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Engaging Physicians to Share Bundled Payments September 13, 2010 Society for Healthcare Strategy & Market Development
Engaging Physicians to Share Bundled Payments
September 13, 2010
Society for Healthcare Strategy & Market Development
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Agenda
I. The Big Picture
II. Value-Based Payment Methodologies
III. CMS Acute Care Episode Demonstration
IV. Other Bundled Payment Initiatives
V. Preparing for Payment Reform
VI. Timing
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I. The Big Picture The Problem With Fee-for-Service Payments
Fee-for-Service (FFS) Characteristic Incentive for Healthcare Providers
The more services you provide, the more you are paid.
Encourages high volume over high value and causes over-utilization.
The more intense the services are, the more you are paid.
Encourages use of high-cost services.
Readmissions and sicker patients result in additional payments.
Penalizes effective care and preventive care.
Compensation is provided for narrow units of services by a single provider.
Promotes silos and transactions rather than relationships with patients.
Global fees are paid to individual providers (e.g., IPPS for hospitals, global surgical fee for surgeons).
Improves a provider’s efficiency but not the aggregate volume of services provided.
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Current FFSPayment System
Patient-Centered Global Payment System
The ProblemCare is fragmented instead of coordinated. Each provider is paid for doing work in isolation, and no one is responsible for coordinating care. Quality can suffer, costs rise, and there is little accountability for either.
The SolutionGlobal payments are made to a group of providers for all care. Providers are not rewarded for delivering more care, but for delivering the right care to meet patients’ needs.
Hospital
$
Primary Care
Hospital
Specialist
Home HealthSpecialist
$
Primary Care
$
Home Health
$ $
I. The Big Picture MA Special Commission on Payment Reform
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I. The Big Picture Goals of Healthcare Reform
Improve health insurance access through government regulation.
Expand federal insurance programs.
Reduce inappropriate utilization.
Invest in electronic health information technology systems.
Increase competition in insurance and drug industries.
Develop and disseminate best practices.
Promote quality-based reimbursement.
Increase transparency.
Access Cost Quality
Reform is aimed at redesigning the U.S. healthcare system to improve access and quality while reducing cost inefficiencies. Reform is aimed at redesigning the U.S. healthcare system to improve access and quality while reducing cost inefficiencies.
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Healthcare reform will place more emphasis on improving outcomes and reducing costs, creating a need for more
innovative approaches to align hospitals and physicians.
Healthcare reform will place more emphasis on improving outcomes and reducing costs, creating a need for more
innovative approaches to align hospitals and physicians.
I. The Big Picture Healthcare Reform
Employer Mandate
Reduced DSH Payments
Individual Mandate
Public Plan
Bundled Payments
At-Risk Quality Bonuses
Outcome-Based Penalties
Episode-Based Payments
Stimulus IT Incentives Medical Home
Comparative Effectiveness
Capitation
Disease Management
Impact on Provider Business
Expanding Coverage Promoting Efficiency Reducing Demand
Level of Integration
Time
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Healthcare reform legislation set things moving.
The next steps are less clear …
“Then a miracle occurs.”
I. The Big Picture Step 1 – Healthcare Reform, Step 2 …?
Healthcare reform legislation initiated the process of change, but the path for successfully realizing the broader vision remains largely unclear.
Healthcare reform legislation initiated the process of change, but the path for successfully realizing the broader vision remains largely unclear.
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I. The Big Picture Near-Term Impact of Reform
Primary Care
Specialists
Outpatient Facility
HospitalReferrals
$R
eferralsC
laims
Claims Claims
Referrals
$
$
$
$$
$
Referrals
Claim
s
Reimbursement increases.
Focus on preventing an increase in demand.
Restructuring of PCP care models – managers of care teams.
Join larger groups or organizations/networks to spread IT costs.
Acute Care Hospitals
Focus on operations.
Some expansion.
Increase in competition for high margin and payor mix.
Increase in transparency regarding quality and cost.
Competition to provide best value.
Investment in IT.
Increase in the number of mergers and acquisitions.
Physician integration is vital.
Slight increase in demand.
Join larger groups or organizations/ networks.
Increase coordination and communication with primary care.
Decreased or flat professional fees.
Potential loss of ancillary income.
Unaffiliated centers are likely targets of more cuts.
Hospitals are seeking to partner with or bail out physician owners.
