Headline Space Here

Insert Headline HereP4P: IMPLICATIONS FOR YOUR ORGANIZATION AND WHAT YOU NEED TO DO TO PREPARE

P4P: IMPLICATIONS FOR YOUR ORGANIZATION AND WHAT YOU NEED TO DO TO PREPARE

P4P: IMPLICATIONS FOR YOUR ORGANIZATION AND WHAT YOU NEED TO DO TO PREPARE

June 2008June 2008June 2008June 2008

Presented to thePresented to the

HFMA ANIHFMA ANI

DeMarco and AssociatesDeMarco and Associates

Presented to thePresented to the

HFMA ANIHFMA ANI

DeMarco and AssociatesDeMarco and Associates

William J. De MarcoWilliam J. DeMarco, MA, CMC, has worked in the health care industry since 1974 when he was hired as an executive for the SHARE health plan, a non profit, community based provider driven HMO in St Paul, Minnesota.

•Assisted in design of Minnesota’s first Medicaid plan and supported the Medicare product line.

•Former Director for the Minneapolis District of Blue Cross Blue Shield’s HMO Minnesota plan.

•Development of a physician driven and owned health plan in Rockford, Illinois. Sponsored by Rockford Clinic. Ltd.

•Based upon this experience DeMarco and Associates began as an independent consulting firm working with medical groups, hospitals, and health systems to create new economic relationships with managed care as well as work with employers and select managed care companies in optimizing relationships with providers.

•The firm’s focus on new plan startups and expansion of physician/employer relationships led to the acquisition of Warren Surveys, a research and publishing company collecting compensation and organizational data on the health plan industry.

•Bill’s understanding of the multifaceted health plan industry with focus on data and quality improvement helped create Pendulum HealthCare Development Corporation, an independent health data analysis and care plan measurement company.

•PHDC continues to assist employer and provider sponsored health plans in focusing resources and building infrastructures to better manage the shift from discounted fee schedules to performance based contracting.

•Bill holds degrees in behavioral science, a Master’s in organizational development from DePaul University, and is a doctoral candidate in human and organizational systems development.

•DeMarco and Associates has received multiple awards from MGMA and HFMA for educational programs and advisory work for members of the association.

•Author of over 7 books and contributor or author to several hundred articles, Bill conducts private workshops for clients as well as conducts consulting projects for large and small organizations on a local and regional basis.

Agenda• Why are we here?• What is Pay for Performance?• What is performance based contracting• Value Based Purchasing?• How does this integrate with physicians and hospitals

structures?• Are employers really using performance information?• Can you show me some private payer strategies that

are working?• Can you show me how employers and health plans

are using this performance data?

Why Now?• Quality Chasm calling for system redesign• Overpayment and fraud cases at an all time high (auditors

hard at it)• Current program under-funded due to demographics• New technologies more prevalent (TPA, drug eluded stints)• Rising charges (60% overall increase over 5 years)• Unnecessary care (Hospitalizations and ER that could have

been avoided or better handled through physician visits/hospice/home health)

• Social and economic barriers to preventive care that produce expensive admissions

Institute Of Medicine Findings

“Serious and widespread quality problems exist in American medicine… [They] occur in small and large communities alike, in parts of the country and with approximately equal frequency in managed care and fee-for-service systems of care. Very large numbers of Americans are harmed as a result (Chassin and Galvin 1998:1000).”

The IOM Studies Report to the National Business Roundtable The IOM Studies Report to the National Business Roundtable on Quality Health Care Says: on Quality Health Care Says:

Institute Of Medicine Findings

• Examples cited include:– Fewer than half adults aged 50 and over were found to

have received recommended screening tests for colorectal cancer (centers for Disease Control and Prevention 2001, Leatherman and McCarty 2002)

– Inadequate care after a heart attack results in 18,000 unnecessary deaths per year (Chassin 1997)

– In a survey, 17 million people reported being told by their pharmacists that the drugs they were prescribed could cause an interaction (Harris Interactive 2001)

Government spending on healthcare to double

Medicare’s Goals

CMS is pursuing a vision to improve the quality of care by expanding the health information available through direct incentives to reward the delivery of superior care.

FirstFirst

ThirdThird

FourthFourth

SecondSecond

Quartile RankQuartile Rank

DC

Source: S.F. Jencks, E.D. Huff, and T. Cuerdon, “Change in the Quality of Care Delivered to Medicare Beneficiaries, Source: S.F. Jencks, E.D. Huff, and T. Cuerdon, “Change in the Quality of Care Delivered to Medicare Beneficiaries, 1998-1999 to 2000-2001, “ Journal of the American Medical Association, 289(3):305-12, Jan. 15, 2003.1998-1999 to 2000-2001, “ Journal of the American Medical Association, 289(3):305-12, Jan. 15, 2003.

Performance On MedicareQuality Indicators: 2000-2001

All Medicare All Medicare beneficiaries have beneficiaries have health coverage, health coverage, yet the quality of yet the quality of care they receive care they receive differs differs significantly from significantly from state to state.state to state.

Note: State ranking based on 22 Medicare performance measures

All Medicare All Medicare beneficiaries have beneficiaries have health coverage, health coverage, yet the quality of yet the quality of care they receive care they receive differs differs significantly from significantly from state to state.state to state.

Note: State ranking based on 22 Medicare performance measures

Value Based Demonstrations and Pilots

• Premier Hospital Quality Demonstration Project• Physicians Group practice Demonstration• Medicare Care Management Performance Demonstration• Nursing Home value Demonstration Project• Home Health Pay for Performance Demonstration• ESRD bundled payment Demonstration• ESRD Disease Management Demonstration• Medicare Health Support Pilots• Care management for high cost beneficiaries

Demonstrations• Medicare healthcare Quality Demonstrations• Gain-Sharing Demonstrations

Four Cornerstones• The Executive Order is intended to ensure that health care programs

administered or sponsored by the federal government build on collaborative efforts to promote four cornerstones for health care improvement:

• Interoperable Health Information Technology: Interoperable health information technology has the potential to create greater efficiency in health care delivery.  Significant progress has been made to develop standards that enable health information systems to communicate and exchange data quickly and securely to protect patient privacy.  Additional standards must be developed and all health care systems and products should meet these standards as they are acquired or upgraded.  

• Measure and Publish Quality Information: To make confident decisions about their health care providers and treatment options, consumers need quality of care information.  Similarly, this information is important to providers who are interested in improving the quality of care they deliver.  Quality measurement should be based on measures that are developed through consensus-based processes involving all stakeholders, such as the processes used by the AQA (multi-stakeholder group focused on physician quality measurement) and the Hospital Quality Alliance.

