Dr. Woolsey’s Disclosure I have no industry or other financial relationships to disclose

Dr. Woolseys Disclosure I have no industry or other financial relationships to disclose.

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Patient Centered Care care that is respectful of and responsive to individual patient preferences, needs and values, ensuring that patient values guide all clinical decisions IOM. (2001). Crossing the Quality Chasm: A new health system for the 21 s century. Washington, DC: National Academy Press.

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Surviving and Thriving in the Age of Payment and Care Delivery Reform Sarah Woolsey, MD Medical Director Patient Centered Care in Action September 27th, 2012

Improved System Performance Relationships Better Outcomes & Health, and Lower Costs Sharing Clinical Data Across Providers & Care Settings Using HIT for Care Coordination Transparency & Continuous Feedback Support Work Flow & Care Process Redesign Consumer Engagement Payment Alignment Copyright HealthInsight 2012 update Engaged Community

Overview Payment and care delivery system reform is upon us Reformed systems will put providers at financial risk for excess: Avoidable complications Adverse outcomes resulting from care coordination failures Negative health outcomes associated with patient health behavior and care plan execution choices Change is not necessary. Survival is optional Deming

Medicare&Medicaid Largest Drivers of Future Federal Spending

Healthcare Cost-Shifting Makes U.S. Businesses Uncompetitive Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database) Notes: Data from Australia and Japan are 2007 data. Figures for Canada, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted.

Health Care Costs Have Wiped Out Real Income Gains $ 95 for spending $ 945 for health care $ 870 for inflation $1910 more income

Every system is perfectly designed to get the results it gets Paul Batalden, M.D.

Current Payment Systems Reward Bad Outcomes, Not Better Health Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode Efficient Successful Outcome Complications, Infections, Readmissions High-Cost Successful Outcome $

REDUCING COSTS ( WITHOUT RATIONING ) What the Focus Should Be: Reduce Costs By Improving Care Patients Lower Costs

Reducing Costs Without Rationing: Can It Be Done??

Reducing Costs Without Rationing: Prevention and Wellness Health Condition Continued Health Healthy Consumer

Reducing Costs Without Rationing: Avoiding Hospitalizations Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode

Reducing Costs Without Rationing: Efficient, Successful Treatment Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode Efficient Successful Outcome Complications, Infections, Readmissions High-Cost Successful Outcome

Reducing Costs Without Rationing: = Better Quality Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode Efficient Successful Outcome Complications, Infections, Readmissions High-Cost Successful Outcome Better Outcomes/Higher Quality

How Big Are the Opportunities?

5-17% of Hospital Admissions Are Potentially Preventable Source: AHRQ HCUP

Many Procedures Could Be Done for 80-90% Less Than Today 10-Fold Difference 5-Fold Difference

Many Other Savings Opportunities Better scheduling of scarce resources (e.g., surgery suites) to reduce both underutilization & overtime Coordination among multiple physicians and departments to avoid duplication and conflicts in scheduling Standardization of equipment and supplies to facilitate bulk purchasing Less wastage of expensive supplies Reducing lengths of stay Moving more procedures to outpatient settings (Your idea here)

We Should Focus First on How to Improve Patient Care How Do We Limit: New Technologies Higher-Cost Drugs Potentially Life-Saving Treatment How Do We Help: Patients Stay Well Avoid Unnecessary Surgery and Other Hospitalizations Eliminate Potentially Life-Threatening Errors and Safety Problems Reduce Costs of Procedures Contributors to Healthcare Costs

Are There Better Ways to Pay for Health Care? Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode Efficient Successful Outcome Complications, Infections, Readmissions High-Cost Successful Outcome $ ?

Episode Payments to Reward Value Within Episodes Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode Efficient Successful Outcome Complications, Infections, Readmissions High-Cost Successful Outcome Episode Payment $ A Single Payment For All Care Needed From All Providers in the Episode, With a Warranty For Complications

Yes, a Health Care Provider Can Offer a Warranty Geisinger Health System ProvenCare SM A single payment for an ENTIRE 90 day period including: ALL related pre-admission care ALL inpatient physician and hospital services ALL related post-acute care ALL care for any related complications or readmissions Types of conditions/treatments currently offered: Cardiac Bypass Surgery Cardiac Stents Cataract Surgery Total Hip Replacement Bariatric Surgery Perinatal Care Low Back Pain Treatment of Chronic Kidney Disease

