U.S. Healthcare:Moving Away from Fee-For Service to Value-Based Payment MethodsDaniel Collins, Sr. Finance Manager

October 28, 2015

*Fee For Service Physicians being paid on the volume of procedures performed. Does not factor quality of service and patient satisfaction.Value Based Payments Payment methods based on quality of care, patient satisfaction, and treating the ailment after a procedure/visit.

Cost of Health Care is Way Too High

The U.S. is currently spending 16% of their GDP just on health expenses.*

Cost of Health Care is Way Too High

Crazy Quilt System Many forms of payment for a patient to a provider Govt (Medicare and Medicaid), Commercial (United, Aetna, Florida Blue), Self Pay (no insurance), Charity (no insurance, no means to pay).

Canada, Sweden, U.K. Already have some form where the government provides the only reimbursement for Health Care Services.*

OPEN Discussion

How would you fix the U.S. Healthcare System if you were president?Why do you think the cost of healthcare has grown so high?Why are your premiums going up each year if employed and receiving medical benefits?

There is no right answer.

Fee-for-Service Healthcare promoted physicians to see as many patients as possible. This was very costly for the government as we were incentivizing physicians to see high quantity of patients and not incentivizing high quality of treatment. If a patient gets sick and is readmitted into the hospital under the old method, the government would shell out more money for that Medicare patient.

Preventative Health Care/Wellness Programs In the 1990s and 2000s, it was almost unheard of to go see a physician when you are not sick/injured. Managing a patients health before illness helps reduce costs on the Healthcare System.

Nutrition Baby Boomers were not a population that were influenced by healthy eating habits. With the growth of our knowledge on how some foods or harmful/helpful to our bodies in the Generation Y and Millenial generations, we are seeing a longer life expectancy than previous years.

Incentivizing the management of a patients health instead of the number of patients seen is the next step.

Some believe commercial insurance companies are to blame for the higher costs of healthcare, as some of their executives are making incredible sums of money for essentially being the middle-man between patient and hospital. Most commercial insurance companies are also looking to reduce costs that they incur for the patient through agreements with providers to share in cost savings.

Premiums are going up due to the increased number of people now receiving healthcare coverage resulting from the Affordable Care Act. Those that are fully employed are paying for the patient with no insurance that shows up to the ED and doesnt pay his/her bill and those that are struggling financially on Medicaid who cannot reimburse the hospital for the full cost of care. *

Only 10% of Contribution to Death

Behavioral Patters and Genetics determine 70% of the causes of premature death.*

Obesity Rates (Florida is #14)

From 2013 to 2014, FL improved their obesity ranking.*

2016 Proposed Budget

$400 Billion in reductions to Medicare, Medicaid, and other Health and Human Services programs over the next decade

$3.9 Trillion budget in 2015 submitted by Obama*

Goals from the Government

30 Percent Medicare payments will be through Alternative Payment Models by end of 201650 Percent Medicare payments will be through 2018*

Goal is for more payments to be transferred to Categories 3 & 4.*

MU = Meaningful Use of an EMR systemPQRS = Patient Quality Reporting Standards Reporting of Quality Data of Your Practice. Will soon be judged on that Quality Data.Value Based Modifier Differential payment to a physician based upon the quality of care vs. the cost of care for a time period.*

Reductions in Payment from Medicare

*Readmission Program Calculating which hospitals had excess readmissions based on their case mix (severity of patients seen), receive a penalty if too high.Value Based Purchasing A 1.5% reduction is taken from all hospitals from their base reimbursement for DRGs. That money is then redistributed based on certain quality metric scores in relation to other hospitals.Hospital Acquired Conditions Hospitals ranking in a poor percentile for Hospital Acquired Conditions will be receiving a reduction in payment.

Accountable Care Organizations (ACOs)

ACO DefinitionGroups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.First established with the Affordable Care Act in 2011First ACOs were formed in the April-July 2012 time period.Pioneer Program (only 19 remain) Full Risk Model which was too financially demanding for many participants.Medicare Shared Savings Plan Much more widely adopted, share 50% of cost savings earned if quality metrics are met.Commercial ACOs Shared Savings Plans with commercial payers.

Collaborative Care of Florida (Orlando Health ACO)

17,000 total covered Medicare livesProgram began in 20131st hospital in state of Florida with ACO2013 - $3M saved, 100% compliant for quality metric reporting. (Reporting only required 1st year)2014 - $5.3M saved, 17th overall in the country out of 330 in the U.S. for quality

Total Number of ACOs

Technology Improving Health Care

*Fee For Service Physicians being paid on the volume of procedures performed. Does not factor quality of service and patient satisfaction.Value Based Payments Payment methods based on quality of care, patient satisfaction, and treating the ailment after a procedure/visit.The U.S. is currently spending 16% of their GDP just on health expenses.*Crazy Quilt System Many forms of payment for a patient to a provider Govt (Medicare and Medicaid), Commercial (United, Aetna, Florida Blue), Self Pay (no insurance), Charity (no insurance, no means to pay).

Canada, Sweden, U.K. Already have some form where the government provides the only reimbursement for Health Care Services.*There is no right answer.

Fee-for-Service Healthcare promoted physicians to see as many patients as possible. This was very costly for the government as we were incentivizing physicians to see high quantity of patients and not incentivizing high quality of treatment. If a patient gets sick and is readmitted into the hospital under the old method, the government would shell out more money for that Medicare patient.

Preventative Health Care/Wellness Programs In the 1990s and 2000s, it was almost unheard of to go see a physician when you are not sick/injured. Managing a patients health before illness helps reduce costs on the Healthcare System.

Nutrition Baby Boomers were not a population that were influenced by healthy eating habits. With the growth of our knowledge on how some foods or harmful/helpful to our bodies in the Generation Y and Millenial generations, we are seeing a longer life expectancy than previous years.

Incentivizing the management of a patients health instead of the number of patients seen is the next step.

Some believe commercial insurance companies are to blame for the higher costs of healthcare, as some of their executives are making incredible sums of money for essentially being the middle-man between patient and hospital. Most commercial insurance companies are also looking to reduce costs that they incur for the patient through agreements with providers to share in cost savings.

Premiums are going up due to the increased number of people now receiving healthcare coverage resulting from the Affordable Care Act. Those that are fully employed are paying for the patient with no insurance that shows up to the ED and doesnt pay his/her bill and those that are struggling financially on Medicaid who cannot reimburse the hospital for the full cost of care. *Behavioral Patters and Genetics determine 70% of the causes of premature death.*From 2013 to 2014, FL improved their obesity ranking.*$3.9 Trillion budget in 2015 submitted by Obama*30 Percent Medicare payments will be through Alternative Payment Models by end of 201650 Percent Medicare payments will be through 2018*Goal is for more payments to be transferred to Categories 3 & 4.*MU = Meaningful Use of an EMR systemPQRS = Patient Quality Reporting Standards Reporting of Quality Data of Your Practice. Will soon be judged on that Quality Data.Value Based Modifier Differential payment to a physician based upon the quality of care vs. the cost of care for a time period.**Readmission Program Calculating which hospitals had excess readmissions based on their case mix (severity of patients seen), receive a penalty if too high.Value Based Purchasing A 1.5% reduction is taken from all hospitals from their base reimbursement for DRGs. That money is then redistributed based on certain quality metric scores in relation to other hospitals.Hospital Acquired Conditions Hospitals ranking in a poor percentile for Hospital Acquired Conditions will be receiving a reduction in payment.