Safety Net Hospitals
Significant decrease in revenue.
Compete or be acquired.
Com
mun
icat
ionReferrals
$
NOTE: The separation of the healthcare system found in the graphic above is meant to identify the impact of health reform on its component parts and ultimately supports a more integrated delivery model that includes multispecialty medical practice(s) partnered with strong inpatient and outpatient services.
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I. The Big Picture Long-Term Impact of Reform
P4P PCMH ACOs Bundled Payments
Focus
Quality/outcomes.
Cost savings.
Standardization.
Chronic care.
Coordinated care.
Cost savings.
Quality.
Cost savings.
Performance metrics.
Inpatient episodes of care.
Implantable procedures.
Cost savings.
Payment Incentive payment for meeting or exceeding quality benchmark standards.
FFS.
PMPM or management fee.
Quality incentive.
Cost-savings incentive.
Based on calculated savings compared to established benchmarks.
One payment.
Patient incentive.
Gainsharing.
Outcomes
Ten physician groups awarded $16.7 million in incentive payments in 2008.
Sacred Heart: received $400,000 in June 2008.
Group Health: 29% decrease in ED visits, 11% in hospital admissions, and 6% in office visits.
NC: $200 million in total cost savings over 3 years for diabetic and asthmatic patients.
Identifying demonstration project participants.
Hillcrest: 4.4% savings for heart transplant and joint replacement surgeries.
Acute Care Episode (ACE) demonstration project.
Reimbursement will shift from payments based on FFS (volume) to a more value-based (patient outcome relative to cost) system.
Reimbursement will shift from payments based on FFS (volume) to a more value-based (patient outcome relative to cost) system.
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II. Value-Based Payment Methodologies Four Payment Models
Model Advantages Disadvantages
P4P
Simplicity and clarity.
Focused approach produces results on select measures.
Limited dollars tied to outcomes.
Focused approach limits comprehensive overhaul.
PCMH/Guided Care Models
Focused management of high-risk populations.
Patient satisfaction.
Major infrastructure investments.
Requires cross-practice coordination and cultural transformation.
Complicates physician compensation in the multispecialty group setting.
ACOs
Aligned incentives.
Major upside opportunity.
Complexity.
Infrastructure requirements.
Care management sophistication and focus.
Major downside risk.
Bundled Payments
Comprehensive outcomes-based approach.
Complexity.
Organizational structure requirements between physicians and hospitals limits participation.
Value-based payment methodologies are under careful study at the national and local levels by government and commercial payors.
Value-based payment methodologies are under careful study at the national and local levels by government and commercial payors.
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II. Value-Based Payment Methodologies Pay for Performance
Pay for Performance (P4P) is intended to promote an adherence to evidence-based medicine and eliminate the incentives to perform unnecessary services.
Measures vary from program to program. Most use a combination that includes:
» Clinical quality and effectiveness.
» Utilization and cost management.
» Patient satisfaction.
» Administrative involvement.
» Patient safety.
In a 2009 survey conducted by ECG Management Consultants, Inc., of faculty practice plans, 59% of respondents were participating in a P4P program.
In a 2009 survey conducted by ECG Management Consultants, Inc., of faculty practice plans, 59% of respondents were participating in a P4P program.
Of these survey participants, 89% stated that less than 5% of reimbursement was tied to the program.
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Key Elements of OIG Advisory Opinion No. 08-16
The PLLC must open participation to a broad group of medical staff members.
Participating physicians must be members of the medical staff for at least 1 year.
Participating physicians must equally capitalize the new entity, although costs should be minimal.
The hospital pays the PLLC to meet predetermined quality targets.
Payments are capped at 50% of base-year P4P dollars (with inflation adjuster).
Quality targets and payments are renegotiated annually.
Monitoring must be in place to protect against inappropriate service reduction.
Physicians who change referral patterns to meet targets may be terminated from the program.
The program must maintain records of performance.
Patients must be informed of the program in writing.
The PLLC must set physician participation criteria that does not induce referrals or incentivize more volume at the hospital.
II. Value-Based Payment Methodologies Professional Limited Liability Corporation
The new physician-owned professional limited liability corporation (PLLC) model allows hospitals to pay select physicians for attaining hospital quality targets.
The new physician-owned professional limited liability corporation (PLLC) model allows hospitals to pay select physicians for attaining hospital quality targets.