Four Cornerstones

• Measure and Publish Price Information: To make confident decisions about their health care providers and treatment options, consumers also need price information.  Efforts are underway to develop uniform approaches to measuring and reporting price information for the benefit of consumers.  In addition, strategies are being developed to measure the overall cost of services for common episodes of care and the treatment of common chronic diseases. 

• Promote Quality and Efficiency of Care: All parties - providers, patients, insurance plans, and payers - should participate in arrangements that reward both those who offer and those who purchase high-quality, competitively-priced health care.  Such arrangements may include implementation of pay-for-performance methods of reimbursement for providers or the offering of consumer-directed health plan products, such as account-based plans for enrollees in employer-sponsored health benefit plans.

•Last revised: February 28, 2007 Value Driven HealthCare website

Looking Ahead To The Consumer Era

Fee-For Service MedicineFee-For Service MedicineFee-For Service MedicineFee-For Service Medicine

Unlimited Unlimited choice of choice of hospitalshospitals

Win

ning

Phy

sici

an L

oyal

tyW

inni

ng P

hysi

cian

Loy

alty

1900-1900-19821982

Foc

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sure

r C

ontr

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ngF

ocus

on

Insu

rer

Con

trac

ting

Unlimited Unlimited choice of choice of

physiciansphysicians

Degree of Degree of Consumer Consumer Choice of Choice of Physicians Physicians

and and HospitalsHospitals

AttributesAttributes

Physicians on TopPhysicians on Top• Leaders of American medicineLeaders of American medicine• Focus on personal status and reputation Focus on personal status and reputation

of physicianof physicianEra of Great MedicineEra of Great Medicine• Hundred year run of clinical advancesHundred year run of clinical advances• Highest quality medicine known Highest quality medicine known

anywhere, anytimeanywhere, anytimeLittle Physician AccountabilityLittle Physician Accountability• Unlimited discretion over clinical Unlimited discretion over clinical

decisionsdecisions• Little accountability for costsLittle accountability for costs• Little accountability for patient service Little accountability for patient service

qualityquality

ResultResult

Unfettered consumer choice of physicians Unfettered consumer choice of physicians and hospitalsand hospitals

Failure to produce consumer goodFailure to produce consumer good

Looking AheadTo The Consumer Era

Shadow of the InsurerShadow of the InsurerShadow of the InsurerShadow of the Insurer

1983-1983-19981998

LockoutLockout

Foc

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sure

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ocus

on

Insu

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Con

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Employer channeling Employer channeling to HMOsto HMOs

Employer channeling Employer channeling to Physiciansto Physicians

DeselectionDeselection

Employer channeling Employer channeling to HMOsto HMOs

Employer channeling Employer channeling to Physiciansto Physicians

DeselectionDeselection

LockoutLockout

Zone of Maximum Channeling

Degree of Degree of Consumer Consumer Choice of Choice of Physicians Physicians

and and HospitalsHospitals

Win

ning

Phy

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tyW

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hysi

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Loy

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Who

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arke

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Who

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AttributesAttributes

Insurers on TopInsurers on Top• Broad authority over care decisionsBroad authority over care decisions• Power to channel and deselectPower to channel and deselectEra of Greater AccountabilityEra of Greater Accountability• Reversal of upward spiral in costReversal of upward spiral in cost• Monitoring of clinical and service Monitoring of clinical and service

qualityqualityLittle Consumer ChoiceLittle Consumer Choice• Employer channeling to HMOsEmployer channeling to HMOs• HMOs channeling to providersHMOs channeling to providers• Lockouts become a regular occurrence Lockouts become a regular occurrence

as employers switch plans and panelsas employers switch plans and panels

ResultResult

Painful loss of freedom for providersPainful loss of freedom for providersBreaking into contracts the top priorityBreaking into contracts the top priority

Looking AheadTo The Consumer Era

Ascendant Consumer Ascendant Consumer EnterpriseEnterprise

Ascendant Consumer Ascendant Consumer EnterpriseEnterprise

Pro

vide

rs M

arke

ting

Dir

ectl

yP

rovi

ders

Mar

keti

ng D

irec

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to C

onsu

mer

sto

Con

sum

ers

1998 to 21st 1998 to 21st CenturyCentury

Emergence of new Emergence of new structures/technologies structures/technologies

Growth of IRAs and Growth of IRAs and HSAsHSAs

Rise of smaller panel Rise of smaller panel provider driven health plansprovider driven health plans

Employer CoalitionsEmployer CoalitionsW

hole

sale

Mar

keti

ngW

hole

sale

Mar

keti

ng

AttributesAttributes

Consumers on TopConsumers on Top• Resurgence of consumer choiceResurgence of consumer choice• Physicians and insurers in service to Physicians and insurers in service to

consumersconsumersEra of Consumer GoodEra of Consumer Good• Improved access and convenienceImproved access and convenience• Improved service qualityImproved service qualityRetreat from traditional channelingRetreat from traditional channeling• Broad consumer choice of multiple Broad consumer choice of multiple

health planshealth plans• Broad plan choice of providersBroad plan choice of providers• Breakdown of exclusive contractingBreakdown of exclusive contracting

ResultResult

Competition shifts from plans to Competition shifts from plans to providersproviders

Imperative to create consumer Imperative to create consumer enterpriseenterprise

Moving from wholesale to retail Moving from wholesale to retail strategiesstrategies

Broad Physician FoundationBroad Physician FoundationChallengeChallenge

For hospitals, the biggest threat of lockout comes For hospitals, the biggest threat of lockout comes from physicians, not insurers; physicians in from physicians, not insurers; physicians in evolving markets are increasingly concentrating evolving markets are increasingly concentrating their inpatient business with fewer hospitals. their inpatient business with fewer hospitals. With capitation, physicians’ single greatest With capitation, physicians’ single greatest concern is to secure hospital cooperation in cost concern is to secure hospital cooperation in cost reduction efforts. Even without capitation pay reduction efforts. Even without capitation pay form performance demands less hospital form performance demands less hospital relationships.relationships.

ImplicationImplicationNo hospital task is more urgent than replacing No hospital task is more urgent than replacing traditional ‘feel good’ physician bonding with true traditional ‘feel good’ physician bonding with true economic partnerships. Farsighted hospitals will economic partnerships. Farsighted hospitals will secure physician loyalty by investing in secure physician loyalty by investing in aggressive efforts to jointly re-engineer care and aggressive efforts to jointly re-engineer care and to align hospital and physician financial to align hospital and physician financial incentives, build high performance panels and incentives, build high performance panels and gain from cost reduction efforts through direct gain from cost reduction efforts through direct contracting with employers.contracting with employers.

