Organization of Health Care Presentation to ITTP Class January 7, 2004 John E. Billi, M.D. Professor, Internal Medicine and Medical Education Associate

Organization ofOrganization of Health Care Health Care

Presentation to ITTP ClassPresentation to ITTP Class

January 7, 2004January 7, 2004

John E. Billi, M.D.John E. Billi, M.D.

Professor, Internal Medicine and Medical EducationProfessor, Internal Medicine and Medical Education

Associate Dean, Clinical AffairsAssociate Dean, Clinical Affairs

Associate Vice President, Medical AffairsAssociate Vice President, Medical Affairs

[email protected]@umich.edu

Organization of Health CareOrganization of Health Care

Who are the players and what Who are the players and what are their interests?are their interests?

Who are the patients?Who are the patients? How is care funded?How is care funded? Who employs the doctors?Who employs the doctors? Who owns the facilities?Who owns the facilities? Who is at financial risk?Who is at financial risk? Who is accountable for quality Who is accountable for quality

and cost effectiveness of care?and cost effectiveness of care?

Ten Issues Will Shape the Future of Ten Issues Will Shape the Future of Health CareHealth Care

The economyThe economy Medical scienceMedical science Education in the health professions, shortages Education in the health professions, shortages Technology, innovation and communicationTechnology, innovation and communication Population shifts – baby boomers and the elderlyPopulation shifts – baby boomers and the elderly Consumerism, choice and informationConsumerism, choice and information Organization and financing of health careOrganization and financing of health care The shrinking world - globalizationThe shrinking world - globalization The environmentThe environment AccountabilityAccountability

Source: Adapted from W. Peck, M.D., Washington Univ.

Organization of Health Care:Organization of Health Care:The PlayersThe Players

Patient&

Family

Source: Marilynn Rosenthal, Ph.D.

PhysiciansM.D.s & D.OsNurses

OtherAllied HealthProfessionals

Hospitals Nursing Homes, SNFs

Pharmacists

Dentists

NPs, RNs, LPNs, MAs, Aides

Ambulatory Surgery Centers

Physician Offices

Home Care

PAs

ChiropractorsOptometrists

Employers$$$

Insurers[$]

Government$$$

TBIUnit

Urgent Care Center

Social Workers

Individuals$

Podiatrists

New Roles for Health New Roles for Health ProfessionalsProfessionals

Nursing shortageNursing shortage- Medical Assistants Medical Assistants

Mid-level providersMid-level providers- Nurse Practitioners, Midwives, AnesthetistsNurse Practitioners, Midwives, Anesthetists- Physician AssistantsPhysician Assistants- Optometrists, PsychologistsOptometrists, Psychologists

Technicians: surgery, radiology…Technicians: surgery, radiology… Care managersCare managers Home care providersHome care providers Complementary / ”integrated” medicine providersComplementary / ”integrated” medicine providers

Health Care Expenditures Health Care Expenditures (Year 2001)(Year 2001)

$1.4 trillion $1.4 trillion 14.1% of Gross Domestic Product (GDP)14.1% of Gross Domestic Product (GDP) $5,035 per capita = $420/month (or PMPM)$5,035 per capita = $420/month (or PMPM) Hospital spending accounts for largestHospital spending accounts for largest

share (32%)share (32%) Drugs $ are fastest-growing category (14%)Drugs $ are fastest-growing category (14%) Spending growth in health careSpending growth in health care continues tocontinues to

outpace growth of GDPoutpace growth of GDP

Source: http://www.cms.hhs.gov/statisticsHighlights---National Health Expenditures 2001

8

10

12

14

16

1980 1984 1988 1992 1996 2000

Source: CMS, Office of the Actuary, National Health Statistics Group.

Calendar Years

Pe

rce

nt

of

GD

P

Period of accelerated growth

Period of stabilization

Rapid growth in the health spending share of GDP stabilized beginning in 1993.

National Health Expenditures as a Share National Health Expenditures as a Share of Gross Domestic Product (GDP)of Gross Domestic Product (GDP)

Private Insurance34%

Other Public1

12% Other Private2

6%Medicaid and

SCHIP15%

Out-of-pocket15%

Medicare17%

1 Other public includes programs such as workers’ compensation, public health activity, Department of Defense, Department of Veterans Affairs, Indian Health Service, and State and local hospital subsidies and school health.2 Other private includes industrial in-plant, privately funded construction, and non-patient revenues, including philanthropy.* SCHIP = Children’s Health Insurance Program (MI CHILD, in Michigan)

Note: Numbers shown may not sum due to rounding.

Source: CMS, Office of the Actuary, National Health Statistics Group.

CMSPrograms

33%

Medicare, Medicaid, and SCHIP* account for one-third of national health spending.

Total National Health Spending = $1.4Trillion

The Nation’s Health Dollar, CY 2001The Nation’s Health Dollar, CY 2001

Health Care ExpendituresHealth Care Expenditures (Year 2001)(Year 2001)

Hospital Care32%

Physician & Clinical Services

22%

Other (dental, home heath,

DME…)23%

Program Admin.

6%

Prescription Drugs10%

Nursing Homes

7%

Source: CMS, Office of the Actuary, National Health Statistics Group

National Health Expenditures -National Health Expenditures -Accelerating GrowthAccelerating Growth

Health care spending increasedHealth care spending increased 8.7 percent in 2001 8.7 percent in 2001

Accelerating growth factors:Accelerating growth factors:- rising health sector wagesrising health sector wages- increased Medicare spendingincreased Medicare spending- increasing insurance premiumsincreasing insurance premiums- more technology, more costly drugsmore technology, more costly drugs- consumer demand for less restrictive consumer demand for less restrictive

insurance plansinsurance plans

Source: http://www.cms.gov.stats

Accelerating Growth: Accelerating Growth: ImplicationsImplications

Public/private initiatives to slow pace of Public/private initiatives to slow pace of spending growthspending growth

Trade-offs between health care and Trade-offs between health care and competing prioritiescompeting priorities

Consumers asked to contribute more Consumers asked to contribute more towards coveragetowards coverage

Choice of plans, providers and benefits Choice of plans, providers and benefits may be narrowedmay be narrowed

Source: http://cms.hhs.gov/statistics

The Coming Train WreckThe Coming Train Wreck......