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Aligns physicians with hospital quality performance targets.
Allows for limited hospital financial support of physicians.
Integrates physician and hospital clinical practice to meet safety/quality goals.
Reduces cost and may include gainsharing arrangements.
Creates a financial “win/win” for physicians and hospitals, but keeps physicians and hospitals focused on their respective core business.
Benefits Concerns
Requires extensive legal review to ensure compliance.
Limits the amount of financial support that the hospital may provide to negotiated P4P dollars.
Directs financial support to individual physicians based on overall performance and individual physician ownership, not on individual physician performance.
Limits changes in physician referral patterns.
Restricts the potential payout.
II. Value-Based Payment Methodologies PLLC Benefits and Concerns
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II. Value-Based Payment Methodologies Patient-Centered Medical Home
PCMH is a model of care in which each patient has an ongoing relationship with a personal physician who leads a
team that takes collective responsibility for patient care.1
PCMH is a model of care in which each patient has an ongoing relationship with a personal physician who leads a
team that takes collective responsibility for patient care.1
Care is episodic and based on illness and patient complaints.
Current Model PCMH
Payment is procedure-based, and volume is rewarded.
Care is coordinated and focused on a long-term healing relationship.
A physician-led care team takes responsibility for all patient care needs, arranging for referrals as appropriate. Communication among providers and the patient (and family) is continuous.
Providers operate in silos with limited communication.
The patient is a passive participant with limited say in treatment.
Patients actively participate in decision making, and patient feedback is sought to ensure that expectations are being met.
Practice patterns vary widely according to physician preference.
Evidence-based medicine and clinical support tools guide consistent decision making.
Payment recognizes the value of care management and communication with the patient outside of face-to-face visits. Measurable and continuous quality improvements are rewarded.
1 Source: The National Committee for Quality Assurance (NCQA).
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The accountable care organization (ACO) aims to reward clinical integration and care coordination among multiple providers.
The accountable care organization (ACO) aims to reward clinical integration and care coordination among multiple providers.
II. Value-Based Payment Methodologies Accountable Care Organizations
ACOs are designed to encourage providers to think of themselves as a group with a defined patient population, care delivery goals, and performance metrics.
ACO DefinitionA local entity and a related set of providers that can be held accountable for the cost and quality of care delivered to a defined [set] . . . of beneficiaries.
Provided by Hospitals/Health Systems
Inpatient, outpatient, and post-acute services.
Physician network (typically employed).
System management expertise.
Provided by Physicians
Clinical expertise.
Professional inpatient and outpatient services.
Other potential assets (e.g., ASCs, managed care lives).
Ability to affect quality and outcomes.
Peer review.
Group management expertise (if partnered with independent practice).
ACO
Physicians
Outpatient Clinics/Centers
BehavioralMedicine
PharmacyHome Health
Rehab
Hospital/SNF
Source: Based on K. Devers and R. Berenson, “Can Accountable Care Organizations Improve the Value of Health Care by Solving the Cost and Quality Quandaries?” Robert Wood Johnson Foundation, Princeton, October 2009.
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Despite a lack of clarity regarding the specific composition of ACOs, current legislation requires them to meet the following minimum criteria:
Despite a lack of clarity regarding the specific composition of ACOs, current legislation requires them to meet the following minimum criteria:
Legislative Criteria1. Agree to become accountable for the overall care of a designated set of Medicare
beneficiaries.
2. Agree to a minimum 3-year participation period.
3. Establish formal management and legal structures that would allow the ACO to provide health services efficiently across the continuum of care.
4. Include PCPs, specialists, and others to be determined by the U.S. Department of Health & Human Services (HHS).
5. Define processes to promote evidence-based medicine, report on quality and cost measures, and coordinate care.
6. Demonstrate that the ACO meets patient-centered criteria as determined by HHS.
II. Value-Based Payment Methodologies ACOs – Legislative Criteria
These standards require a degree of integration that few healthcare delivery systems currently achieve.
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The legal, financial, and organizational relationship among participants in an ACO is ultimately designed to provide a framework
within which it can legally establish the common infrastructure, financial arrangements, and contracts to support clinical integration.
The legal, financial, and organizational relationship among participants in an ACO is ultimately designed to provide a framework
within which it can legally establish the common infrastructure, financial arrangements, and contracts to support clinical integration.
