Results of the Typical Strategies

• Consolidation of providers to resist cuts in fees

• Shifts in care to higher-cost settings

• Increases in utilization to offset losses in revenue

• Patients avoiding necessary care due to high cost-sharing

• Large increases in health insurance premiums

• Inability to afford health insurance


Results of the Typical Strategies

• Consolidation of providers to resist cuts in fees

• Shifts in care to higher-cost settings

• Increases in utilization to offset losses in revenue

• Patients avoiding necessary care due to high cost-sharing

• Large increases in health insurance premiums

• Inability to afford health insurance

IS THERE A BETTER WAY?


The Right Focus: Spending

That is Unnecessary or Avoidable

AVOIDABLESPENDING

AVOIDABLESPENDING

AVOIDABLESPENDING

NECESSARYSPENDING

AVOIDABLESPENDING

NECESSARYSPENDING

NECESSARYSPENDING

NECESSARYSPENDING

$

TIME


Avoidable Spending Occurs

In All Aspects of Healthcare

NECESSARYSPENDING

AVOIDABLESPENDING

$


Avoidable Spending Occurs

In All Aspects of Healthcare

NECESSARYSPENDING

AVOIDABLESPENDING

$

CANCER TREATMENT• Use of unnecessarily-expensive drugs• ER visits/hospital stays for dehydration and avoidable complications

• Fruitless treatment at end of life• Late-stage cancers due to poor screening

SURGERY• Unnecessary surgery• Use of unnecessarily-expensive implants• Infections and complications of surgery• Overuse of inpatient rehabilitation

CHEST PAIN DIAGNOSIS/TREATMENT• Overuse of high-tech stress tests/imaging• Overuse of cardiac catheterization• Overuse of PCIs, high-priced stents

CHRONIC DISEASE• ER visits for exacerbations• Hospital admissions and readmissions• Amputations, blindness


Cardiologists Agree That Many

Tests/Procedures Are Overused


The Right Goal: Less Avoidable $,

NECESSARYSPENDING

AVOIDABLESPENDING

$

TIME

AVOIDABLESPENDING

AVOIDABLESPENDING

AVOIDABLESPENDING


The Right Goal: Less Avoidable $,

More Necessary $

NECESSARYSPENDING

AVOIDABLESPENDING

NECESSARYSPENDING

NECESSARYSPENDING

NECESSARYSPENDING

$

TIME

AVOIDABLESPENDING

AVOIDABLESPENDING

AVOIDABLESPENDING


Win-Win for Patients & Payers

NECESSARYSPENDING

AVOIDABLESPENDING

NECESSARYSPENDING

NECESSARYSPENDING

NECESSARYSPENDING

$

TIME

SAVINGSSAVINGS SAVINGS

AVOIDABLESPENDING

AVOIDABLESPENDING

AVOIDABLESPENDING


Barriers in the Payment System

Create a Win-Lose for Providers

NECESSARYSPENDING

AVOIDABLESPENDING

$

BARRIERSIN THE

CURRENTPAYMENTSYSTEM NECESSARY

SPENDING

SAVINGS

AVOIDABLESPENDING


Barrier #1: No $ or Inadequate $

for High-Value Services

NECESSARYSPENDING

AVOIDABLESPENDING

UNPAIDSERVICES

$No Payment or

Inadequate Payment for:

• Services deliveredoutside of face-to-facevisits with clinicians, e.g.,phone calls, e-mails, etc.

• Services delivered bynon-clinicians, e.g., nurses, community healthworkers, etc.