Aging, growing population Dramatic advances in clinical capabilities Information technology requirements 43 million uninsured Unbounded patient demands

vs. Taxpayer, employer, individual

willingness to pay

Health Care Paradigm ShiftHealth Care Paradigm Shift

PhysiciansPhysicians

Solo PracticeSolo Practice

HospitalsHospitals

Free-standing,Free-standing,

communitycommunity

InsuranceInsurance

IndemnityIndemnity

PurchasersPurchasers

PassivePassive

Group Practice orEmployed

Networks & IntegratedDelivery Systems

Managed Care

“Prudent Purchaser”as Proactive Partner(cost shifts, drop insurance)

Performance- based Models(more choice, PPOs)

Privatized




HospitalsHospitals


communitycommunity

InsuranceInsurance

IndemnityIndemnity


PassivePassive



Managed Care



Privatized

Physician RolesPhysician Roles

Traditional:Traditional: Self-employedSelf-employed

Solo practiceSolo practice Single specialty groupsSingle specialty groups Fee-for-service Fee-for-service

reimbursement for care reimbursement for care of individual patientsof individual patients

Open access to any Open access to any doctordoctor

AutonomyAutonomy

Managed Care Era:Managed Care Era: Employed (then Employed (then

privatized)privatized) Group practiceGroup practice Multi-specialty groups Multi-specialty groups Capitated for care ofCapitated for care of

a populationa population(shared $ (shared $

risk)risk) Primary care Primary care

physician gatekeeperphysician gatekeeper(wax and wane)(wax and wane)

AccountabilityAccountability

Physician Payment ModelsPhysician Payment Models

Traditional: fee-for-serviceTraditional: fee-for-service““Do more - make more”Do more - make more”

Capitation: fixed payment per member Capitation: fixed payment per member per month (pmpm)per month (pmpm)““Do less - make more”Do less - make more”

Future: fee-for-benefit &Future: fee-for-benefit &performance-based contractingperformance-based contracting““Do the right thing”Do the right thing”

Evolution of Evolution of Physician OrganizationsPhysician Organizations

Early structure:Early structure:- Group PracticeGroup Practice

• single specialty single specialty • multispecialtymultispecialty

Managed care contracting organizations:Managed care contracting organizations:- IPA - Independent Practice AssociationsIPA - Independent Practice Associations- Physician Organizations (POs)Physician Organizations (POs)- Physician Hospital Organizations (PHOs)Physician Hospital Organizations (PHOs)

Recent developments:Recent developments:- Second Generation Physician Organizations Second Generation Physician Organizations - Physicians within Integrated Delivery SystemsPhysicians within Integrated Delivery Systems

What should Physician What should Physician Organizations do?Organizations do?

Traditional roles:Traditional roles: Contract negotiations with HMOsContract negotiations with HMOs Negotiations with hospitalsNegotiations with hospitals Support office operations, billing…Support office operations, billing…

Emerging roles - Assist physicians to:Emerging roles - Assist physicians to: Improve efficiencyImprove efficiency Improve quality of careImprove quality of care

ToolsTools Physician profiling (quality and appropriateness)Physician profiling (quality and appropriateness) Evidence-based practice guidelinesEvidence-based practice guidelines Disease management programsDisease management programs

Traditional CareTraditional Care

Episodic, uncoordinatedEpisodic, uncoordinated Focused on the acutely illFocused on the acutely ill Patient initiatedPatient initiated Patient education is sporadicPatient education is sporadic Communication among clinicians is sporadicCommunication among clinicians is sporadic

- Information scattered on paperInformation scattered on paper Process of care is variable Clinicians’ Clinicians’ opinionsopinions drive decisions drive decisions ExpensiveExpensive

““Crossing the Quality Chasm”Crossing the Quality Chasm”

Health care should be:Health care should be: SafeSafe EffectiveEffective Patient-centeredPatient-centered TimelyTimely EfficientEfficient Equitable - not vary due to gender, ethnicity, Equitable - not vary due to gender, ethnicity,

geography, socioeconomic statusgeography, socioeconomic status

Source: Crossing the Quality Chasm: A New Health System for the 21st Century, Institute of Medicine, National Academy of Sciences, 2000.

Professional Values - EnduringProfessional Values - Enduring Altruism Altruism

- patients’ interests come firstpatients’ interests come first Commitment to self-improvementCommitment to self-improvement

- master and incorporate new knowledgemaster and incorporate new knowledge- contribute to the knowledge base of the contribute to the knowledge base of the

disciplinediscipline Peer reviewPeer review

- collective sense of responsibility and collective sense of responsibility and accountability among medical professionals accountability among medical professionals for the conduct of colleaguesfor the conduct of colleagues

Source: D Blumenthal, Health Affairs, Spring (I) 1994




HospitalsHospitals


communitycommunity

InsuranceInsurance

IndemnityIndemnity


PassivePassive



Managed Care



Privatized

Hospitals and Health SystemsHospitals and Health Systems

Traditional:Traditional: Community hospitalsCommunity hospitals

- Not-for-profitNot-for-profit- IndependentIndependent

Teaching hospitalsTeaching hospitals Specialized hospitalsSpecialized hospitals

- PsychiatricPsychiatric- Children’sChildren’s

VA and other government VA and other government facilitiesfacilities

Managed Care Era :Managed Care Era : Hospital systemsHospital systems

- Horizontal integrationHorizontal integration- Vertical integrationVertical integration- For-profit chains (Tenet)For-profit chains (Tenet)