Payment + Process Improvement = Better Outcomes, Lower Costs

It Can Be Done By Physicians, Not Just Health Systems In 1987, an orthopedic surgeon in Lansing, MI and the local hospital, Ingham Medical Center, offered: a fixed total price for surgical services for shoulder and knee problems a warranty for any subsequent services needed for a two-year period, including repeat visits, imaging, rehospitalization and additional surgery Results: Health insurer paid 40% less than otherwise Surgeon received over 80% more in payment than otherwise Hospital received 13% more than otherwise, despite fewer rehospitalizations Method: Reducing unnecessary auxiliary services such as radiography and physical therapy Reducing the length of stay in the hospital Reducing complications and readmissions. Johnson LL, Becker RL. An alternative health-care reimbursement systemapplication of arthroscopy and financial warranty: results of a two-year pilot study. Arthroscopy. 1994 Aug;10(4):46270

Caution: The Weakness of Episode Payment Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode Efficient Successful Outcome Complications, Infections, Readmissions High-Cost Successful Outcome Episode Payment Still paying only when care occurs Does not address upstream prevention of the episode itself

Comprehensive Care Payments To Avoid Episodes Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode Efficient Successful Outcome Complications, Infections, Readmissions High-Cost Successful Outcome A Single Payment For All Care Needed For A Condition $ Comprehensive Care Payment or Global Payment

Payment Levels Adjusted Based on Patient Conditions Providers Lose Money On Unusually Expensive Cases Limits on Total Risk Providers Accept for Unpredictable Events Providers Are Paid Regardless of the Quality of Care Bonuses/Penalties Based on Quality Measurement Provider Makes More Money If Patients Stay Well Flexibility to Deliver Highest-Value Services No Additional Revenue for Taking Sicker Patients CAPITATION (WORST VERSIONS) COMPREHENSIVE CARE PAYMENT Isnt This Capitation? No Its Different

Example: BCBS Massachusetts Alternative Quality Contract Single payment for all costs of care for a population of patients Adjusted up/down annually based on severity of patient conditions Initial payment set based on past expenditures, not arbitrary estimates Provides flexibility to pay for new/different services Bonus paid for high quality care Five-year contract Savings for payer achieved by controlling increases in costs Allows provider to reap returns on investment in preventive care, infrastructure Broad participation 14 physician groups/health systems participating with over 400,000 patients, including one primary care IPA with 72 physicians Positive first-year results Higher ambulatory care quality than non-AQC practices, better patient outcomes, lower readmission rates and ER utilization http://www.bluecrossma.com/visitor/about-us/making-quality-health-care-affordable.html

Not Just Better Acute Care, But Reducing the Need for It Health Condition Continued Health Healthy Consumer No Hospitalization Acute Care Episode Efficient Successful Outcome Complications, Infections, Readmissions High-Cost Successful Outcome

Opportunity: Significant Reduction in Rate of Hospitalizations Examples: 40% reduction in hospital admissions, 41% reduction in ER visits for exacerbations of COPD using in-home & phone patient education by nurses or respiratory therapists J. Bourbeau, M. Julien, et al, Reduction of Hospital Utilization in Patients with Chronic Obstructive Pulmonary Disease: A Disease-Specific Self-Management Intervention, Archives of Internal Medicine 163(5), 2003 66% reduction in hospitalizations for CHF patients using home-based telemonitoring M.E. Cordisco, A. Benjaminovitz, et al, Use of Telemonitoring to Decrease the Rate of Hospitalization in Patients With Severe Congestive Heart Failure, American Journal of Cardiology 84(7), 1999 27% reduction in hospital admissions, 21% reduction in ER visits through self-management education M.A. Gadoury, K. Schwartzman, et al, Self-Management Reduces Both Short- and Long-Term Hospitalisation in COPD, European Respiratory Journal 26(5), 2005

ER Visits Lab Work/ Imaging Hospital Stay Health Insurance Plan Physician Practice/ ACO Global Payment Can Assist, ( But Its a Big Jump from FFS ) FULL COMP. CARE/GLOBAL PAYMENT Avoidable $ Flexibility and accountability for a condition-adjusted budget covering all services $ Condition- Adjusted Per Person Payment Office Visits Nurse Care Mgr Phone Calls