• Non-medical services,e.g., transportation

• Additional time or costfor patients with higher intensity needs

• Services not covered bybenefit restrictions


Barrier #2: Avoidable Spending

May Be Revenue for Providers…

NECESSARYSPENDING

AVOIDABLESPENDING

$

COSTOF

SERVICEDELIVERY

MARGIN

PROVIDERREVENUE


…And When Avoidable Services

Aren’t Delivered…

NECESSARYSPENDING

AVOIDABLESPENDING

$

NECESSARYSPENDING

AVOIDABLESPENDING

COSTOF

SERVICEDELIVERY

MARGIN

PROVIDERREVENUE


…Providers’ Revenue

May Decrease…

NECESSARYSPENDING

AVOIDABLESPENDING

$

NECESSARYSPENDING

AVOIDABLESPENDING

COSTOF

SERVICEDELIVERY

MARGIN

PROVIDERREVENUE

PROVIDERREVENUE


…But Providers’ Fixed Costs

Don’t Disappear…

NECESSARYSPENDING

AVOIDABLESPENDING

$

NECESSARYSPENDING

AVOIDABLESPENDING

COSTOF

SERVICEDELIVERY

MARGIN

PROVIDERREVENUE

COSTOF

SERVICEDELIVERY

PROVIDERREVENUE

Many Fixed Costs of ServicesRemain When Volume Decreases


…Leaving Providers With Losses

(or Bigger Losses Than Today)

NECESSARYSPENDING

AVOIDABLESPENDING

$

NECESSARYSPENDING

AVOIDABLESPENDING

COSTOF

SERVICEDELIVERY

MARGIN

LOSS

PROVIDERREVENUE

COSTOF

SERVICEDELIVERY

PROVIDERREVENUE

Many Fixed Costs of ServicesRemain When Volume Decreases

Potentially Causing Financial Losses


A Payment Change isn’t Reform

Unless It Removes the BarriersBARRIER #1

BARRIER #2


Three Payment Reform Options

Under MACRA

MACRA

OPTION #1

OPTION #2

OPTION #3


Payer-Designed

Payment Reforms

MACRA

CMS-DESIGNEDPAY FOR PERFORMANCE

(MIPS)

CMS-DESIGNEDALTERNATIVE PAYMENT

MODELS (APMs)

OPTION #3


Physician-Designed

Payment Reforms

MACRA

CMS-DESIGNEDPAY FOR PERFORMANCE

(MIPS)

CMS-DESIGNEDALTERNATIVE PAYMENT

MODELS (APMs)

PHYSICIAN-DESIGNEDALTERNATIVE PAYMENT

MODELS (APMs)


MIPS Adds Bonuses/Penalties

With No Change to Existing FFS

FFS•No payment for services that will benefit patients

•Lower revenues from reducing avoidable costs

P4P



MIPS “Merit Based Incentive Payment System”


Patient Care Will Be Driven By

Dozens of Narrow Quality Measures



P4P





Over-Emphasis on Narrow Quality

Measures Can Harm Patients

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 HypoglycemiaAmong Medicare Beneficiaries, 1999 to 2011 JAMA Internal Medicine May 17, 2014


Physician Payments Will Depend

On Spending They Can’t Control



P4P





Providers Will Be Penalized for

Having Patients With Higher Needs

JAMA Intern Med. Published online September 14, 2015. doi:10.1001/jamainternmed.2015.4660


CMS APMs Use “Shared Savings”

With No Change to Existing FFS



P4P





“Shared Savings”

MIPS CMSAPMs

• Accountable CareOrganizations (ACOs)

• End Stage RenalDisease CareOrganizations (ESCOs)

• ComprehensivePrimary CareInitiative (CPCI)

• Oncology Care Model(OCM)

• Comprehensive Carefor Joint Replacement(CJR)


Medicare ACOs Aren’t Succeeding

Due to Flaws in Payment Model

2013 Results for Medicare Shared Savings ACOs

• 46% of ACOs (102/220) increased Medicare spending

• Only one-fourth (52/220) received shared savings payments

• After making shared savings payments,

Medicare spent more than it saved

2014 Results for Medicare Shared Savings ACOs

• 45% of ACOs (152/333) increased Medicare spending

• Only one-fourth (86/333) received shared savings payments

• After making shared savings payments,

Medicare spent more than it saved


Problems With “Shared Savings”

• Conservative and effective physicians receive little or no additional revenue and may be forced out of business

• Physicians who have been practicing inefficiently or inappropriately are paid more than conservative physicians

• Physicians could be rewarded for denying needed care as well as by reducing overuse

• Physicians are placed at risk for costs they cannot control and random variation in spending

• Shared savings bonuses are temporary and when there are no more savings to be generated, physicians are underpaid


MIPS and CMS APMs Don’t Fix

the Barriers in Current PaymentsBARRIER #1

BARRIER #2


A Better Way: Physician-Focused

Alternative Payment Models



P4P





“Shared Savings”