PHOsPHOs Specialized: Heart, Hernia...Specialized: Heart, Hernia... IntegratedIntegrated Delivery Systems Delivery Systems Academic health systemsAcademic health systems VA “regional networks”VA “regional networks”

New Care SettingsNew Care Settings

Urgent care sitesUrgent care sites Ambulatory surgical centers (Ambulatory surgical centers (++ MD investors) MD investors) Mobile imaging (MRI, mammography…)Mobile imaging (MRI, mammography…) Psychiatric partial hospitalization & intensive Psychiatric partial hospitalization & intensive

outpatient programsoutpatient programs Home care Home care

All less costly, but shift care out of hospitalAll less costly, but shift care out of hospitale.g., Deep Venous Thrombosis as an outpatient e.g., Deep Venous Thrombosis as an outpatient

- Drug costs higher- Drug costs higher- - TotalTotal costs lower costs lower

Major Trends in Hospitals Major Trends in Hospitals 1990s & 2000s1990s & 2000s

Acquisitions & MergersAcquisitions & MergersDownsizing & ClosuresDownsizing & Closures

IntegrationIntegrationManaged CareManaged Care

Clinical RedesignClinical RedesignMalpractice RiskMalpractice Risk

----Increased Volume & Complexity----Increased Volume & Complexity

Source: Adapted from R. Lichtenstein

Integrated Delivery SystemsIntegrated Delivery Systems

Organized Organized systemsystem of care of care Integrates:Integrates:

- Providers (doctors, nurses, …)Providers (doctors, nurses, …)- Facilities Facilities (tertiary and community hospitals, clinics, home care)(tertiary and community hospitals, clinics, home care) - (Health plan – HMO, PPO)(Health plan – HMO, PPO)

Full spectrum of services Full spectrum of services (primary to tertiary)(primary to tertiary)

Geographic coverageGeographic coverage Economically viable scale (contracting clout)Economically viable scale (contracting clout) Ultimate goals: improve quality, lower costUltimate goals: improve quality, lower cost

- Harder to do in reality than the “paper merger”Harder to do in reality than the “paper merger”

Source: Adapted from R Lichtenstein

Accountability for Cost and QualityAccountability for Cost and QualityIntegrated Health Systems Integrated Health Systems shouldshould:: Promote clinical effectiveness researchPromote clinical effectiveness research Only use effective procedures, therapies, tests: Only use effective procedures, therapies, tests:

Evidence-based MedicineEvidence-based Medicine Develop and use clinical guidelines, clinical pathwaysDevelop and use clinical guidelines, clinical pathways Follow principles of Continuous Quality Improvement Follow principles of Continuous Quality Improvement

(CQI)(CQI) Strive to improve patient safetyStrive to improve patient safety Report quality & safety data to stakeholdersReport quality & safety data to stakeholders

SEE HAND-OUT PACKET FOR SAMPLE SEE HAND-OUT PACKET FOR SAMPLE “REPORT CARD”“REPORT CARD”

Evidence-Based MedicineEvidence-Based Medicine SystematicSystematic process to encourage process to encourage allall

practitioners to apply the appropriate practitioners to apply the appropriate scientific scientific evidenceevidence to individual clinical to individual clinical decisions.decisions.

Evidence Evidence isis::- scientific studies and meta-analysesscientific studies and meta-analyses- published in peer-reviewed journalspublished in peer-reviewed journals- with appropriate methods and populationswith appropriate methods and populations- showing significant outcomesshowing significant outcomes

Distilled into evidence-based practice Distilled into evidence-based practice guidelinesguidelines

Practice GuidelinesPractice Guidelines Prospective agreement among clinicians for the Prospective agreement among clinicians for the

management of typical casesmanagement of typical cases Synthesis of knowledge of diagnoses & therapySynthesis of knowledge of diagnoses & therapy Tool to improve appropriateness and efficiencyTool to improve appropriateness and efficiency Documentation of excellent process of careDocumentation of excellent process of care Evidence-basedEvidence-based

SEE HAND-OUT PACKET FOR SAMPLESEE HAND-OUT PACKET FOR SAMPLEPRACTICE GUIDELINEPRACTICE GUIDELINE

Continuous Quality ImprovementContinuous Quality Improvement

The Approach to Better HealthcareThe Approach to Better Healthcare

A process for continuous improvement:A process for continuous improvement:- evidence basedevidence based- consensus building - consensus building - data driven- data driven

Can be used to address:Can be used to address:- overuseoveruse- underuseunderuse- misusemisuse

Quality Concerns• UnderuseUnderuse

– 60% of diabetic patients w/o HbAlc test in 199860% of diabetic patients w/o HbAlc test in 1998– Only 59% / 65% of GM women are receiving Only 59% / 65% of GM women are receiving

recommended screenings for cervical / breast cancerrecommended screenings for cervical / breast cancer

• OveruseOveruse– Cardiac surgery and hysterectomy rate in Flint MI 80% Cardiac surgery and hysterectomy rate in Flint MI 80%

higher than Kaiser Permanente (a West Coast HMO)higher than Kaiser Permanente (a West Coast HMO)

– catheterization rate in all catheterization rate in all majormajor MI, OH, IN areas at least MI, OH, IN areas at least 160% higher than Kaiser160% higher than Kaiser

• MisuseMisuse– 60% of cold / URI / bronchitis patients receive antibiotics60% of cold / URI / bronchitis patients receive antibiotics