Example: Washington State Medical Home Pilot Program Organized by Puget Sound Health Alliance and Washington State Health Care Authority 4-Part Payment Model Current FFS payments for PCP services Additional PMPM payment for care management $2.50 per patient per month in Year 1 (part of year) $2.00 per patient per month in Years 2 & 3 No restrictions on how money is used Targets for Reducing Preventable ER/Hospital Utilization Reduction targets large enough to repay health plans for upfront payments Penalty for failure: Repayment of up to 50% of PMPM payment Bonus for success in reducing utilization beyond targets 50/50 split of payers savings from reductions in ER visits and/or hospitalizations net of PMPM payment Quality of care must be maintained based on quality measures Implementation Began May 2011 7 health plans (5 commercial, 2 Medicaid) 12 primary care practice sites (8 provider orgs), ~ 25,000 patients

CMS CMMI: The Federal $10 Billion Investment in Payment & System Redesign Medicare Shared Savings Model ACO Initiative Medicare Advanced Payment Model ACO Initiative Medicare Pioneer ACO Initiative Bundled Payments for Care Improvement Initiative Comprehensive Primary Care Initiative FQHC Primary Practice Demonstration Independence at Home Demonstration Initiative to Reduce Avoidable Hospitalizations Among Nursing Facility Residents Medicaid Emergency Psychiatric Demonstration Medicaid Incentives for the Prevention of Chronic Disease State Demonstrations to Integrate Care for Dual Eligibles Community-based Care Transitions Program Partnership for Patients Innovation Advisors Program Innovation Awards Program http://www.bluecrossma.com/visitor/about-us/making-quality-health-care-affordable.html

A Sampling of Utah Payment Reform Initiatives: Both Public and Private Sector Approved Medicaid ACO Waiver Application Multiple PCMH Initiatives with Private Payers and Providers Direct contracting with Providers by Private and Public Employers Payer, State, and Community-led efforts to measure and make visible pricing and quality performance Onsite Work Clinics Developed by providers Medical Home Infrastructure Development in Preparation for ACO Other ACO Development Activities by Providers and Payers (e.g., Central Utah Clinic) Limited Network Product Development by multiple payers Aarches CO-OP insurance plan ($85M CMS loan) http://www.bluecrossma.com/visitor/about-us/making-quality-health-care-affordable.html

Things Needed to Make Global Payment Work Well for Physicians Trusted, Shared Data on Current Utilization, Cost Physician needs to know current rates of admissions, complications, etc. to set prices appropriately Purchaser/payer needs to know that theyre getting a better deal than they are today Protections for Physicians from Insurance Risk Severity adjustment of payment Risk corridors in case costs were mis-estimated Outlier payments for unusually expensive patients Risk exclusions for some patient populations Good Measures of Outcomes Measures meaningful to patients using high-quality data

Challenge: Gaining Support from a Critical Mass of Payers Payer Provider Payer Patient Provider is only compensated for changed practices for the subset of patients covered by participating payers Better Payment System Current Payment System

Payers Need to Truly Align to Allow Focus on Better Care Payer Provider Payer Patient Better Payment System A Better Payment System B Better Payment System C Even if every payers system is better than it was, if theyre all different, providers will spend too much time and money on administration rather than care improvement

Payer Coordination Is Beginning to Occur Around the Country Examples of Multi-Payer Payment Reforms: Colorado, Maine, Michigan, Minnesota, New York, North Carolina, Oregon, Pennsylvania, Rhode Island,Vermont, and Washington all have multi-payer medical home initiatives A Facilitator of Coordination is Needed State Government (provides anti-trust exemption) Non-profit Regional Health Improvement Collaboratives Medicare Needs to Participate in Local Projects as Well as Define its Own Demonstrations Center for Medicare and Medicaid Innovation (CMMI) created under PPACA provides the opportunity for this Medicare is now participating in eight of the state-led multi-payer medical home initiatives

Payment Reform Efforts Depend on Patient, Family & Consumer Engagement

In the Clinic Outside the Clinic A ratio problem: 60 vs. 525,540 minutes How can individuals take control of their own healthcare, and ultimately their own health? What can providers and plans do to help?