New Retail FranchiseNew Retail FranchiseChallengeChallenge

With the return of broad physician and hospital With the return of broad physician and hospital panels, provider choice will increasingly devolve panels, provider choice will increasingly devolve from insurers back to consumers. As a result, from insurers back to consumers. As a result, inclusion in HMO panels will become secondary inclusion in HMO panels will become secondary to providers’ ability to meet consumer demand for to providers’ ability to meet consumer demand for superior quality, service and accesssuperior quality, service and access

ImplicationImplicationThe best health systems will invest in the creation The best health systems will invest in the creation of a retail franchise. Key priority is renewed of a retail franchise. Key priority is renewed emphasis on consumer marketing - appealing emphasis on consumer marketing - appealing directly to enrollees through concerted efforts at directly to enrollees through concerted efforts at consumer enrollment, consumer retention and consumer enrollment, consumer retention and elevation of the provider as a brand.elevation of the provider as a brand.

Burden of Breaking InBurden of Breaking InChallengeChallenge

Particularly in early managed care markets, Particularly in early managed care markets, providers faced a very real threat of exclusion providers faced a very real threat of exclusion from key managed care contracts. While the from key managed care contracts. While the danger of contract lockout is lessening over time, danger of contract lockout is lessening over time, it will never disappear altogether, even broad-it will never disappear altogether, even broad-panel plans are unlikely to include every hospital panel plans are unlikely to include every hospital and physician. Smaller networks within networks and physician. Smaller networks within networks are working in several markets.are working in several markets.

ImplicationImplicationConcerted effort to ensure inclusion in major Concerted effort to ensure inclusion in major contracts is a major priority for providers to avoid contracts is a major priority for providers to avoid losing access to lives and revenues as managed losing access to lives and revenues as managed care penetration increases. care penetration increases. However, in a world of broadening panels and However, in a world of broadening panels and panels within panels, effective contracting alone panels within panels, effective contracting alone is no guarantee of health system success.is no guarantee of health system success.

Three Health System Imperatives

Approaches Tried by Hospitals & Health Systems

• Attempts to “make it easy” by creating standards and reporting doctors who do not meet these standards to health plans

• Misunderstanding about the value of this data

• Genuine disregard for physician individual differences in treatment and experience

The Hope of Pay for Performance Is That It Will Change the System From Bottom up

• Emotional response by the patient when expectations are not met becomes the motivator of change by physicians.

• Underlying enabler in this process is the data the consumer has available that sets this expectation.

• The current gap between consumers and physicians can be filled by offering AUTHORITATIVE data from the health system or the employer’s health plan.

• These elements represent a dramatic change that has been going on in the market for 10 years. A change from wholesale to retail selection and purchase of health services.

Who Sets the Standards• United, Humana and others have attempted to create

standards and set them upon physicians in Missouri, Washington, Tennessee, and California

• The compromised version incorporates leading physicians representing all specialties, and there is an ability to request your data and there is an appeal process if you think you are being unfairly treated

• Of course, there is always litigation

• Continuity of care could be interrupted by standards

Insurers probed about physician-ranking programs

• Physician-ranking programs by Aetna and Cigna Healthcare may confuse or deceive

consumers because of how they are designed, New York Attorney General Andrew Cuomo has warned in letters to the two insurers.

• Cuomo requested full justification for the programs, which recommend certain primary-care physicians and specialists to consumers.

• His office wrote that Aetna Aexcel and the Cigna Care Network may be flawed because the insurers rely on claims data, which may exclude key information and have too small a sample size to yield useful data. The insurers did not disclose ranking data, according to the letters.

• “The goal of transparency is defeated if the information provided is itself inaccurate or misleading, or based on flawed data,” wrote Linda Lacewell, counsel for economic and social justice at the attorney general’s office, in the letters.

• Inaccurate physician rankings could cause financial harm to consumers because some employers steer workers to preferred doctors by lowering copayments, according to the attorney general's office. So workers who choose not to see preferred doctors could pay more.

• Insurers have a profit motive to steer consumers to cheaper doctors, not those who are most-qualified, Lacewell wrote.

Performance Models• CMS Approach. Pay is based on a capped share of savings

achieved by several types of measures such as a reduction in harmful procedures.

• Points Earned Approach. Health plan pays for HEDIS type measures but on a tiered basis, .i.e. participating physicians are stratified and paid on a points earned basis.

• Outcomes based. Pay is linked to evidence based process and achievement related outcomes above a predetermined benchmark.

Defining “Success” in a P4P World

P4P Programs

• Integrated Healthcare Association (IHA)

• Leapfrog Group

• Bridges to Excellence

• CMS/Premier Hospital Quality Incentive Demonstration

• CMS/Physician Group Practice Demonstration (PGP)

• California based purchasers – health plan medical directors, physician group directors

• Formed in 2000• P4P announced in 2002• Clinical measures – mammograms, pap smears,

immunizations, asthma, diabetes, coronary artery disease• Other measures – patient satisfaction, prevention, chronic care

management, IT• NCQA is intermediary to aggregate data• $54 million in bonuses paid in 2004 …$64 in 2006

Integrated Healthcare Association (IHA)Integrated Healthcare Association (IHA)Integrated Healthcare Association (IHA)Integrated Healthcare Association (IHA)

P4P Programs

• Formed in 2000 after IOM report• U.S. corporations formed to improve safety, quality, value,

affordability• Four ‘leaps’

– computer based order entry– evidence based hospital referrals– ICU staffing by specialists– NQF safe practices

• Hospital Rewards Program – launched in 2005 to monitor five clinical areas (patterned after the CMS Premier Demo)

Leapfrog GroupLeapfrog GroupLeapfrog GroupLeapfrog Group

P4P Programs

• Multi-state, multi-employer coalition• IOM concepts (SEEETP)• Three principles

– reengineer care processes to reduce mistakes– reduce defects to reduce waste– provide performance data

• Three programs– Physician Office Link– Diabetes Care Link– Cardiac Care Link

• Rewards for IT

Bridges to ExcellenceBridges to ExcellenceBridges to ExcellenceBridges to Excellence

P4P Programs

Resources• www.hfma.org. Executive roundtable on P4P 2005• www.ahqr.org Quality measures and projects in

place. Especially Transforming health systems leadership design and incentives October 18 2004 and Leading Practices Redesign December 15 2004

• www.cato.org Pay for Performance is Medicare a good candidate? Michael Cannon July 31 2006

• Cms.hhs.gov/HospitalQualityInits/35_HospitalPremier.asp Top performers in demo projects 2006

• www.iha.org Integrated Healthcare Association annual report February 2007

Resources: What employers are being told

• www.ahrq.gov Strategies to support quality based purchasing, a review of the evidence

• www.ahrq.gov Pay for performance: a decision guide for purchasers

• www.comonwealthfund.org Excellent website of P4P and Performance based medicine as part of the total reform occurring in Health Care

Resourcesfor Finance Directors who want to understand the basis

of these formulas

• Medicare Risk Adjusted Capitation Payments: from research to implementation, Greenwald, Health Care Financing Review, Spring 2000.