Clinically Integrated Network
Common Practice
Standards and Protocols Incentives That
Support Common Objectives
Measureable Outcomes
That DemonstrateEfficiencies
Common Electronic
Medical Record (EMR) and
Related Systems
Investment in Common
Infrastructure
Legal, Financial, and Organizational Structure That
Supports Clinical Integration
II. Value-Based Payment Methodologies ACOs – Essential Features
Essential Characteristics of Alignment Model
Network of sufficient size and distribution to support effective management of care across all settings and specialties.
Legal framework and capabilities that will allow for the participants to collectively enter into contracts.
Well-defined governance and decision-making structure.
Alignment of financial incentives among participants toward common objectives.
Single signature authority for contracts with commercial and government payors.
Capable of accepting common financial risk for performance and of internally distributing revenues and allocating expenses.
Sufficient size to support comprehensive performance measurement and reporting.
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The term “bundled” can be used broadly to include a wide range of payment models. It is often defined as a payment that encompasses more than discrete patient encounters, including global and packaged payments.
The term “bundled” can be used broadly to include a wide range of payment models. It is often defined as a payment that encompasses more than discrete patient encounters, including global and packaged payments.
Particular Conditions (e.g., diabetes)
Particular Episodes of Treatment (e.g., cardiac surgery, including
90 days of follow-up)
BundledPayment
Hospital
PhysicianOutpatient
SNF
NOTE: All covered services for a specific time period.
II. Value-Based Payment Methodologies Bundled Payments – Overview
Global Payment
PackagedPayment
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II. Value-Based Payment Methodologies Bundled Payments – MedPAC
According to MedPAC, bundling payments would:
Allow Medicare to pay a set fee per hospitalization episode instead of separate hospital (IPPS), physician (RBRVS), SNF (SNFPPS), and outpatient department (OPPS) payments.
Have the potential to improve efficiency and quality, reduce Medicare costs, and better align the interests of hospitals and physicians, particularly in regard to requests for specialty consultations, discharge planning, and the utilization of ICUs and DME.
Require changes in the way hospitals are reimbursed for readmissions and the revision of existing restrictions that inhibit hospitals from financially rewarding physicians.
Have the potential to produce undesirable consequences, such as underutilization of services on the part of hospitals and the avoidance of certain “low margin” patients (those that require extensive hospital resource use) on the part of physicians.
“Bundling” all Medicare payments for an episode of care has the potential to improve incentives for providers to offer the right mix of services at the right time.
“Bundling” all Medicare payments for an episode of care has the potential to improve incentives for providers to offer the right mix of services at the right time.
Source: MedPAC July 2008 Report to Congress. MedPAC is an independent agency established to advise the U.S. Congress on issues affecting the Medicare program.
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According to the Senate Finance Committee’s proposal, the HHS Secretary would be required to select eight conditions for a “bundled” payment pilot program beginning in 2013.
The “bundled” payment would be made to a Medicare provider to cover the costs of acute care inpatient and outpatient hospital services, physician services, post-acute care, and any rehospitalizations that occur during that time period.
Any Medicare provider, including hospitals or physician groups, would be eligible to apply to participate in the pilot.
Any entity assuming responsibility for bundled payment would be required to have an arrangement with an acute care hospital for initiation of bundled services.
If the pilot is successful in reducing costs and increasing quality, the HHS Secretary would be required to submit an implementation plan in FY 2016 to become part of Medicare in FY 2018.
Currently, CMS is preparing to pilot bundled payments for select conditions beginning in 2013. Any Medicare provider will be eligible to apply.
Currently, CMS is preparing to pilot bundled payments for select conditions beginning in 2013. Any Medicare provider will be eligible to apply.
Source: Douglas A. Hastings, “Health Care Delivery System Reform Provisions in the Baucus Bill: A Substantive Set of Provisions,” BNA’s Health Law Reporter, 2009.
II. Value-Based Payment Methodologies Bundled Payments – CMS Pilots
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III. CMS ACE Demonstration Objectives
Medicare’s ACE demonstration is encouraging collaboration and quality using bundled payments.
Medicare’s ACE demonstration is encouraging collaboration and quality using bundled payments.
Improve care coordination to improve quality of care.
Align incentives between hospital and physicians through bundled payment and cost-saving incentives.