Source: Bruce Bradley, General Motors

Health Care Paradigm ShiftHealth Care Paradigm ShiftPhysiciansPhysicians


HospitalsHospitals


communitycommunity

InsuranceInsurance

IndemnityIndemnity


PassivePassive



Managed Care

“Prudent Purchaser”as Proactive Partner

Performance- based Contracting

2004 Megatrends2004 Megatrends

Medicare Drug BillMedicare Drug Bill Medicare HMOs and PPOs returnMedicare HMOs and PPOs return

- - - maybe - - - maybe Health savings accountsHealth savings accounts Uninsured riseUninsured rise

Health InsuranceHealth Insurance Employment-based groupsEmployment-based groups

- Traditional Indemnity Traditional Indemnity (e.g., Blue Cross/Blue Shield and for-profit )(e.g., Blue Cross/Blue Shield and for-profit )

- Managed care (HMOs, PPOs, POS, etc.)Managed care (HMOs, PPOs, POS, etc.) Government-sponsored programsGovernment-sponsored programs

- Medicare (federal): Medicare (federal): elderlyelderly, disabled, ESRD, disabled, ESRD- Medicaid (state/federal match): Medicaid (state/federal match):

some of the some of the poorpoor, disabled, disabled Individual coverageIndividual coverage

- Limited availability; high cost; excludesLimited availability; high cost; excludespre-existing conditionspre-existing conditions

Uninsured – safety net programsUninsured – safety net programs

Sample Insurance ConditionsSample Insurance Conditions Deductible: amount that is paid by patient,

before insurance begins paying anything (e.g., after patient pays $500 cumulative medical costs/yr, then insurance begins paying some of costs)

Co-pay/coinsurance: portion of charge that patient must pay for service (e.g., patient pays $10 copay for visit, or pays 20% coinsurance of physician charge)

Discount: % less than charges that MD or hospital agrees to accept from insurer (e.g., agree to accept 50% of charges as full payment, & not balance bill the patient for the remainder)

How Do Deductibles and Copays How Do Deductibles and Copays Work? The Medicare Drug BillWork? The Medicare Drug Bill

Starting 2006, Medicare beneficiary must pay:Starting 2006, Medicare beneficiary must pay: Pay $35/month ($450/yr)Pay $35/month ($450/yr) $450$450 PremiumPremium Pay first $250Pay first $250 $250$250 DeductibleDeductible Pay 25% of next $2000Pay 25% of next $2000$500$500 CoinsuranceCoinsurance Pay next $2850Pay next $2850 $2850$2850 “Donut Hole”“Donut Hole” Pay 5% from there onPay 5% from there on Stop LossStop Loss Discounts begin 2004 (~15%)Discounts begin 2004 (~15%) DiscountsDiscountsTotal cost to person w/ $5100/year drug cost = $4050 (79%) Total cost to person w/ $5100/year drug cost = $4050 (79%) Total cost to person w/ $7500/year drug cost = $4170 (56%)Total cost to person w/ $7500/year drug cost = $4170 (56%)

SEE HAND-OUT PACKET FOR SUMMARY OF SEE HAND-OUT PACKET FOR SUMMARY OF MEDICARE DRUG BILLMEDICARE DRUG BILL

How realistic are these drug costs?How realistic are these drug costs?$5100/year = $425/month$5100/year = $425/month$7500/year = $625/month$7500/year = $625/month

Monthly costs: Monthly costs: NexiumNexium $119$119Pravachol Pravachol $124$124ZoloftZoloft $72$72FosamaxFosamax $65$65ClarinexClarinex $76$76

$456$456CoregCoreg $97$97CelebrexCelebrex $78$78

$631$631

How realistic are these drug costs?How realistic are these drug costs?$5100/year = $425/month$5100/year = $425/month$7500/year = $625/month$7500/year = $625/month

Monthly costs: Monthly costs: NexiumNexium $119$119 omeprazole OTC $15omeprazole OTC $15Pravachol Pravachol $124$124 lovastatin lovastatin $68$68ZoloftZoloft $72$72 fluoxetinefluoxetine $30$30FosamaxFosamax $65$65 Fosamax Fosamax $65$65ClarinexClarinex $76$76 loratidine OTCloratidine OTC $10$10

$456$456 $188$188CoregCoreg $97$97 atenololatenolol $5$5CelebrexCelebrex $78$78 ibuprofenibuprofen $3$3

$631$631 $196$196https://ummcpharmweb.med.umich.edu/internal/ambulatory/umhs_fgp_prefdrugs.asphttps://ummcpharmweb.med.umich.edu/internal/ambulatory/umhs_fgp_prefdrugs.asp

Health Insurance TrendsHealth Insurance Trends Rising premium costs Rising premium costs (slowed, now rising fast)(slowed, now rising fast)

More temporary and part-time work More temporary and part-time work (without health care coverage)(without health care coverage)

Growth of managed care---especially PPOsGrowth of managed care---especially PPOs Reduction in comprehensive coverage:Reduction in comprehensive coverage:

Cost shiftingCost shifting and and benefit limitsbenefit limits-cap on pharmaceutical coverage, triple tier formularies;-cap on pharmaceutical coverage, triple tier formularies;-higher copays, percent co-insurance, deductibles;-higher copays, percent co-insurance, deductibles;-limits on number of services [PT, psych];-limits on number of services [PT, psych];-more stringent authorization requirements-more stringent authorization requirements

Source: Adapted from Kuttner, NEJM1999;34:163-168

The UninsuredThe Uninsured

Uninsured rising despite economic “recovery”Uninsured rising despite economic “recovery” 43.3 million nonelderly Americans were without 43.3 million nonelderly Americans were without

health insurance in 2002 health insurance in 2002 (17.3% of U.S. population)(17.3% of U.S. population)

The number of nonelderly uninsured grew The number of nonelderly uninsured grew almost 10% between 2000 and 2002almost 10% between 2000 and 2002

Low income families are at greatest risk of losing Low income families are at greatest risk of losing health care insurancehealth care insurance

Source: The Kaiser Commission on Medicaid and the Uninsured

Managed Care - What is it?Managed Care - What is it?