• Risk Adjustment of Medicare Capitation Payments using CMS HCC Model, G Pope Health Care Financing Review, Summer 2004.

Current Status of P4P

• Over 100 programs• 1/3 targeted to hospitals• Programs in infancy• Great variation in organization, metrics, rewards• CMS will be major market driver• Increasing demands for quality, value, efficiency• Movement from process to outcomes• Enhanced IT essential

What’s next• Employers and their consultants are molding the new P4P• Health Plans have the opportunity to get ahead and stay

ahead of this curve• Hospitals have an opportunity to work with health plans and

share data that ultimately creates a cost differential in the market

• Physicians can lead much of this change if there is a willingness to better organize themselves into new types of organization platforms

• Hospitals can help build the platform to support this “exchange “ between plans, employers, and physicians but

first, the understanding of where P4P is going needs to be clear.

The Future: Performance Based Contracting

A new direction and opportunity for providers and

Health Plans to collaborate

Performance Based Contracting (PBC)

Medical Medical ManagementManagement

Managed Managed CareCare

Private PayerPrivate Payer NeedsNeeds InformaticsInformatics

DiseaseDisease ManagementManagement

Quality Quality ImprovementImprovement

P4PP4P

ConsumerConsumer

• Requires multiple disciplines within a health system to work together

• Integrates external with environmental changes

• Creates an opportunity for growth in private pay markets to balance public pay reductions

• Should be a core strategy to your organization, not just an agenda item in a management meeting

Performance Based Contracting (PBC)

Pay For PerformanceDriving Technology

• A pay-for-performance program in upstate New York hopes to tap into bonuses offered by Bridges to Excellence as well. That, however, would be icing on the cake for participating doctors who came together to get a health information technology network up and running, in part, to garner P4P bonuses from individual health plans.

• "Many health plans are prepared to pay for performance," John Blair, CEO of Taconic Health Information Network and Community, tells the New York Times. "The rub is that you have to have the technology in place to garner those incentives. You need to automate the reporting capability."

..

CDHP Accelerates Organizational Change

CDHPCDHP DrivingDriving

P4PP4P

New Product New Product Driving Driving

Org ChangeOrg Change

Health PlansHealth PlansDrivingDrivingCDHPCDHP

P4PP4PDrivingDriving

New InfotechNew Infotech

New Infotech New Infotech DrivingDriving

New ProductNew Product

The Changed Environment

• 1975: General Motors was the largest single non-government employer in the USA - 2.2 million employees, and every one of them had full womb-to-tomb health care paid 100% by GM.

• 1985: AT&T was the largest employer - 1.8 million employees, all with 100% employer-paid coverage.

• 2005: Wal-Mart is the nation's largest employer, with 1.5 million US employees - less than 400,000 have health care and it costs them from $120-190/month for a high deductible limited coverage plan.

Source: Jeanne Scott, Chief of Health-Politics.com.Source: Jeanne Scott, Chief of Health-Politics.com.

CDH Accounts Reach 10 Million In January 2008

• Combined enrollment in health insurance linked to HSAs or HRAs exceeded 10 million covered lives in January, Consumer Driven Market Report has found.

• HSAs alone have over 6 million Americans enrolled while HRAs have over 4 million.

• The HSA number is verified by reports from the biggest HSA custodians polled privately. The 12 largest custodians enjoy steady HSA adoption, and seven will be over 100,000 HSA accounts by 2009.

• OptumHealth Bank has the most, but Mellon ACS, JPMorgan Chase, and HSA Bank are on its heels. Bancorp Bank, Bank of America, and Wells Fargo are duking it out the middle.

What employers are doing with this data

Tiering hospital and physician services just like they did pharmacy

services

Discuss Quality Initiatives/Standards

Include in Select Network Gold Card

for UM Review

Consider Remediation Including Network

Termination

Alter Reimbursement

Physician Performance

LowLow QualityQuality HighHighL

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Estimated Savings From Redirection

REDIRECTION

ID Name Mbrs Seen

Actual Paid Amt

Expected Paid Amt Diff Perf

Index 25% 50% 75% 100%

6636498 Provider 6636498 183 $127,190 $75,642 $51,547 1.68 $12,886.75 $25,773.50 $38,660.25 $51,547.00 6636492 Provider 6636492 350 $229,000 $166,453 $62,547 1.38 $15,636.75 $31,273.50 $46,910.25 $62,547.00 6631410 Provider 6631410 165 $99,304 $72,703 $26,600 1.37 $6,650.00 $13,300.00 $19,950.00 $26,600.00 6637732 Provider 6637732 354 $214,405 $167,368 $47,037 1.28 $11,759.25 $23,518.50 $35,277.75 $47,037.00 6636491 Provider 6636491 336 $176,154 $141,255 $34,900 1.25 $8,725.00 $17,450.00 $26,175.00 $34,900.00

Total Redirection: $55,657.75 $111,315.50 $168,973.25 $222,631.00

Total Redirection:

$55,657.75 $111,315.50 $168,973.25 $222,631.00

PHDC Population Profiling SystemPHDC Population Profiling SystemProvider Ranking - Total DollarsProvider Ranking - Total Dollars

Develop Tiered NetworksCompare Risk Adjusted Cost

Population: The Universe Benchmark: N/A

PROVIDER POPULATION

Rank ID Name Mbrs Seen

Actual Paid Amt

Expected Paid Amt Diff Perf

Index phdc

3899 6636498 Provider 6636498 183 $127,190 $75,642 $51,547 1.68 0.90 3905 6636492 Provider 6636492 350 $229,000 $166,453 $62,547 1.38 1.03 3876 6631410 Provider 6631410 165 $99,304 $72,703 $26,600 1.37 0.95 3897 6637732 Provider 6637732 354 $214,405 $167,368 $47,037 1.28 1.02 3883 6636491 Provider 6636491 336 $176,154 $141,255 $34,900 1.25 0.91 3813 6637895 Provider 6637895 150 $83,074 $75,027 $8,047 1.11 1.08 3823 6636495 Provider 6636495 232 $120,429 $111,345 $9,084 1.08 1.04 3776 6636242 Provider 6636242 157 $79,036 $74,498 $4,538 1.06 1.03 3387 6637765 Provider 6637765 265 $96,586 $96,279 $307 1.00 0.79

315 6634381 Provider 6634381 219 $111,192 $119,540 -$8,348 0.93 1.18 99 6633835 Provider 6633835 525 $170,727 $211,799 -$41,072 0.81 0.87

147 6633712 Provider 6633712 280 $101,897 $127,628 -$25,731 0.80 0.99

RedirectRedirectPatientsPatients

Include Include Provider in Provider in

Select Select NetworkNetwork

Tiered Network Example

0%

20%

40%

60%

80%

100%

TiersTiers

Par

tici

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arti

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Phy

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100%100%

PremiumPremium

75%75%

UltraUltra

50%50%

65 Year Old Male 90 Year Old Male65 Year Old Male 90 Year Old Male

Source: Pendulum, CopyrightSource: Pendulum, Copyright © © 2002 Learning and Knowledge Resources. 2002 Learning and Knowledge Resources.