Designate selected facilities as Value-Based Care Centers.
Provide financial incentives for Medicare beneficiaries.
Do financial incentives impact quality of care and consequently provider of choice and provider referrals?
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AlabamaAlabamaAlabamaAlabamaAlabama
ArizonaArizonaArizonaArizonaArizonaArkansasArkansasArkansasArkansasArkansasCaliforniaCaliforniaCaliforniaCaliforniaCalifornia
ColoradoColoradoColoradoColoradoColorado
FloridaFloridaFloridaFloridaFlorida
IdahoIdahoIdahoIdahoIdaho
IllinoisIllinoisIllinoisIllinoisIllinois IndianaIndianaIndianaIndianaIndiana
IowaIowaIowaIowaIowa
KansasKansasKansasKansasKansas
KentuckyKentuckyKentuckyKentuckyKentucky
LouisianaLouisianaLouisianaLouisianaLouisiana
MichigaMichigaMichigaMichigaMichiga
MinnesotaMinnesotaMinnesotaMinnesotaMinnesota
MissouriMissouriMissouriMissouriMissouri
MontanaMontanaMontanaMontanaMontana
NebraskaNebraskaNebraskaNebraskaNebraska
Nev adaNev adaNev adaNev adaNev ada
New MexicoNew MexicoNew MexicoNew MexicoNew Mexico
OklahomaOklahomaOklahomaOklahomaOklahoma
regonregonregonregonregonSouth DakotaSouth DakotaSouth DakotaSouth DakotaSouth Dakota
TennesseeTennesseeTennesseeTennesseeTennessee
TexasTexasTexasTexasTexas
UtahUtahUtahUtahUtah
WisconsinWisconsinWisconsinWisconsinWisconsin
WyomingWyomingWyomingWyomingWyoming
AlabamaAlabamaAlabamaAlabamaAlabama
ArizonaArizonaArizonaArizonaArizonaArkansasArkansasArkansasArkansasArkansasCaliforniaCaliforniaCaliforniaCaliforniaCalifornia
ColoradoColoradoColoradoColoradoColorado
FloridaFloridaFloridaFloridaFlorida
IdahoIdahoIdahoIdahoIdaho
IllinoisIllinoisIllinoisIllinoisIllinois IndianaIndianaIndianaIndianaIndiana
IowaIowaIowaIowaIowa
KansasKansasKansasKansasKansas
KentuckyKentuckyKentuckyKentuckyKentucky
LouisianaLouisianaLouisianaLouisianaLouisiana
MichigaMichigaMichigaMichigaMichiga
MinnesotaMinnesotaMinnesotaMinnesotaMinnesota
MissouriMissouriMissouriMissouriMissouri
MontanaMontanaMontanaMontanaMontana
NebraskaNebraskaNebraskaNebraskaNebraska
Nev adaNev adaNev adaNev adaNev ada
New MexicoNew MexicoNew MexicoNew MexicoNew Mexico
OklahomaOklahomaOklahomaOklahomaOklahoma
regonregonregonregonregonSouth DakotaSouth DakotaSouth DakotaSouth DakotaSouth Dakota
TennesseeTennesseeTennesseeTennesseeTennessee
TexasTexasTexasTexasTexas
UtahUtahUtahUtahUtah
WisconsinWisconsinWisconsinWisconsinWisconsin
WyomingWyomingWyomingWyomingWyoming
Exempla Saint Joseph Hospital, Denver
Lovelace Health System, Albuquerque
Oklahoma Heart Hospital, Oklahoma City
Hillcrest Medical Center, Tulsa
Baptist Health System, San Antonio
III. CMS ACE Demonstration Participating Hospitals
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Exempla Saint Joseph Hospital – Denver, Colorado
Only not-for-profit and only teaching hospital in demonstration.
At present, does not employ cardiac specialists.
High percentage of Medicare managed care/Kaiser patients in population.Baptist Health System – San Antonio, Texas
Five hospitals operating under common provider number.
Member of for-profit Vanguard Health Systems of Nashville, Tennessee.
At present, does not employ cardiac or orthopedic specialists.
Medicare market share leader in very close market – includes a MedCath Heart Hospital.
Hillcrest Medical Center – Tulsa, Oklahoma
Single-location medical center.
Employs both cardiac surgeons and cardiologists.