“ “Means of providing health care services within Means of providing health care services within a defined a defined networknetwork of health care providersof health care providers responsible for responsible for managingmanaging and providing and providing quality quality, , cost-effectivecost-effective health care”. health care”.

Source: Vogel, DE. The Physician and Managed Care. Chicago, AMA, 1993.

What are the goals ofWhat are the goals of managed care? managed care?

Efficient screening and prevention Efficient screening and prevention programsprograms

Efficient & accurate diagnosisEfficient & accurate diagnosis Efficient & effective treatment and Efficient & effective treatment and

managementmanagement High patient satisfactionHigh patient satisfaction

What do managed care plans What do managed care plans expect from physicians?expect from physicians?

Low costLow cost High qualityHigh quality Patient-satisfying carePatient-satisfying care

Source: C Krause, Family Medicine, June 1995

Managed Care CompetenciesManaged Care Competencies Understanding of health care needs of populationsUnderstanding of health care needs of populations Clinical preventionClinical prevention Management of health risks at home and workManagement of health risks at home and work Clinical decision-making in managed careClinical decision-making in managed care

(Including ethics of resource allocation)(Including ethics of resource allocation) Effective communication with panels of patientsEffective communication with panels of patients Continuous quality improvementContinuous quality improvement Professional satisfactionProfessional satisfaction Team work and practice leadershipTeam work and practice leadership Practice managementPractice management

SOURCE: GT Moore, Report to COGME, 1993

ABCs of Managed CareABCs of Managed Care

HMO - Health Maintenance OrganizationHMO - Health Maintenance Organization- Comprehensive benefit planComprehensive benefit plan

(including screening and preventive services)(including screening and preventive services)- Usually uses “gate-keeper”Usually uses “gate-keeper”- Usually “capitated” or shared financial riskUsually “capitated” or shared financial risk- Out-of-network services not coveredOut-of-network services not covered

PPO - Preferred Provider OrganizationPPO - Preferred Provider Organization- Limited provider network, but no “gatekeeper”Limited provider network, but no “gatekeeper”- Discounted fee-for-service Discounted fee-for-service - No (or low) risk sharingNo (or low) risk sharing- Out-of-network coverage at lower benefit levelOut-of-network coverage at lower benefit level

ABCs of Managed CareABCs of Managed Care POS - Point of Service PlanPOS - Point of Service Plan

- Hybrid of HMO & PPOHybrid of HMO & PPO- Patient chooses how to use benefit optionsPatient chooses how to use benefit options- Some coverage for out-of-network servicesSome coverage for out-of-network services

““Managed” IndemnityManaged” Indemnity- ““Managed care” tools used in a fee-for-service planManaged care” tools used in a fee-for-service plan

• Pre-certification of hospital staysPre-certification of hospital stays• Disease management programsDisease management programs• Prior authorization of high cost proceduresPrior authorization of high cost procedures

Customized Health Savings Account (HSAs)Customized Health Savings Account (HSAs)- High deductible, $$ set aside, keep if don’t useHigh deductible, $$ set aside, keep if don’t use

• Most attractive to those without medical problemsMost attractive to those without medical problems• Leaves the sicker families in the traditional plansLeaves the sicker families in the traditional plans• Access to doctor/hospital report cards (profiles)Access to doctor/hospital report cards (profiles)

Managed CareManaged CareSpectrum of ManagementSpectrum of Management

High Provider Risk Low Provider Risk

High Management Low Management

HMO POS PPO

Indemnity

HMO ModelsHMO Models

Staff ModelStaff Model - HMO employs physicians - HMO employs physicians Group ModelGroup Model - HMO contracts with a - HMO contracts with a

physician group practicephysician group practice IPA and Network ModelsIPA and Network Models - HMO - HMO

contracts multiple physician groupscontracts multiple physician groups Mixed ModelsMixed Models

Funds Flow - Traditional ModelFunds Flow - Traditional Model

people employers

insurers

doctors hospitals

Funds Flow - Capitation Funds Flow - Capitation Physician Hospital Org. Model Physician Hospital Org. Model

HMO1

PHO

Physician Organization

M.D. M.D. M.D. M.D. D.O. M.D.

Group Practice Hospital

HMO2

people employers

HMO

Funds Flow – Funds Flow – Shared Risk ModelShared Risk Model

Primary Care Fund

Specialty CareFund

HospitalFund

PharmacyFund

Other

PCPs PCPs & Specialists

PCP/Specialists/HMO




HospitalsHospitals


communitycommunity

InsuranceInsurance

IndemnityIndemnity


PassivePassive



Managed Care



Privatized

Health Care PurchasersHealth Care Purchasers EmployersEmployers

- Large employers (GM, Detroit Edison, UofM)Large employers (GM, Detroit Edison, UofM)- Small employers (Angelo’s, Ulrich’s)Small employers (Angelo’s, Ulrich’s)

GovernmentGovernment- For aged (thru Medicare)For aged (thru Medicare)- For some indigent (thru Medicaid)For some indigent (thru Medicaid)- Federal, state, local employeesFederal, state, local employees

Health Care CoalitionsHealth Care Coalitions IndividualsIndividuals

- growing due to cost shifts from employersgrowing due to cost shifts from employers

What do purchasers want?What do purchasers want? ValueValue = quality/cost = quality/cost Care that is:Care that is:

- High qualityHigh quality- AppropriateAppropriate- CoordinatedCoordinated- AccessibleAccessible- Cost effectiveCost effective

Healthy, satisfied employees/membersHealthy, satisfied employees/members Ability to hold “suppliers” accountableAbility to hold “suppliers” accountable Lately, they want out!Lately, they want out!