Risk Adjustment In ActionTwo male patients with the same principal diagnosis (congestive heart failure) are admitted to different emergency rooms. Though medical intervention does its best for both patients, the reality is that advanced age and serious secondary diagnoses put the 90 year old at a much higher risk of death. It would be unfair to compare mortality outcomes of the two without risk adjustment. Therefore, risk adjustment provides a better comparison.

Congestive Heart Failure Congestive Heart Failure with Diabetes Mellitus with Diabetes Mellitus

with Hypertensionwith Hypertension

Congestive Heart Failure Congestive Heart Failure with COPD with Mitral Valve with COPD with Mitral Valve

Insuffic with Aortic Valve StenosisInsuffic with Aortic Valve Stenosis

This patient’sThis patient’sexpected mortality is 8.0 timesexpected mortality is 8.0 times

the expected mortality forthe expected mortality forthe 65 year oldthe 65 year old

Visualizing An Annual >>2.5% Gain In Cost Efficiency

2.5%/year2.5%/year2.5%/year2.5%/year

2.5%/year2.5%/year2.5%/year2.5%/year

5050thth %ile %ile5050thth %ile %ile

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Lower Longit. Efficiency/ Lower Longit. Efficiency/ Higher Total CostHigher Total CostLower Longit. Efficiency/ Lower Longit. Efficiency/ Higher Total CostHigher Total Cost

Higher Longit. Efficiency/ Higher Longit. Efficiency/ Lower Total CostLower Total Cost

Higher Longit. Efficiency/ Higher Longit. Efficiency/ Lower Total CostLower Total Cost

Low Longit. Efficiency Low Longit. Efficiency Low Quality Low Quality (Worst)(Worst)

Low Longit. Efficiency Low Longit. Efficiency Low Quality Low Quality (Worst)(Worst)

High Longit. Efficiency High Longit. Efficiency High Quality High Quality (Best)(Best)

High Longit. Efficiency High Longit. Efficiency High Quality High Quality (Best)(Best)

High Longit. Efficiency High Longit. Efficiency Low QualityLow QualityHigh Longit. Efficiency High Longit. Efficiency Low QualityLow Quality

Total Cost of Care Index for Seattle MDsTotal Cost of Care Index for Seattle MDs(total cost per case mix-adjusted treatment episode)(total cost per case mix-adjusted treatment episode)

Total Cost of Care Index for Seattle MDsTotal Cost of Care Index for Seattle MDs(total cost per case mix-adjusted treatment episode)(total cost per case mix-adjusted treatment episode)

Low Longit. Efficiency Low Longit. Efficiency High QualityHigh QualityLow Longit. Efficiency Low Longit. Efficiency High QualityHigh Quality

New Insights for Physicians and Hospitals

Once employers and managed care understand that they can differentiate providers on quality, product, technology and price the market, as we once knew it, shifts and providers will need to

look at risk differently

The system does not behave the way employers or patients want it to behave

• The system actually rewards providers who let patients get sicker. The more complex the patient the more the providers can charge.

• When hospitals become more efficient and more effective they lower costs, save lives but also lower revenue projections.

• Right now the more efficient and effective the hospital is, the more money the insurance company makes.

• The only way to harvest these savings from improvements is to share risk in carefully constructed performance driven agreements.

CAP Protocol Compliance

Source: Intermountain Healthcare, Dr. Brent James, 2006.Source: Intermountain Healthcare, Dr. Brent James, 2006.

Prop

orti

on C

ompl

iant

Prop

orti

on C

ompl

iant

Prop

orti

on C

ompl

iant

Prop

orti

on C

ompl

iant

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

-23 -21 -19 -17 -15 -13 -11 -9 -7 -5 -3 -1 1 3 5 7 9 11 13 15 170

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8BaselineBaseline ImplementationImplementationBaselineBaseline ImplementationImplementation

Month Relative to CPM ImplementationMonth Relative to CPM ImplementationMonth Relative to CPM ImplementationMonth Relative to CPM Implementation

Implementation Group – Loose Abx ComplianceImplementation Group – Loose Abx Compliance

CAP: Cost Vs. Reimbursement

Source: Intermountain Healthcare, Dr. Brent James, 2006.Source: Intermountain Healthcare, Dr. Brent James, 2006.

Act

ual v

s. E

xpec

ted

Rei

mbu

rsem

ent (

$)A

ctua

l vs.

Exp

ecte

d R

eim

burs

emen

t ($)

Act

ual v

s. E

xpec

ted

Rei

mbu

rsem

ent (

$)A

ctua

l vs.

Exp

ecte

d R

eim

burs

emen

t ($)

0

5000

10000

15000

-37 -35 -33 -31 -29 -27 -25 -23 -21 -19 -17 -15 -13 -11 -9 -7 -5 -3 -1 1 3 5 7 9 11 13 15 17 19 21 230

5000

10000

15000

Expected CostExpected Cost projected from risk-adjusted history, controls projected from risk-adjusted history, controls

Actual CostActual Cost as complication rate fell as complication rate fell

Actual ReimbursementActual Reimbursement

Expected CostExpected Cost projected from risk-adjusted history, controls projected from risk-adjusted history, controls

Actual CostActual Cost as complication rate fell as complication rate fell

Actual ReimbursementActual Reimbursement

Month Relative to Protocol IntroductionMonth Relative to Protocol IntroductionMonth Relative to Protocol IntroductionMonth Relative to Protocol Introduction

Impact On Net Income

Source: Intermountain Healthcare, Dr. Brent James, 2006.Source: Intermountain Healthcare, Dr. Brent James, 2006.

Improvement to Cost Structure

Discounted FFS

Per Case

Per Diem Shared

Risk

Decrease Cost per Unit

Decrease # Units per Case Decrease other units per case Decrease LOS (# nursing hours)

Decrease # of Cases(45%)

(40%)

(0%)

(15%)

Impact On Net Income

Source: Intermountain Healthcare, Dr. Brent James, 2006.Source: Intermountain Healthcare, Dr. Brent James, 2006.