Member of for-profit Ardent Health Services of Nashville, Tennessee.
Third place in market share for both cardiac and orthopedic services.
III. CMS ACE Demonstration Participant Profiles
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Lovelace Health System – Albuquerque, New Mexico
Three-hospital system operating under different provider numbers.
Does not employ orthopedic surgeons.
High degree of Medicare managed care patients in population.
Trails Presbyterian Hospital in orthopedic market share.
Oklahoma Heart Hospital – Oklahoma City, Oklahoma
Joint venture for-profit, stand-alone heart hospital.
51% owned by not-for-profit Mercy Hospital; 49% owned by Oklahoma Cardiovascular Associates (multispecialty cardiovascular group).
Market share leader in Oklahoma City.
III. CMS ACE Demonstration Participant Profiles (continued)
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Demonstration included 28 cardiovascular and 9 Orthopedic DRGs.
Demonstration length: 3 years.
Inclusion criteria: Medicare FFS beneficiaries.
Cardiac DRGs
216 to 221 – Valves.
226 to 227 – Defibrillators.
231 to 236 – CABGs.
242 to 244 – Pacemakers.
246 to 251 – Stents.
258 to 262 – Pacer Revisions.
III. CMS ACE Demonstration Scope and Duration
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III. CMS ACE Demonstration Lessons Learned From Hillcrest
Outreach and marketing.
Incentives.
Case management.
Materials management.
Hillcrest has identified four areas of lessons that other hospitals can apply to future bundled payment demonstrations and pilots.
Hillcrest has identified four areas of lessons that other hospitals can apply to future bundled payment demonstrations and pilots.
Source: Hund C. and Joshi M., Early Learnings from the Bundled Payment Acute Care Episode Demonstration Project, Health Research & Educational Trust, Chicago, July 2010.
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IV. Other Bundled Payment Initiatives Geisinger and PrometheusGeisinger ProvenCare
“Warranty” covers any follow-up care needed for avoidable complications within 90 days at no additional charge.
The model was initially for coronary artery bypass graft surgery. It is expanding to hip replacement, cataract surgery, angioplasty, and so forth.
The provider defines the care process standards to be followed.
Prometheus Payment
Covers the full episode of care and all providers.
Deals with both integrated and nonintegrated providers by offering a default scheme for allocating payment.
Estimates the appropriate payment amount based on historical costs and any guidelines for evidence-based medicine.
Pilot sites in Rockford, Illinois; Minneapolis, Minnesota; and Philadelphia, Pennsylvania.
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Minnesota Health Reform – Baskets of Care
The purpose is to uniformly define a scope and set of care components for a given condition, procedure, or episode of care.
Initial areas of focus:» Asthma (children) – Management of asthma as a chronic disease. » Diabetes – Without comorbidities, does include hypertension and
hyperlipidemia. » Lower Back Pain – Management of acute episode of lower back pain. » Obstetric Care – Prenatal, uncomplicated vaginal delivery, cesarean
section delivery.» Preventive Care – Adults and children.» Total knee replacement.
Baskets of care relies on state-run programs and interested insurance or medical provider organizations.
IV. Other Bundled Payment Initiatives Minnesota’s Baskets of Care
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IV. Other Bundled Payment Initiatives California’s Bundled Episode-of-Care Pilot
Health Plans Hospitals
Aetna, Inc.
Blue Shield of California
Health Net
Cedars-Sinai Medical Center
Hoag Memorial Hospital Presbyterian
Providence Health & Services
Tenet California
UCLA Medical Center
Integrated Healthcare Association
Objectives.
» Encourage financial alignment to support process reengineering and improve quality and efficiency.
» Allow for shared savings from efficiency improvements.
» Develop and test solutions to implementation issues.
Coalition of the Willing
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California’s Bundled Episode-of-Care Pilot
HospitalPPO
IPA
Physician Organization / FoundationClinically Integrated
Contract describes episode parameters (condition & time frame) and delegates payment responsibility to hospital or physician organization
Other MDs and AHPs;HHAs; lab, etc.
•Hospital or Physician Organization acts as administrator for payment•If hospital working with multiple groups, need either financial or clinical integration or implement messenger model•Identify entity to negotiate payment disputes with payor
Contracts for non-MDs could be directly with hospital instead
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California’s Bundled Episode-of-Care Pilot (con’t)
Hospital
Physician Organization / FoundationClinically Integrated
Allocation of Bundled Payment
•Allocation of hospital/physician percentage of total payment based on hospital LOS
•Fixed fee + Incentive Bonus (shared savings/P4P)
•[John- have you seen other mechanisms?]