MIPS CMSAPMs

Physician-Focused

AlternativePaymentModels

•Flexibility to deliver services patients need

•Adequate payment for high-quality carebased on patient needs

•Accountability for costs and quality the physician can control

Physician-FocusedAPMs


There are Many Ways to Create

Better Physician-Focused APMs

APM #1: Payment for a High-Value Service

APM #2: Condition-Based Payment for a Physician’s Services

APM #3: Multi-Physician Bundled Payment

APM #4: Physician-Facility Procedure Bundle

APM #5: Warrantied Payment for Physician Services

APM #6: Episode Payment for a Procedure

APM #7: Condition-Based Payment


FFSPayments to

PhysicianPractice

OPPORTUNITIES TO REDUCE SPENDING

• Reduce Avoidable Hospital Admissions

• Reduce Unnecessary Tests and Treatments

• Use Lower-Cost Tests and Treatments

• Deliver Services More Efficiently

• Use Lower-Cost Sites of Service

• Reduce Preventable Complications

• Prevent Serious Conditions From Occurring

$

PhysicianPracticeRevenue

Avoidable Spending

Payments toOther

Providersfor

RelatedServices

Step 1: Identify Opportunities to

Reduce Related SpendingFee-for-ServicePayment (FFS)

TotalSpendingRelevant

to thePhysician’s

Services


Unpaid Services

FFSPayments to

PhysicianPractice

OPPORTUNITIES TO REDUCE SPENDING

• Reduce Avoidable Hospital Admissions

• Reduce Unnecessary Tests and Treatments

• Use Lower-Cost Tests and Treatments

• Deliver Services More Efficiently

• Use Lower-Cost Sites of Service

• Reduce Preventable Complications

• Prevent Serious Conditions From Occurring

BARRIERS IN CURRENT FFS SYSTEM• No Payment for Many High-Value Services

• Insufficient Revenue to Cover Costs WhenUsing Fewer or Lower-Cost Services

$


Avoidable Spending

Payments toOther

Providersfor

RelatedServices

Step 2: Identify Barriers in Current

Payments That Need to Be FixedFee-for-ServicePayment (FFS)


to thePhysician’s

Services


Fee-for-ServicePayment (FFS)

Physician-FocusedAlternative

Payment Model

Flexible,Adequate

Payment forPhysician’s

Services

$


Step 3: Design an APM That

Removes the Payment Barriers

Unpaid Services

FFSPayments to

PhysicianPractice

Avoidable Spending

Payments toOther

Providersfor

RelatedServices


to thePhysician’s

Services




Payment Model

Savings

Flexible,Adequate


Services

AvoidableSpending

Payments toOther

Providersfor

RelatedServices

Accountabilityfor

ControllingAvoidableSpending

$


Step 4: Include Provisions to

Assure Control of Cost & Quality

Unpaid Services

FFSPayments to

PhysicianPractice

Avoidable Spending

Payments toOther

Providersfor

RelatedServices


to thePhysician’s

Services




Payment Model

Savings

Flexible,Adequate


Services

AvoidableSpending

Payments toOther

Providersfor

RelatedServices

$


“Alternative Payment Models”

Can Be Win-Win-Wins

Unpaid Services

FFSPayments to

PhysicianPractice

Avoidable Spending

Payments toOther

Providersfor

RelatedServices


to thePhysician’s

Services

Win for Payer:

Lower Total Spending

Win for Patient:

Better Care Without

Unnecessary Services

Win for Physician: Adequate

Payment forHigh-Value Services


Many Ways Cardiologists Can

Reduce Costs Without Rationing

• Use of lower-cost medications• Avoiding unnecessary medications

• Better post-discharge care management• Fewer complications from procedures

• Less use of expensive inpatient rehab• More in-home services

• Fewer unnecessary procedures• Reducing the cost of procedures• More procedures in outpatient settings• Fewer ER visits for chronic disease• Fewer admissions for chronic disease• Z• Fewer unnecessary procedures• Use of lower-cost procedures• Reducing the cost of procedures• Use of lower-cost facilities

• Fewer unnecessary tests• Use of lower-cost tests• Use of lower cost testing facilities

Cardiologist SalaryPractice Expenses

Outpatient Procedures

Inpatient Procedures

and Admissions of

Chronic Disease

Patients

Post-Acute Care

Medications

Tests and Imaging

Readmissions

SPENDING ON CARDIOLOGY PATIENTS


Cardiologists Have Recognized

Overuse of Tests & Interventions


Cardiologists Have Recognized

Overuse of Tests & Interventions

HOW CAN YOU DO FEWER TESTS AND PROCEDURES

AND KEEPA CARDIOLOGY PRACTICE

FINANCIALLY VIABLE?