Payment MechanismImprovement to

Cost StructureDiscounted

FFSPer

CasePer

DiemShared Risk

Decrease Cost per Unit

Decrease # Units per Case

Decrease other units per case

Decrease LOS (# nursing hours)

Decrease # of Cases (45%) (40%) (0%) (15%)

Failure to understand this fundamental construct

• The leading source of frustration for CFOs and Administrators has been they make no money on Provider Sponsored plans because they thought risk was all about insurance. They did not understand that to manage risk well requires the delivery system to change.

• The failure of most hospitals to integrate with medical staff and benefit from the efficiencies of this process was a misunderstanding that true integration required a change in delivery system process and outcome not just written contracts and information systems that makes it look like we are integrated.

0

10000

20000

30000

40000

IdentifyingProfitable Service Lines

Source: Health Leaders, March 2003.Source: Health Leaders, March 2003.

Cardio/VascularThoracic Surgery Orthopedics General Surgery

Complications Tot

Pats Tot Pay Avg

Tot Cost Avg

Tot Profit Avg

Tot Pats

Tot Pay Avg

Tot Cost Avg

Tot Profit Avg

Tot Pats

Tot Pay Avg

Tot Cost Avg

Tot Profit Avg

None

838 13732 30505 3227 925 5688 6702 -1014 842 8473 9410 -937

Single CoC 350 16672 16585 87 152 7100 9728 -2628 346 13608 36293 -2685 Multiple CoCs 180 17649 27080 -9431 80 8296 12530 -4234 335 23910 36270 -12360 Grand Total 1368 14999 14241 758 1157 6054 7503 -1449 1523 13035 16882 -3847

Tot Pay AvgTot Pay Avg Tot Cost AvgTot Cost Avg Tot Pay AvgTot Pay Avg Tot Cost AvgTot Cost Avg Tot Pay AvgTot Pay Avg Tot Cost AvgTot Cost AvgTot Pay AvgTot Pay Avg Tot Cost AvgTot Cost Avg Tot Pay AvgTot Pay Avg Tot Cost AvgTot Cost Avg Tot Pay AvgTot Pay Avg Tot Cost AvgTot Cost Avg

NoneNoneSingle CoCSingle CoCMultiple CoCsMultiple CoCs

NoneNoneSingle CoCSingle CoCMultiple CoCsMultiple CoCs

Cardio/Vascular/Thoracic SurgeryCardio/Vascular/Thoracic Surgery OrthopedicsOrthopedics General SurgeryGeneral SurgeryCardio/Vascular/Thoracic SurgeryCardio/Vascular/Thoracic Surgery OrthopedicsOrthopedics General SurgeryGeneral Surgery

Population: Eastern Region

EMPLOYER RETROSPECTIVE PROSPECTIVE

Rank ID Name MbrsSeen

ActualPaid Amt

ExpectedPaid Amt Diff Perf

IndexRisk

ScoreExpectedPaid Amt Diff Perf

IndexRisk

Score

4 00210087843 ProDrive 461 $541,952 $514,627 $27,326 1.05 1.07 $643,283 -$101,331 0.84 1.346 00210061234 Brembo Brakes 467 $439,141 $471,195 -$32,054 0.93 0.97 $565,434 -$126,293 0.78 1.162 00210033453 Borla Exhaust 198 $171,569 $143,319 $28,250 1.20 0.70 $190,614 -$19,045 0.90 0.921 00210098789 ZP Transmissions 187 $167,157 $174,216 -$7,059 0.96 0.89 $257,840 -$90,683 0.65 1.327 00210038739 Allison Transmissions 101 $153,511 $174,891 -$21,380 0.88 1.67 $162,648 -$9,137 0.94 1.553 00210044774 Neuspeed 33 $34,791 $29,288 $5,503 1.19 0.85 $34,852 -$61 1.00 1.015 00210082882 K&N Industries 9 $9,867 $10,453 -$585 0.94 1.13 $13,798 -$3,930 0.72 1.49

Average per Employer: 208 $216,855 $216,855 $0 1.02 1.04 $266,924 -$50,069 0.83 1.26Total for Report: 1,455 $1,517,988 $1,517,988 $0 $1,868,470 -$350,482

Average per Member: $1,043 $1,043 $0 $1,284 -$241

Predicting Future Cost

PHDC Population Profiling SystemPHDC Population Profiling SystemEmployer Ranking Risk - Adjusted Total DollarsEmployer Ranking Risk - Adjusted Total Dollars

Retrospective and Prospective ERGRetrospective and Prospective ERG™™ss

So Far…We have:• addressed the basic structures of P4P and PBC.• discussed the forces in the marketplace that are expanding

the performance measurement opportunities for providers and health plans to better collaborate

• presented several insights into where technology is acting as the great equalizer to propel small plans into a leadership role by offering a healthcare 2.0 vision of the member.

• introduced you to hard evidence that risk can be profitable if you are able to measure your panel on a disease specific basis and help your providers to focus on product line management.

And now let’s put this all together into a VBP strategy.

Objectives– Gain insight into the current nature of P4P models.– Identify examples of successful P4P business

models that integrate both hospital and physician issues.

– Outline corporate strategy issues that impact private payer contracting issues.

Trouble to avoid

• This is not a program or an isolated academic project. Do not turn this over to the revenue cycle management people alone as their goals are maximum billing not quality improvement.

• This strategy has winners and losers. Losers are the ones who cannot produce reasonable evidence as to their quality and will lose market share and trust in the marketplace.

• Employers and third parties, including Medicare, are very concerned that as consumer driven exposes patients to large out of pocket risks that the care is done right the first time. Otherwise it comes out of the payer’s side of the bank, not the consumers.

• Hospitals and physicians will spend more money trying to reestablish themselves as a quality facility than they will taking a leadership role RIGHT NOW in positioning themselves for the future as the ally to the employer and consumer.

What these collaboratives may look like

• Developing an exchange process of data elements for market-share as long as it meets specifications.

• Creating a sales relationship as a “source” for all things medical.

• Developing Direct contracts between employer and provider.

• Developing benchmarking consortiums between multiple employers and multiple providers.

• Building your own shared risk model.

Corporate Health Department• Most health systems and physicians do not know how many patients

come from which employer in their service area. Insurers and TPAs control payment to providers.

• Most health systems have someone selling Occupational Medicine, Wellness programs, Fitness programs, some on site screening programs etc.. Most departments cannot link volume of visits or admissions to this activity so budgets are sparse.

• Combining these programs with a central core strategy of PBC, offers a new dimension to partner directly with employers as they move their employees to the role of a consumer.