PPO
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V. Preparing for Payment Reform Don’t Be Skeptical
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V. Preparing for Payment Reform Goals of Payment Models [John – I think we should delete this one]
Increasing integration and care coordination among providers.
Paying for quality instead of volume.
Lower costs by eliminating the incentives to provide unnecessary care and reducing administrative
costs.
Bundled Payments
P4P
ACOs
PCMH
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V. Preparing for Payment Reform Core Competencies
Source: Adapted from HFMA, Healthcare Payment Reform: Accelerating Success, March 2010.
Unique skills will be required to address the challenges of payment reform.Unique skills will be required to address the challenges of payment reform.
Quality/ValueQuality/Value
IntegrationIntegration
PaymentReform
CoreCompetencies
PaymentReform
CoreCompetencies
PricingPricing
Risk ManagementRisk Management
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V. Preparing for Payment Reform Enhancing Integration Capabilities
MedicalLeadershipMedical
Leadership
MarketAwareness
MarketAwareness
SharedGoals
SharedGoals
Aligned ProviderIncentives
Aligned ProviderIncentives
SharedTechnology/Data
SharedTechnology/Data
Source: Adapted from HFMA, Integration in a Reform Environment: Strategies for Success, June 2010.
EnhancedIntegrationCapabilities
SupportiveStructure
and Culture
SupportiveStructure
and Culture
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Market DataMarket Data
Market Analysis
Deliverable:Deliverable:
Market Assessment
ReportStakeholder Interviews
Stakeholder Interviews
Community Need
Assessment
Community Need
Assessment
Market Analysis
Market Opportunity
Population
Growth Rates
Payor Mix
Community Need
CurrentMarket Share
SecondaryMarket Share
Net MarketOpportunity
Quaternary Care
Lack of Community Need
Outside of Scope/Mission
Discharges by Service Line
Visits/Encounters by Service Line
Discharges/Visits by Service Line
Contribution Margin ($)
Change in Market Share (%)
–
=
–
V. Preparing for Payment Reform Market Awareness
Understanding the net market opportunity available to an organization will provide a valuable foundation for evaluating potential strategies.
Understanding the net market opportunity available to an organization will provide a valuable foundation for evaluating potential strategies.
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V. Preparing for Payment Reform Shared Goals
Realistic goals that are based on the organization’s capabilities and market position must be backed by specific actions and performance metrics.
Realistic goals that are based on the organization’s capabilities and market position must be backed by specific actions and performance metrics.
Establish common vision among administration and physicians.
Agree to clearly defined action steps and performance metrics.
Goal setting should be a unifying process that aligns all parties toward achievement of improved clinical outcomes.
"The task of the leader is to get his people from where they are to where they have not been."
— Henry Kissinger
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Global Payment Per Enrollee
Global DRG Case Rate, Hospital, and Post-Acute Care
Global DRG Case Rate, Hospital Only
Global Fee for Primary Care
Blended FFS/ Medical Home Fee
FFS
Con
tinuu
m o
f Pay
men
t Bun
dlin
g
Continuum of Organization
Independent Physician Practices
and Hospitals
Hospital Systems
Integrated Delivery Systems
Less Feasible
More Feasible
Primary Care Group
Practices
Source: Adapted from Commission on a High Performance Health System, The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way, February 2009.
V. Preparing for Payment Reform Supportive Structure and Culture
The preferred structure for the integrated organization should be driven by local market conditions. There is no one-size-fits-all strategy.
The preferred structure for the integrated organization should be driven by local market conditions. There is no one-size-fits-all strategy.
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V. Preparing for Payment Reform Comanagement of Service Lines
Management Company, LLCManagement Company, LLC
Hospital Governing BoardHospital Governing Board
Orthopedic Surgeon Investors
Orthopedic Surgeon Investors HospitalHospital
Orthopedic Service LineOrthopedic Service Line
Agreement to Manage Orthopedic Services
Management Fee – 50% Fixed, 50% Based on Performance Incentives
Appropriate Equity Split
Appropriate Physician/Hospital Governance Split
Management Company Reports to Hospital Board
Partnering with physicians beyond traditional medical staff relationships helps a hospital program to achieve targeted clinical outcomes.