Strategies that create an environment

where motivation and incentives reward

consumers, providers and payers for

behaviors that result in improved:• Quality and outcomes of care • Productivity and cost.

Managed CareManaged Care(One Large Employer’s View of What the (One Large Employer’s View of What the

Definition Definition ShouldShould Be) Be)


Purchasers - New RolesPurchasers - New Roles Active Active partners with providerspartners with providers in design of health care in design of health care

and quality improvement:and quality improvement:- Partnership Health (Ford/UM), Active Care (GM/UM) Partnership Health (Ford/UM), Active Care (GM/UM) - Medicaid HMOs Medicaid HMOs - Medicare HMOs (were shrinking, subsidies in new bill)Medicare HMOs (were shrinking, subsidies in new bill)- GDAHC Quality Forum (GDAHC Quality Forum (Greater Detroit Area Health Council)Greater Detroit Area Health Council)

Reporting quality and costsReporting quality and costs::- GDAHC RFI (Request for Information): HMO report cardGDAHC RFI (Request for Information): HMO report card- Hospital safety reports (Leapfrog- employer QI group)Hospital safety reports (Leapfrog- employer QI group)

Working with providers as Working with providers as “suppliers”“suppliers” to improve to improve clinical workflow (PICOS - GM)clinical workflow (PICOS - GM)

Carve outsCarve outs (UM pays directly for Pharmacy) (UM pays directly for Pharmacy) Drop insuranceDrop insurance coverage for dependents/workers coverage for dependents/workers

Employee & Community Health

Value Purchasing

Evolution of Employers’Evolution of Employers’ Management of Health Plans Management of Health Plans

Pay Premiums

Selection / Negotiation

Quality Leadership


Impact on PhysiciansImpact on Physicians

More uninsured patientsMore uninsured patients Insured patients pay more (cost share/shift)Insured patients pay more (cost share/shift) More complexity in drug prescribingMore complexity in drug prescribing

- Multiple preferred drug lists, restrictions, prior authsMultiple preferred drug lists, restrictions, prior auths- Patients and doctors lobbied by PHARMAPatients and doctors lobbied by PHARMA

Less PCP gatekeepingLess PCP gatekeeping Zero-sum-game in healthcareZero-sum-game in healthcare

- More money in one area means less in the restMore money in one area means less in the rest- Harder to get coverage for new procedures, Harder to get coverage for new procedures,

technology, or drugstechnology, or drugs

Services that are:Services that are:- High quality, patient-friendly, accessibleHigh quality, patient-friendly, accessible

Choice of physicians, health plan, Choice of physicians, health plan, hospitalshospitals

Continuity of care, coordinated careContinuity of care, coordinated care Low out-of-pocket costsLow out-of-pocket costs No “red tape” and administrative hassleNo “red tape” and administrative hassle Confidentiality/privacyConfidentiality/privacy

What do patients want?What do patients want?

Patient Empowerment: Patient Empowerment: Age of the ConsumerAge of the Consumer

Care co-manager (the true PCP)Care co-manager (the true PCP) Informed consumerInformed consumer

- Report cards: physician, HMO, & hospital Report cards: physician, HMO, & hospital - Increased availability of health care information [50% Increased availability of health care information [50%

web users = health]web users = health]- Marketing directly to patients: hospitals, health plans, Marketing directly to patients: hospitals, health plans,

pharmaceutical companiespharmaceutical companies Role transition (passive active)Role transition (passive active)

- From “receiver of decision”From “receiver of decision”- To “participant in decision-making” To “participant in decision-making” - To “decision-maker”, even “payer” in some new modelsTo “decision-maker”, even “payer” in some new models

CustomerCustomer with service expectations with service expectations

What do physicians want?What do physicians want?

Professional autonomy Professional autonomy - ability to practice and provide high quality care ability to practice and provide high quality care

without undue interferencewithout undue interference Ability to do what’s best for patient and to Ability to do what’s best for patient and to

develop patient-physician relationships develop patient-physician relationships characterized by trustcharacterized by trust

Minimal “red tape” and administrative Minimal “red tape” and administrative hassleshassles

Reasonable reimbursementReasonable reimbursement

What do hospitals & What do hospitals & health systems want?health systems want?

Contracts with payers to lock-in businessContracts with payers to lock-in business Reasonable reimbursementReasonable reimbursement

“No Margin = No Mission”“No Margin = No Mission” Achieve a size/scale to be competitiveAchieve a size/scale to be competitive Satisfied stakeholdersSatisfied stakeholders

- patients patients - physiciansphysicians- payerspayers- communitycommunity

Next Model of Health CareNext Model of Health Care Coordinated careCoordinated care Integrated delivery systemsIntegrated delivery systems Population-basedPopulation-based

- Outreach initiated by plan/physiciansOutreach initiated by plan/physicians- Incorporates prevention and patient educationIncorporates prevention and patient education

Communication among providers & patientsCommunication among providers & patients- Facilitated by information technologyFacilitated by information technology

Standardized, Standardized, evidence-basedevidence-based process process- Guidelines, pathways, disease managementGuidelines, pathways, disease management

Performance-based contractingPerformance-based contracting- Clinical outcomesClinical outcomes- CostCost

Next Model of Health Care: Next Model of Health Care: AccountabilityAccountability

Who?Who?- Physician, hospital, group practice, PO, Physician, hospital, group practice, PO,

PHO, health plan, hospital, IDS, patientPHO, health plan, hospital, IDS, patient For What?For What?