• Employers, when asked which doctor does the best job for a particular illness, do not know the answer and will buy outside data services to get the answer. You know the answer and should charge for it.

Direct Contracting

• Health plan takes the lead to approach select employers with de-identified patient data to suggest problem areas where hospital and physicians can help lower cost and improve quality.

• The employer has never seen all of their work comp, disability management, disease management, claims cost, network access fees, ancillary costs, and productivity costs in one database.

• Your strategy is looking for ways to improve productivity and holding yourself accountable to the employer and the consumer to reform the delivery system and share in the savings.

• The more employers save money the more employers they will sell on the idea that your organization is a good partner

Direct Contracting Model

• Provider/Payer Model

HospitalHospital

MfgrMfgr

SchoolDistrictSchoolDistrict

CityCounty

CityCounty

Uniontrust

Uniontrust

Health PlanHealth Plan

PhysiciansPhysicians

Integrated System

Integrated System

Benchmarking Consortium

• Collaborative between large employers, hospitals, physicians.

• Mission is to collect and share data for the purpose of improving quality and cost through understanding capabilities and limitations.

• Everyone pays into the confederation to support it.• End user is the consumer, and success is a combination of

satisfaction, affordability and quality outcomes.• This can be a new revenue stream to pay for ongoing data

initiatives.• Any new health plan visits with the employer will need to

use your “high performance panel” as long as you can continue to improve quality ( something the insurer cannot).

FUTURE

Benchmarking Consortium

Confederation model

Data SourceData SourceTPAs/

vendorsTPAs/

vendors

HospitalHospital

Physician Network

Physician Network

EmployersEmployers Union trust

Union trust

Population Profiling SystemPMPM Average Dollars

Specialty: Family PracticeSpecialty: Family PracticeProvider

Rank PCP ID PCP Name Average # of Members

Total Member Months

Actual PMPM

Expected PMPM Difference Percent

Difference Performance

Index Statistical

Significance

Relative CCI

(RCCI)

27 XXXX ********** 398 4,752 $93.34 $68.64 $24.70 36% 1.36 ** 1.04 28 XXXX ********** 48 577 71.67 47.43 24.24 51% 1.51 0.72 29 XXXX ********** 213 2,556 91.25 67.40 23.85 35% 1.35 ** 1.02 30 XXXX ********** 236 2,833 97.60 74.79 22.81 30% 1.30 ** 113 31 XXXX ********** 476 5,715 96.90 75.93 20.97 28% 1.28 ** 1.15 32 XXXX ********** 619 7,433 112.04 91.91 20.13 22% 1.22 ** 1.39 33 XXXX ********** 524 6,285 86.53 66.68 19.85 30% 1.30 ** 1.01 34 XXXX ********** 260 3,116 81.87 62.42 19.45 31% 1.31 * 0.94 35 XXXX ********** 266 3,190 95.66 78.06 17.60 23% 1.23 1.18 36 XXXX ********** 773 9,281 74.33 56.83 17.50 31% 1.31 ** 0.86 37 XXXX ********** 356 4,271 73.46 57.30 1618 28% 1.28 ** 0.87 38 0002 Brian Henry, MD 274 3,291 77.98 61.93 16.05 26% 1.26 ** 0.63 39 XXXX ********** 235 2,823 69.80 54.07 15.73 29% 1.29 ** 0.82 40 XXXX ********** 101 1,208 58.82 44.00 14.82 34% 1.34 * 0.66 41 XXXX ********** 63 761 60.45 46.01 14.44 31% 1.31 0.69 42 XXXX ********** 326 3,939 87.79 73.50 14.29 19% 1.19 * 1.11 43 XXXX ********** 370 4,439 91.97 77.77 14.20 18% 1.18 * 1.17 44 XXXX ********** 658 7,897 69.48 55.42 14.06 25% 1.25 ** 0.84 45 XXXX ********** 185 2,214 $95.13 $83.02 $12.11 15% 1.15 1.25

0

5

10

15

20

VisitsVisitsVisitsVisits ServicesServicesServicesServices

Population Profiling SystemProvider Case Load By Complexity Level

Specialty: EndocrinologySpecialty: EndocrinologyPROVIDER NAME: 2285 Robert Gregory

Mild Minor Moderate Severe

Provider Peer

Group Provider

Peer Group

Provider Peer

Group Provider

Peer Group

3 31 42 860 30 1,638 3 1.3 1.1 4.4 2.1 5.9 2.7 3.3 3.0 1.7 11.4 5.1 16.0 7.3 6.0

Population: Automotive Manufacturing >100 EmployeesBenchmark: Borla Exhaust Products

PROVIDER POPULATION BENCHMARK

1 ****** ********** 163 $1,643 $267,817 $238,334 $29,483 *1.12 0.79 $221,651 $46,166 **1.21 0.792 ****** ********** 202 $1,529 $308,774 $298,345 $10,429 1.03 0.79 $277,461 $31,313 *1.11 0.793 2100654 Raybestos 204 $1,919 $391,417 $384,161 $7,256 1.02 1.01 $357,270 $34,147 *1.10 1.014 ****** ********** 290 $2,100 $608,935 $605,443 $3,492 1.01 1.12 $563,062 $45,873 1.08 1.125 ****** ********** 110 $1,919 $211,087 $207,943 $3,144 1.02 1.02 $193,387 $17,700 1.09 1.026 ****** ********** 137 $2,285 $313,091 $334,456 -$21,365 0.94 1.31 $311,044 $2,047 1.01 1.317 ****** ********** 113 $1,482 $167,484 $199,923 -$32,439 **0.84 0.95 $185,928 -$18,444 *0.90 0.95

Average per Provider: 174 $1,840 $324,086 $324,086 $0 1.00 1.00 $301,400 $22,686 1.07 1.07Total for Report: 1,219 $2,268,605 $2,268,605 $0 $2,109,803 $158,802

Average per Patient: $1,861 $1,861 $0 $1,731 $130

Masked Employer Report

Population Profiling System - Employer RankingPopulation Profiling System - Employer RankingTotal Dollars Paid for Covered IndividualsTotal Dollars Paid for Covered Individuals

What these approaches have in common

• Requires a better understanding of employers’ needs and makes PBC a vital payer strategy with an ROI

• Requires a sincere effort to bring physicians into the future shift in the insurance and delivery system business

• Builds confidence in the community as local leadership is in charge of the process

• Allows the health system or physician network to get prepared for Value Based Purchasing and to leverage that knowledge into a new revenue stream by helping employers meet their employees needs

MedPAC 2008

• Recommending that physician and hospital payments be bundled together for all future Medicare payments.

• Recommending Medicare Advantage.• Recommending 2% to 5% of all DRGs be set aside in a

performance pool for hospitals to earn if certain benchmarks are met.