Partnering with physicians beyond traditional medical staff relationships helps a hospital program to achieve targeted clinical outcomes.
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V. Preparing for Payment Reform Medical Leadership
CMOCMOCOOCOO
PCPs and Regional Health
PCPs and Regional Health
Heart and Vascular Center
Heart and Vascular Center
Diagnostic ServicesDiagnostic Services
Medical SubspecialtiesMedical Subspecialties
Surgical ServicesSurgical Services
Hospital MedicineHospital Medicine
VP, Surgical ServicesVP, Surgical Services
VP, Medical SpecialtiesVP, Medical Specialties
VP, Diagnostic ServicesVP, Diagnostic Services
VP, Primary Care and Regional Services
VP, Primary Care and Regional Services
VP, Hospital OperationsVP, Hospital Operations
CNOCNO
Medical DirectorMedical Director
Medical DirectorMedical Director
Medical DirectorMedical Director
Medical DirectorMedical Director
Medical DirectorMedical Director
Medical DirectorMedical Director
Other Direct Reports
Other Direct Reports
Other Direct Reports
Other Direct Reports
CEOCEO
Successful healthcare organizations will integrate physician leadership into the hospital management structure at every level.
Successful healthcare organizations will integrate physician leadership into the hospital management structure at every level.
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Planning and Physician/Hospital
Integration
Finance Operations
GeneralOversight
Physician Hiring/Termination
Care Coordination/
Quality
Mature Physician
Leadership
Emerging Physician
Leadership
Dyad models pair physician leaders and administrative leaders to comanage service areas, departments, or service lines.
Dyad models pair physician leaders and administrative leaders to comanage service areas, departments, or service lines.
V. Preparing for Payment Reform Medical Leadership – Dyad Model
40
Medical DirectorMedical DirectorAdministrative VP
Administrative VP
Each physician/executive team maintains bidirectional feedback from employees and manages services within a service area.
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V. Preparing for Payment Reform Medical Leadership – Meeting Integration Needs
Medical Director/ Administrative VP
Dyad
Formal alignment with a designated administrator who is empowered to make decisions.
Time and education to understand the “big picture.”
Better understanding of organizational financial drivers.
A reliable forum for physicians’ views to be heard.
More colleagues “on the inside” in terms of understanding administrative decisions.
A sense of joint decision making with administrative leadership.
More clarity regarding leadership roles.
Physician Needs
More time to build trusting relationships with physician leaders.
More time with physician leaders well versed in healthcare finance, business, and legal concepts.
More advocates who will speak publicly on decisions that hospital leaders and physicians agree with in private.
Better understanding of the issues the physicians face from a business perspective.
A forum where physician issues from one arena can be vetted against those from other arenas for administrative support and financial backing.
Management Needs
Greater hospital/physician collaboration on decisions is crucial as clinics and hospitals integrate operations to enhance patient care delivery.
Greater hospital/physician collaboration on decisions is crucial as clinics and hospitals integrate operations to enhance patient care delivery.
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V. Preparing for Payment Reform Aligned Provider Incentives [What about deleting this too?]
Physician compensation should be based not only on productivity, but also performance metrics that reflect strategic priorities of the organization.
Physician compensation should be based not only on productivity, but also performance metrics that reflect strategic priorities of the organization.
Reasons to Move to Performance-Based Medical Directorships
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V. Preparing for Payment Reform Shared Technology/Data
“Trying to improve something when you don’t have a means of measurement and performance standards is like setting out on a cross- country trip in a car without a fuel gauge. You can make calculated guesses and assumptions based on experience and observations, but without hard data, conclusions are based on insufficient evidence.”
– Mikel J. Harry, Ph.D., Principal Architect of Six Sigma
“Not everything that can be counted counts, and not everything that counts can be counted.”
– Albert Einstein, Super-Smart Scientist
Your EHR must be accompanied by clinical and financial decision support tools to generate information to guide quality and efficiency decisions.
Your EHR must be accompanied by clinical and financial decision support tools to generate information to guide quality and efficiency decisions.
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VI. Timing
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Mr. John N. [email protected]
858-436-3220
Ms. Jill H. [email protected]
213-633-6875