- QualityQuality- AccessAccess- CostCost

By Whom?By Whom?- Employers, consumers, labor, government, Employers, consumers, labor, government,

communitycommunity

Health Trends 2004 Health Trends 2004 Shifting Accountability DownwardShifting Accountability Downward

Performance-based contractingPerformance-based contracting Report cards: outcomes, costsReport cards: outcomes, costs Defined contribution health plansDefined contribution health plans Individualized Medical Savings Individualized Medical Savings

Accounts, with provider report cardsAccounts, with provider report cards Differential copays for high cost Differential copays for high cost

hospitals/groupshospitals/groups

Crossing the Quality Chasm:10 Rules

1. Care based or continuous healing relationshipsa. 24 hour availabilityb. Face-to-face and remote

2. Customized based on needs and values, choice and preference 3. Patient as source of control 4. Shared knowledge and free flow of information

Patients - their own information & medical knowledge 5. Evidence-based decision making 6. Safety as a system property 7. Transparency - consumers and employers data on systems (safety, evidence-based practice, satisfaction) 8. Anticipation of needs 9. Continuous decrease in waste10. Cooperation among clinicians (coordination)

ENDEND

PopulationsPopulations

Healthy Stable chronic disease

and stable at riskHigh risk orunstablechronic disease

Hospitalized

Acutely ill

University of Michigan Medical School

Evidence-Based Guidelines for PopulationsEvidence-Based Guidelines for Populations

Prevention & screeningpracticeguidelines

Stable chronic diseasepractice guidelines

High intensitymanagement principles

Criticalpathways

Acute carepracticeguidelines


Healthy

Acutely ill

HospitalizedStable chronic diseaseand stable at risk

High risk orunstablechronic disease

Specialist (& PCP)

Prevention &screeningpractice guidelines

Acute care practice guidelines


High intensity management principles

Critical pathways

Prevention/Screeningmanagement program

Acute illnessmanagement program

Chronic/stable illnessmanagement program

High intensitycase management &tracking program

Inpatient practice management

PCP (& Specialist)

PCP & Specialist Specialist (& PCP)

Medical Management Strategies

TEAM APPROACH(Physicians, Nurse Practitioners, Social Work…)


Healthy

Acutely Ill

Stable chronic diseaseand stable at risk

High risk or unstable chronic disease

Hospitalized

Specialist(& PCP)

Hospitalized

Healthy Stable chronic diseaseand stable at risk

High risk or unstablechronic disease

Acutely ill

Prevention & screeningpractice guidelines

Acute carepractice guidelines


High intensity management principles

Critical pathways

Prevention/Screeningmanagement program

Acute illnessmanagement program

Chronic/stable illnessmanagement program

High intensitycase management &tracking program

Inpatientpracticemanagement

PCP (& Specialist)

PCP & Specialist Specialist (& PCP)

Health Plan Design StrategiesHealth Plan Design Strategies

Principal Physician

Hospitalist

TEAM APPROACH(Physicians, Nurse Practitioners, Social Work)

Access to Specialists

Risk factoridentification, HRA

Patient educationcovered

Specialized management programs covered

Full preventiveservices covered

Targeted health behaviorprograms

Patient advocateHome contactsBenefit expansion

Identify Areas of Practice

Identify Areas of Practice

Process for Practice Guideline Adaptation & ImplementationProcess for Practice Guideline Adaptation & Implementation

Define OptimalClinical Practice

Define OptimalClinical Practice

Teams Design and Implement

Interventions


Interventions

Assess OutcomesAssess Outcomes

Health Care DatabaseHealth Care Database

Redesign Process, if Necessary


Institutional ActivitiesInstitutional Activities

External AgenciesExternal AgenciesWise, Billi. Jt. Comm. J. Q. Imp. 1995;21:465-476.

Characteristics of Delivery System


CQI Process

CQI Process CQI Process

CQI Process

CQI Process

Identify Areas of Practice• High cost• High volume• Practice variation• High risk• Marketing factors• Regulatory factors• Guidelines available• Local clinical champion(s)• Other


Define Optimal Clinical Practice & Systems Processes

* Clinical panels adapt guidelines to local practice

* Collaborative critical pathways * Case management

Define Optimal Clinical Practice & Systems Processes

* Clinical panels adapt guidelines to local practice

* Collaborative critical pathways * Case management


Interventions


Interventions






External AgenciesExternal Agencies



CQI Process


CQI Process

CQI Process

Teams Design & Implement Interventions

• Data feedback• MIS-based intervention• Administrative interventions• Financial interventions• Educational models• Patient empowerment• Clinician empowerment• Other




Teams Design & Implement Interventions* Data feedback* MIS-based intervention* Administrative interventions* Financial interventions* Educational models* Patient empowerment* Clinician empowerment* Other

Teams Design & Implement Interventions* Data feedback* MIS-based intervention* Administrative interventions* Financial interventions* Educational models* Patient empowerment* Clinician empowerment* Other






External AgenciesExternal Agencies



CQI Process


CQI Process

CQI Process

Define Optimal Clinical Practice Guideline

•Begin with best evidence-based guideline•Clinical panels adapt guidelines to local practice•Modify based on medical evidence, not opinion

•Practice guidelines•Case management principles•Collaborative critical pathways








Teams Design & Implement Interventions•Data feedback • MIS-based intervention•Administrative interventions•Financial interventions•Educational models•Patient empowerment•Clinician empowerment•Other

Teams Design & Implement Interventions•Data feedback • MIS-based intervention•Administrative interventions•Financial interventions•Educational models•Patient empowerment•Clinician empowerment•Other

Institutional Activities Develop financial packages Planning & Marketing Regulatory reporting