A Simplified Example:

Reducing Avoidable PCIsTODAY

$/Patient # Pts Total $

Physician Svcs

Evaluations $100 300 $30,000

300 Patientswith Stable Angina

• Physician evaluates allpatients

• Up to 10% of proceduresmay be avoidablethrough patient choiceor alternative treatment





Physician Svcs

Evaluations $100 300 $30,000

Procedures $600 200 $120,000

Subtotal $150,000

Hospital Pmt $10,000 200 $2,000,000

Total Pmt/Cost 300 $2,150,000



• Physician performsprocedure on 2/3 ofevaluated patients






Physician Svcs

Evaluations $100 300 $30,000

Procedures $600 200 $120,000

Subtotal $150,000

Hospital Pmt $10,000 200 $2,000,000




• Physician performsprocedure on 2/3 ofevaluated patients



Most of the Money

Isn’t Going to the PhysicianTODAY


Physician Svcs

Evaluations $100 300 $30,000

Procedures $600 200 $120,000

Subtotal $150,000

Hospital Pmt $10,000 200 $2,000,000


Physician is OnlyReceiving 7% ofTotal Spending


What Happens If You Reduce

the Number of PCIs?TODAY w/ UTILIZATION CTRL

$/Patient # Pts Total $ $/Patient # Pts Total $ Chg

Physician Svcs

Evaluations $100 300 $30,000

Procedures $600 200 $120,000 180

Subtotal $150,000

Hospital Pmt $10,000 200 $2,000,000 180



Under FFS, Payer Wins,

Physicians and Hospitals LoseTODAY w/ UTILIZATION CTRL


Physician Svcs

Evaluations $100 300 $30,000 $100 300 $30,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $138,000 -8%

Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%

Total Pmt/Cost 300 $2,150,000 300 $1,938,000 -10%


Will a 4% MIPS Bonus for Low

Resource Use Offset the Loss?TODAY MIPS Bonus


Physician Svcs

Evaluations $100 300 $30,000 $104

Procedures $600 200 $120,000 $624

Subtotal $150,000

Hospital Pmt $10,000 200 $2,000,000 $10,000

Total Pmt/Cost 300 $2,150,000 300 $1,938,000 -10%


No – MIPS Is Still a Win-Lose

Proposition for PhysiciansTODAY MIPS Bonus


Physician Svcs

Evaluations $100 300 $30,000 $104 300 $31,200

Procedures $600 200 $120,000 $624 180 $112,320

Subtotal $150,000 $143,520 -4%

Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%

Total Pmt/Cost 300 $2,150,000 300 $1,943,520 -10%


MIPS Will Penalize Doctors for

High Resource Use…TODAY MIPS Penalty


Physician Svcs

Evaluations $100 300 $30,000 $96

Procedures $600 200 $120,000 $576

Subtotal $150,000

Hospital Pmt $10,000 200 $2,000,000

Total Pmt/Cost 300 $2,150,000 300 $2,150,000 -0%


Same Impact on Physicians, No

Impact on Hospitals, No SavingsTODAY w/ UTILIZATION CTRL


Physician Svcs

Evaluations $100 300 $30,000 $96 300 $28,800

Procedures $600 200 $120,000 $576 200 $115,200

Subtotal $150,000 $144,000 -4%

Hospital Pmt $10,000 200 $2,000,000 $10,000 200 $2,000,000 0%

Total Pmt/Cost 300 $2,150,000 300 $2,144,000 -0%


Is There a Better Way?

TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 ? ? ?

Procedures $600 200 $120,000 ? ? ?

Subtotal $150,000 ?

? ? ?

Hospital Pmt $10,000 200 $2,000,000 ? ? ?

Total Pmt/Cost 300 $2,150,000 ? ? ?