Benefit Design Changes Are Critical to Success ProviderPatient Payment System Benefit Design Ability and Incentives to: Keep patients well Avoid unneeded services Deliver services efficiently Coordinate services with other providers Ability and Incentives to: Improve health Take prescribed medications Allow a provider to coordinate care Choose the highest-value providers and services

Current Lack of Incentives for Value-Based Patient Choice Copays, Co-insurance, and High Deductibles can discourage patients from getting preventive treatments or medications they need to stay well and out of the hospital Copays, Co-insurance, and High Deductibles do little to encourage patients to be cost- conscious in choosing among high-cost providers and services

Pay the Difference in Price? Use the High-Value Provider Consumer Share of Surgery Cost Price #1 $23,000 Price #2 $28,000 Price #3 $33,000 $1,000 Copayment:$1,000 10% Coinsurance w/$2,000 OOP Max: $2,000 $5,000 Deductible:$5,000 Highest-Value (Reference Pricing): $0$5,000$10,000 Knee Joint Replacement

Blue Cross/Blue Shield of MA Hospital Choice Cost-Share Benefit Low-Cost Hospitals High-Cost Hospitals PCP$20 SPC$35 Inpatient Hospital$500$1500* Outpatient Hospital Day Surgery$250$1250 High Tech Radiology$50$500 Laboratory$0$35 X-Rays/Other Imaging Tests$0$100 PT/OT/ST$35$70 *LOWER INPATIENT COPAY APPLIES IF EMERGENCY ADMISSION

Use Financial Incentives to Encourage Use of Medical Home? CONSUMERS/ PATIENTS CAN CHANGE OR USE MULTIPLE PROVIDERS AT WILL CONSUMERS/ PATIENTS ARE LOCKED IN TO A SINGLE GATEKEEPER PROVIDER CONSUMERS/ PATIENTS ARE ENCOURAGED TO CHOOSE & USE AN ACO OR MEDICAL HOME MIDDLE GROUND ROCKHARD PLACE OPTION 1:Charge patients more for using providers outside the ACO or medical home (requires changing benefits)

Or Offer a Better Product to Attract and Retain Patients? CONSUMERS/ PATIENTS CAN CHANGE OR USE MULTIPLE PROVIDERS AT WILL CONSUMERS/ PATIENTS ARE LOCKED IN TO A SINGLE GATEKEEPER PROVIDER CONSUMERS/ PATIENTS ARE ENCOURAGED TO CHOOSE & USE AN ACO OR MEDICAL HOME MIDDLE GROUND ROCKHARD PLACE OPTION 1:Charge patients more for using providers outside the ACO or medical home (requires changing benefits) OPTION 2: Give patients high quality, coordinated care by using the providers inside the ACO or medical home (requires payment change)

Today: Many Barriers to Patient Adherence & Care Coordination PATIENT PCP OFFICE/ MEDICAL HOME SPECIALIST OFFICE LAB FOR TESTING NON-MEDICAL SUPPORT (e.g., weight loss) Lack of Transportation Multiple Days Off Work Services Unavailable or Not Affordable

Flexible Payment Allows More Radical Care Redesign PATIENT SNF/ASSISTED LIVING CLINIC URGENT CARE CENTER EMERGENCY ROOM WORK-SITE CLINIC SPECIALIST SUPPORT LAB FOR TESTING PCP OFFICE NON-MEDICAL SUPPORT Single, Flexible, Comprehensive Care Payment

Where are we going? Care delivery system will need to accommodate more patients and sicker patients New models of care and innovation needed to address cost/capacity/quality issues. Patient at the center and a new focus on care outside clinic walls. Payment models will change; more accountability for outcomes, less focus on activities.

Rapid Cycle - Multiple Cycles Overall AIM Increase documented eye exams for our diabetes population by 45% in the next 12 months Time Expect Challenges and Barriers Cycle #1 Contact Eye Doctors Cycle #2 Patient Fax Back Form Cycle #3 Front Office track down eye results Cycle #4 Computer Network with eye doctors Cycle #5 Reminder letter from PCPs Implement Final Changes

Summary Payment and care delivery system reform is upon us Reformed systems will put providers at financial risk for excess: Avoidable complications Adverse outcomes resulting from care coordination failures Negative health outcomes associated with patient health behavior and care plan execution choices Change is not necessary. Survival is optional Deming

Todays Engagement Agenda Can patient choices and behavior be positively influenced by health care providers? Or are such patient behaviors beyond the reach of providers (theres nothing we can do)? can patient behaviors be influenced by providers, but not systematically (instead luck dominates)? can patient behaviors be influenced by providers, but those providers must be born with the knack (it cannot be learned)? is there something else that makes this impossible? What can we do to prepare for reform?

Self-assessment: Are you ready? Areas for improvement? Experts and best practices.

Documents

Dr. Woolsey’s Disclosure I have no industry or other financial relationships to disclose