Beyond Health Reform: Organizing for Risk

Jeff GoldsmithHealth Futures, Inc.

Accountable Care Organizations WebinarMedline Industries Webinar7 November, 2011

The Cost Curve is Already Bent

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2000 2003 2004 2005 2006 2007 2008 2009 2010

Source: CMS, Office of Actuary

% G

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HE

Actu

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Health

Services

Actual SpendingOn Health Services

% Growth NHE

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2.5

2.6

HOSPITAL ADMISSION TRENDS2000-2011

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%1Q

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3Q00

1Q01

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

Source: Banc of America Securities LLC

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Patient visits at lowest level seen in over 7 years

Source: IMS Health, National Disease and Therapeutic Index, Apr 2011

TOTAL PATIENT VISIT IN US

1,511 Apr 2011

1,616 Aug09

1.563 Jun04

1.656 Jun05

1.641 Jun06

1.653 Jun07

1.676 Sep05

1.607 Jun08

1.671 Dec06

1.450

1.500

1.550

1.600

1.650

1.700

1.750

1.800Ju

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ROLLING MAT

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Imaging Volume SlumpSource: Thomson Reuters

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$250

$260

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2006 2007 2008 2009 2010

% C

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Sale

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Dollars Growth

Source: IMS Health, National Sales Perspectives, Dec 2010

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0.5

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1.5

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2006 2007 2008 2009 2010

% C

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TRx Growth

Source: IMS Health, National Prescription Audit, Dec 2010

After strong growth recovery in 2009; 2010 sales growth slows to 2.3% and 1.0% TRX growth

5.1%

1.0%2.3%

2.1%

Cause of Healthcare’sRecession is Affordability!

50 Million Americans lack Health Insurance Perhaps 40 Million More have Insurance but Lack cash to

pay the patient’s share 53 Million Americans are on Medicaid That’s close to Half the US Population! It’s Not Good for the Field if Half the Country cannot

afford to use its Product A Lot of the Problem is NOT cyclical

Health Reform: What Part of 30 Million New Paying Customers Don’t We Understand?

Major Themes: Health Reform

Restructuring private health insurance to make coverage more predictable and accessible to 30 Million More People

Introducing new experimental payment schemes for public programs to encourage better co-ordinated and more effective care

Encouraging providers to manage variation and clinical risk, reduce readmissions and correct care defects by using knowledge of what works

Encouraging the adoption of healthcare IT to make care safer and more evidence based

Health Reform: A Tough Sell

Public Opinion about Health Reform

Will Health Reform Benefit Your Family?

ACA is a Deeply Flawed Bill

It is an astonishing bureaucratic project which will depend on a lot of hostile governors’ and state legislatures’ co-operation and on a dramatic expansion of federal regulation

It delayed crucial deliverables almost four years (past two election cycles!)

It is financed by a capital gains tax increase and an implicit tax on the wage base

It did nothing meaningful to reduce health costs (!) It excessively depends on Medicaid expansion, perpetuating deep

inequities and threatening state finances

Lyndon Johnson Signs Medicare Into Law- 1965

Mitt Romney Signs Commonwealth Care into Law- 2006

2010 Mid Term Election

The Fate of Health Reform Hangs in the Balance!

BEYOND HEALTH REFORM: WHAT SHOULD WE EXPECT?

DEFICIT REDUCTION 30% EXPANSION OF MEDICAID RETHINKING OF MEDICARE UNRAVELING OF PRIVATE MEDICAL PRACTICE

Would You Invest in This Company?

Contrasting Visions of Deficit Reduction

Medicaid Expansion Budget Limits Forced Congress to Rely on Medicaid Expansion for

as much as 50% of total coverage growth- another 15-20 million people on top of 53 million presently enrolled

States initially shielded from the cost of the expansion but then begin taking on their ultimate share (10%) in 2016

By some estimates, there are 12 million more people presentlyeligible for Medicaid under the old matching formula

Health exchanges will become the gateways for connecting people to coverage, including Medicaid, in 2014

ACA prevented states from shrinking eligibility prior to 2014 Expansion starting in 2014 will start from much lower provider

payment base in many states Expansion is politically fraught

Care System and Payment System Redesign

Policy Community Searching for a Successor to Fee-for-Service Payment in Medicare

Problem: There’s No Consensus on What to do

Solution: Try Twenty Things and See what “Works”