Pay More to Manage Patient Care,

Not Just to Do ProceduresTODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200

Procedures $600 200 $120,000 $600

Subtotal $150,000

Hospital Pmt $10,000 200 $2,000,000 $10,000


Better Payment for Condition Management• Physician paid adequately to engage in

shared decision making process with patients and given the decision support tools to ensure quality


Physicians Could Be Paid More

While Still Reducing Total $TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%

Total Pmt/Cost 300 $2,150,000 300 $1,968,000 -8%

Better Payment for Condition Management• Physician paid adequately to engage in

shared decision making process with patients and given the decision support tools to ensure quality


Win-Win-Win for

Patients, Physicians, and PayersTODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%

Total Pmt/Cost 300 $2,150,000 300 $1,968,000 -8%

Physician Wins

Payer Wins

Patient Wins


Do Hospitals Have to Lose In Order

for Physicians & Payers to Win?TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%

Total Pmt/Cost 300 $2,150,000 300 $1,968,000 -8%

Physician Wins

Payer Wins

Hospital Loses


Do Hospitals Have to Lose In Order

for Physicians & Payers to Win?TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%

Total Pmt/Cost 300 $2,150,000 300 $1,968,000 -8%

What should matter to hospitals is their margin,

not their revenue (volume)


We Need to Understand the

Hospital’s Cost StructureTODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000

Variable Costs $4,500 45% $900,000

Margin $500 5% $100,000

Subtotal $10,000 200 $2,000,000



Now, if the Number of Procedures

is Reduced…TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000

Variable Costs $4,500 45% $900,000

Margin $500 5% $100,000

Subtotal $10,000 200 $2,000,000 180



…Fixed Costs Will Remain the

Same (in the Short Run)…TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000

Margin $500 5% $100,000

Subtotal $10,000 200 $2,000,000 180



…Variable Costs Will Go Down in

Proportion to Procedures…TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%

Margin $500 5% $100,000

Subtotal $10,000 200 $2,000,000 180



…And Even With a Higher Margin

for the Hospital…TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%

Margin $500 5% $100,000 $110,000 +10%

Subtotal $10,000 200 $2,000,000 180



…The Hospital Gets Less Revenue,

But a Higher Margin…TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%

Margin $500 5% $100,000 $110,000 +10%

Subtotal $10,000 200 $2,000,000 180 $1,920,000 -4%



…And The Payer

Still Saves MoneyTODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%

Margin $500 5% $100,000 $110,000 +10%

Subtotal $10,000 200 $2,000,000 180 $1,920,000 -4%

Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%


I.e., Win-Win-Win for

Physician, Hospital, and PayerTODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%

Margin $500 5% $100,000 $110,000 +10%

Subtotal $10,000 200 $2,000,000 180 $1,920,000 -4%

Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%

Physician Wins

Payer Wins

Hospital Wins


What Payment Model Supports

This Win-Win-Win Approach?TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%

Margin $500 5% $100,000 $110,000 +10%

Subtotal $10,000 200 $2,000,000 180 $1,920,000 -4%

Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%


It’s Impractical to Renegotiate

Fees for Individual ServicesTODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $810,000 -10%

Margin $500 5% $100,000 $110,000 +10%

Subtotal $10,000 200 $2,000,000 $10,666 180 $1,920,000 -4%

Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%


…What Assures The Payer That

There Will Be Fewer Procedures?TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $810,000 -10%

Margin $500 5% $100,000 $110,000 +10%

Subtotal $10,000 200 $2,000,000 $10,666 180 $1,920,000 -4%

Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%

?


Pay Based on the Patient’s

Condition, Not on the ProcedureTODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $150 300 $45,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $153,000 +2%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $700,000 -0%

Variable Costs $4,500 45% $900,000 $567,000 -10%

Margin $500 5% $100,000 $71,400 +2%

Subtotal $10,000 200 $2,000,000 $7,436 180 $1,338,400 -4%

Total Pmt/Cost $7,167 300 $2,150,000 $1,491,400 -4%


Plan to Offer Care of the Condition

at a Lower Cost Per Patient…TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000

Procedures $600 200 $120,000

Subtotal $150,000

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000

Variable Costs $4,500 45% $900,000

Margin $500 5% $100,000

Subtotal $10,000 200 $2,000,000

Total Pmt/Cost $7,167 300 $2,150,000 $6,933 300 -3%


Use the Payment as a Budget to

Redesign Care…TODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000

Procedures $600 200 $120,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000