• Promoting the development of a VBP dataset for hospitals.

• http://www.medpac.gov/transcripts/03050306Medpac%20final.pdf

Case Studies Provider Case Studies Provider ProfilingProfiling

Case Studies Provider Case Studies Provider ProfilingProfiling

June 2008June 2008June 2008June 2008

William J. DeMarco, MA, CMCWilliam J. DeMarco, MA, CMCWilliam J. DeMarco, MA, CMCWilliam J. DeMarco, MA, CMC

Case StudyUnion Managed Benefits Plan

• Union offered PPO for 175,000 lives in 20 states. 608,000 visits to 1,800 physicians.

• Diverse population not using preventive care.

• Average cost per patient for acute bronchitis is $89 to $771 and urinary infections are $81 to $778.

• No discernable value in higher cost episodes.

Union Managed Benefits Plan Methods

• Goals: reduce cost variation of necessary services and increase use of preventive care.

• Analyze 10 years of data using a modified ETG grouper.

• Restructured network using ‘market basket’ approach by specialty.

• Using combinations of HEDIS and AQA indicators and a threshold of those providers with 35 plus episodes, 50 unique patients and $10,000 in claims over 2 years providers were scored.

Union Managed Benefits Plan Results

• The plan used a 10% over and above salaries pool to fund initial performance payments.– Average of $1300.00

• Profiles discussed with advisors, then with providers receiving bonuses. 50 providers were culled from the network leaving 155 providers (66 groups).

• Gold Star program was initiated with the top 50% of each specialty receiving a gold star rating.

Union Managed Benefits Plan

• Gold Star providers saw a 30% increase in their visits.

• Overall visits increased 14%.

• Adherence to quality measures improved 14%.

• Plan reduced its premium cost. It had budgeted 13% increases, but instead saw a $69 million savings over 2 years.

Children’s Health Plan• HMO for Children

sponsored by Metro Area Children’s Hospital

• 12,000 children accessing:– 780 pediatricians

– 1,300 pediatric specialists

– 60 in network hospitals

• 21,000 admissions:– 190,900 clinic visits

– 79,319 ED

– 19,785 surgeries

Children’s Health PlanMethods

• Goals were to integrate financial and clinical reporting capabilities to make good decisions as to how best to manage the plans medical loss ratio

• Extracted data had many holes:– Misaligned fields for lines of business– Claim adjustment errors

• Reconfigured reports to be useable by departments and management

Children’s Health PlanResults

• Aligned financial and clinic reports into 30 summaries

• Reporting by line of business, specific drugs, service codes, and disease condition by provider

• Adopted cost per patient per 1,000 and PMPM by service

• Plan is now implementing HEDIS measures and other custom quality measures for operational improvement and compliance

Case Study:Detecting Visit Upcoding

• Providers offset lower reimbursement by increasing complexity of office visit level

• Focusing on a single procedure Otitis Media for 62,000 Medicaid patients and 400,000 Commercial patients, we found over-reliance on level 4 and 5 office visits

Office Visit Level

% Medicaid Claims

% Commercial

Claims

1 0.3% 2.3%

2 6.5% 35.0%

3 59.9% 58.8%

4 30.0% 3.6%

5 3.3% 0.3%

Detecting Visit Upcoding

• Variances between Commercial and Medicaid is not clinically justified

• The financial impact of reducing office payments by 21% is substantial

• Drill down reports allowed us to look at the practice mix compared to specialty averages for each condition

• We were able to identify the providers who billed 90% or greater of their visits at level 5 and show them where they stand next to their peers

• Plan can use this data to curb abuses or fraud and help physicians to improve quality and safety while reducing overall costs

4 ways to create revenue

• Reorganize networks into tiers with high performance doctors and hospitals sharing in the savings and designing benefits to channel patients to top providers. Change patient behavior.

• Incentivize the use of prevention to promote early detection of large claims reducing risk and reinsurance costs. Change the behavior of patients and physicians.

• Identify those physicians with documentation, up-coding and down-coding problems. Correct this situation and you change the behavior of physicians and their expectations of you as a health plan.

• Sell the data to employers AND CONSUMERS, reinforce behavior change.

Summary

• Large employers and regional health plans are in a hurry to manage benchmarks not just benefits.

• Building benchmarks creates new interest in the minds of buyers to tier providers and design benefits to incent use of top providers.

• The governments pay for performance demo projects and initial success with risk adjusters is a driving force that is not going away.

• These changes create new opportunities for providers to collaborate and harvest savings through performance arrangements.

• Technology is changing in favor of supporting these more sophisticated models of care improvement and reimbursement improvement.

Implementing these strategies

• What are you going to publish?

• What are your employers ready for?

• What limits do you have in terms of collecting data?

• Is your organizational structure set in place to do this?

• Do you have managers accountable to form, refine and carry out this strategy?

• Do we buy or build a data retrieval system?

• Participating providers and timely data, how will this fit?

Getting started with providers

Performance based contracting preparedness• Inventory of current process improvement tasks• Physician issues of quality measures, ETGs, ERGs, AVGs • Information gaps in being able to collect and analyze (RCA)

Performance Based Contracting ( PBC) feasibility• Employers interest • Health plan requirements• Internal assessment of management AND STAFF• Understanding the difference between management and

leadership.

Provider implementation

• Sending a report card, think again• Provider involvement on EVIDENCE BASED guidelines• Provider involvement on pay “80% of goal equals?”• Early ramp up to gather and inform providers of intent and

willingness to work in a collaborative manner• Data should be clear (do not paper them, doctors REALLY

hate this)• Hotlines for doctors and consumers for individual questions • Third party objective and trusted source for this data

Employer selling• Tiered network MUST be tied to benefit gains.• Results of the tiered versus un-tiered network must be

reported.• Employee meetings to sell the smaller network at better

VALUE.• Large self funded groups are not the only market segment.• Retirees could be a market segment if you have an MA

license.• Reaffirm on website the VALUE – Pricing is not as important

as VALUE.• These are value added but can create a revenue stream for

panel rental and reports, wellness etc..

Conclusion• Employers, Hospitals and Physicians have a new opportunity to not

only take unnecessary costs out of the system but also improve the quality of necessary services while being paid a success fee to improve.

• This is not a social engineering project but rather a business proposition that starts with making the case for quality from all stakeholder perspectives.

• Do not let the complexity of informatics be the failure of your plan. Sometimes starting out with standard reports of what you ARE doing will lead to employers saying what they are looking for.

• We have just shown you a way to be paid well for being the leader of care reform as a health plan provider in your community.

For more information

contact DeMarcoHealthcare.com

For more information PendulumHealth.com