Consequence: Massive Uncertainty in Provider Community about What’s Next

“Let a Hundred Flowers Bloom”: The new CMS Innovation Center

Patient Centered Medical Homes Transitioning primary care practices away from

FFS to comprehensive or salary-based payment Using geriatric assessments and comp. care plans

to co-ordinate care of patients w/ multiple chronic illnesses

Promote care co ordination between providers and suppliers that transition health care providers away from FFS toward salary based payment

Supporting care co-ordination of chronically ill individuals at high risk of hospitalization thru IT enabled provider networks using care co-ordinators, chronic disease registries and telehealth

Allow states to test and evaluate all-payer payment reforms

Let a Hundred Flowers Bloom”: The new CMS Innovation Center

Promoting “greater efficiencies and timely access to outpatient services” thru models that do not require a physician or other health professional to refer the service or be involved in establishing a plan of care

Establish comprehensive payments for Healthcare innovation Zones inc. a teaching hospital, physicians and other clinical entities that provide integrated and comprehensive care inc. innovative training methods

Varying payment to physicians for advanced imaging based on MD adherence to appropriateness criteria

Establishing community based health teams to support small-practice medical homes

Other PPACA “Science Projects” aka New Program Initiatives

Money Follows the Person Rebalancing Demonstration

Dual Eligibles Demonstration(s) The Patient Navigator Program Program to Facilitate Shared Decisionmaking Medicare shared savings program (ACOs)- NOT A

DEMONSTRATION National pilot program on payment bundling (from

3 days prior to 30 days post discharge) Independence at home Practice demonstration Hospital readmissions reduction program Community based Care Transitions program Medicaid Global Payment System Demonstration

(around a safety net hospital system or network) Medicaid Demonstration to evaluate integrated care

around a hospitalization CO-OP Style non-profit health plan start ups

ACO: Hospital “Mad Cow” Disease

Source: Advisory Board Company, 2010

Haven’t We Tried This Already?

Five year Physician Group Practice demonstration preselected high performing group practices, many with capitation or health plans sponsorship experience

Only two managed positive results in each of five years, and one got more than half of the total savings

Billings Clinic was shut out, Everett Clinic and Park Nicollet got only one year and Geisinger got only two years of shared savings

Two of the Three Hospital/Physician collaborations were also shut out

The Hospital’s Widening Medicare Risk Envelope

A’la Carte (cost plus, then cost) Per Admission (DRG’s), later APG’s Per Admission PLUS . . . (“Centers of Excellence”,

ACE) Per “Episode” (Geisinger ProvenCare™) Per Illness (Disease/Condition Management) Per Enrolled Life (per year) Per Community (PGP, ACO)

What On Earth is Happening to Medical Practice??

Looking Back on the Baby Boom Physicians

• Practiced Medicine Continuously• Work/Life Balance and Stress Large Issues• Highly Entrepreneurial• Suspicious of Hospitals and Systems• Dramatically improved the quality of medical practice• Struggled With and Never Mastered Information Technology• Leaving Practice as much as a Decade earlier than their Elders did (until the Crash)

Hospitals’ Role in Physician Practice(MGMA, 2009)

Do You Need Employed Physicians to Manage Enhanced Risk?

No, but You Do Need Physician Buy in and a Script!

AND a health insurance partner. . .

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Geisinger’s ProvenCare™ CABG Protocol:Delivering on Evidence-based Care

ACC/AHA Class I Recommendations Pre-op antibiotics Pre-op carotid doppler studies Aspirin Epiaortic echocardiography to identify

atherosclerotic ascending aorta Aggressive debridement and revascularization

for deep sternal wound infections Perioperative beta blockers (or amiodarone) to

reduce atrial fibrillation Statins Smoking cessation education and

pharmacotherapy Cardiac rehab Withholding of clopidogrel for 5 days pre-op Left internal mammary artery as graft for the

LAD artery

Source: Geisinger Clinic

ACC/AHA Class II Recommendations Pre-operative use of a CABG operative

mortality risk model Anticoagulation for recurrent/persistent

postoperative Afib Anticoagulation for postoperative anteroapical

MI with persistent wall motion abnormality Carotid endarterectomy for carotid stenosis

that is symptomatic or >80% Intra-aortic counterpulsation for low LV

ejection fraction Blood cardioplegia Delay operation for patients with recent

inferior MI with significant RV involvement Tight peri-operative glucose control

Implications for Long Term Care

Medicaid Restructuring biggest risk FFS Medicare will be With us for a While Acute Providers Just as Anxious about Post

Acute Bundling as LTC Providers are New Care Models Expected to Achieve better

Post Acute Co-ordination Markedly Improving the Patient/Family

Experience Key to Future