Variable Costs $4,500 45% $900,000

Margin $500 5% $100,000

Subtotal $10,000 200 $2,000,000 180 $1,912,000 -4%

Total Pmt/Cost $7,167 300 $2,150,000 $6,933 300 $2,080,000 -3%


…And Let the Docs & Hospital

Decide How They Should Be PaidTODAY TOMORROW


Physician Svcs

Evaluations $100 300 $30,000 $200 300 $60,000

Procedures $600 200 $120,000 $600 180 $108,000

Subtotal $150,000 $168,000 +12%

Hospital Pmt

Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%

Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%

Margin $500 5% $100,000 $102,000 +2%

Subtotal $10,000 200 $2,000,000 180 $1,912,000 -4%

Total Pmt/Cost $7,167 300 $2,150,000 $6,933 300 $2,080,000 -3%


APM #7:

(Full) Condition-Based Payment


ACC SMARTCare Project

Working on an APM

• APM for Ischemic Heart Disease (SMARTCare)

– ACC received a $16 million grant from the CMS Innovation Center

in 2014 to implement ACC appropriate use criteria for testing and

interventions for stable angina

– Initial work has been done to develop an Alternative Payment Model to

continue the project after funding ends and to adequately support the

costs of cardiac testing and interventions for appropriate patients


Fewer Unnecessary Procedures Is

Just One Way to Reduce Spending

• Use of lower-cost medications• Avoiding unnecessary medications

• Better post-discharge care management• Fewer complications from procedures

• Less use of expensive inpatient rehab• More in-home services

• Fewer unnecessary procedures• Reducing the cost of procedures• More procedures in outpatient settings• Fewer ER visits for chronic disease• Fewer admissions for chronic disease• Z• Fewer unnecessary procedures• Use of lower-cost procedures• Reducing the cost of procedures• Use of lower-cost facilities

• Fewer unnecessary tests• Use of lower-cost tests• Use of lower cost testing facilities

Cardiologist SalaryPractice Expenses

Outpatient Procedures

Inpatient Procedures

and Admissions of

Chronic Disease

Patients

Post-Acute Care

Medications

Tests and Imaging

Readmissions

SPENDING ON CARDIOLOGY PATIENTS


There are Many Ways to Create

Physician-Focused APMs

APM #1: Payment for a High-Value Service

APM #2: Condition-Based Payment for a Physician’s Services

APM #3: Multi-Physician Bundled Payment

APM #4: Physician-Facility Procedure Bundle

APM #5: Warrantied Payment for Physician Services

APM #6: Episode Payment for a Procedure

APM #7: Condition-Based Payment

www.PaymentReform.org


MACRA Enables Fixing Problems

With Current Claims-Based APMs• PROBLEM TODAY: “Attribution” models that assign patients

to physicians after care is already delivered

SOLUTION IN MACRA: New Patient Relationship Categories will be created so physicians can say who their patients are

• PROBLEM TODAY: Poor risk adjustment systems that fail to recognize patients who need more time and resources

SOLUTION IN MACRA: New Patient Condition Groups will be created so physicians can identify which patients are complex

• PROBLEM TODAY: Spending measures that hold physicians responsible for services unrelated to their care

SOLUTION IN MACRA: New Patient Episode Groups that allow physicians to designate the purposes of services


More Detail on Opportunities to

Improve Resource Use Measures



Three Choices Under MACRA

MACRA

MIPSHarm to Patients,

Physicians, and Hospitals, Little Savings to Medicare

CMS APMsHarm to Patients,


PHYSICIAN-FOCUSED APMsWin-Win-Win for Patients,

Physicians, Hospitals & CMS


Leadership by Physicians & ACC

Needed to Ensure Good Choice

MACRA

MIPSHarm to Patients,


CMS APMsHarm to Patients,


PHYSICIAN-FOCUSED APMsWin-Win-Win for Patients,

Physicians, Hospitals & CMS


Learn More About Win-Win-Win

Payment and Delivery Reformwww.PaymentReform.org

http://www.paymentreform.org/

For More Information:

Harold D. MillerPresident and CEO

Center for Healthcare Quality and Payment Reform

[email protected]

(412) 803-3650

www.CHQPR.org


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