Institutional Activities Develop financial packages Planning & Marketing Regulatory reporting

External Agencies Payers Public Corporations Corporate alliances Government agencies

External Agencies Payers Public Corporations Corporate alliances Government agencies

Characteristics of Delivery System• Process driven

• collaboration of caregivers• process of care defined

•Variation reduced (“optimal practice”)• Predictable costs (cost-effectiveness)• Outcomes - optimal outcomes defined & measured

Characteristics of Delivery System• Process driven

• collaboration of caregivers• process of care defined

•Variation reduced (“optimal practice”)• Predictable costs (cost-effectiveness)• Outcomes - optimal outcomes defined & measured

CQI Process


CQI Process

CQI Process








•Identify barriers•Fine tune guidelines


•Identify barriers•Fine tune guidelines

Assess Outcomes•Clinical•Process•Costs (cost / benefit)•Patient satisfaction•Return to work, days off, days ill

Assess Outcomes•Clinical•Process•Costs (cost / benefit)•Patient satisfaction•Return to work, days off, days ill

Health Care Database• Clinical• Demographic• Economic• Nursing• Outcomes: function, satisfaction, productivity

Health Care Database• Clinical• Demographic• Economic• Nursing• Outcomes: function, satisfaction, productivity

Practice GuidelinesPractice Guidelines““I can’t keep all that evidence in my head…”I can’t keep all that evidence in my head…”

PG = A distillation of scientific PG = A distillation of scientific evidenceevidence into a into a practical guidepractical guide to to assistassist a clinician a clinician in the in the managementmanagement of a problem. of a problem.

A A prospective agreement among cliniciansprospective agreement among clinicians to use in the care of similar cases.to use in the care of similar cases.

To reduce variation -- To reduce variation -- toward optimaltoward optimal

While permitting a doctor to vary -- While permitting a doctor to vary -- with a with a reason!reason!

8 Characteristics of Good 8 Characteristics of Good Practice GuidelinesPractice Guidelines

OpenOpen development process (who development process (who

developed it, why?)developed it, why?) Focused on improving Focused on improving importantimportant, ,

targeted health targeted health outcomesoutcomes.. Specify the most important questionSpecify the most important question SystematicSystematic use of the peer-reviewed use of the peer-reviewed

medical literature to support key steps.medical literature to support key steps.

8 Characteristics of Good 8 Characteristics of Good Practice GuidelinesPractice Guidelines

Full Full disclosure of the level of evidencedisclosure of the level of evidence for for

each step in the guideline.each step in the guideline. ““Expert opinionExpert opinion” minimized and labeled.” minimized and labeled. Include a Include a care algorithmcare algorithm and and key pointskey points.. Make Make availableavailable: supporting materials, text : supporting materials, text

rationales, literature reviews, evidence tables, rationales, literature reviews, evidence tables, patient education materials and bibliography.patient education materials and bibliography.

UMHS Guidelines: http://cme.med.umich.edu/iCMEUMHS Guidelines: http://cme.med.umich.edu/iCME

12 Characteristics of 12 Characteristics of Good UsesGood Uses of Practice Guidelinesof Practice Guidelines

Start with Start with good guidelinesgood guidelines, including the , including the source(s).source(s).

Use the guidelines nested in a Use the guidelines nested in a constructiveconstructive, , educationally-oriented quality improvement educationally-oriented quality improvement model.model.

In the In the local endorsement processlocal endorsement process, involve true , involve true representatives of the clinicians whose practice representatives of the clinicians whose practice the guideline covers.the guideline covers.

Allow Allow local adaptation, with justificationlocal adaptation, with justification and and documentation. Focus on aspects which may documentation. Focus on aspects which may not be feasiblenot be feasible..


Carefully design implementationCarefully design implementation programs to programs to encourage encourage educationeducation, dialogue and constructive , dialogue and constructive use of data. use of data.

The guidelines and supporting materials, literature The guidelines and supporting materials, literature reviews and evidence tables must be broadly reviews and evidence tables must be broadly availableavailable..

Help clinicians measure their performance with a Help clinicians measure their performance with a ““measure to improvemeasure to improve” rather than a “measure to ” rather than a “measure to judge” philosophy. judge” philosophy.

Measure onlyMeasure only key stepskey steps supported by high grade supported by high grade scientific evidence. Don’t sweat the small stuff!scientific evidence. Don’t sweat the small stuff!


Assess Assess barriersbarriers to successful practice to successful practice improvement. Make changes to overcome improvement. Make changes to overcome them.them.

Activate Activate alliesallies to help with the changes: to help with the changes: staff, patients, payers, employers, other staff, patients, payers, employers, other physicians.physicians.

Plan to Plan to modifymodify the guidelines based on their the guidelines based on their use, as experience grows.use, as experience grows.

Plan to Plan to updateupdate guidelines formally and guidelines formally and regularly.regularly.

Disease ManagementDisease Management

Disease Management is:Disease Management is:A systematic program to identify A systematic program to identify members with a disease and to members with a disease and to intervene to improve quality of intervene to improve quality of care and outcomes. care and outcomes.

Disease ManagementDisease Management

Simplest Versions:Simplest Versions: Multidisciplinary subspecialty clinicMultidisciplinary subspecialty clinic Office nurseOffice nurse

Elements of Superb Elements of Superb Disease Management ProgramsDisease Management Programs

Coordination of careCoordination of care Communication about careCommunication about careComprehensive careComprehensive care PreventionPreventionCollaborative/MultidisciplinaryCollaborative/Multidisciplinary Case managementCase management Provider educationProvider education Patient educationPatient education Patients

with a particular

disease

Features of Superb Features of Superb Disease Management ProgramsDisease Management Programs

Population basedPopulation based Disease specificDisease specific Define the spectrum of disease handledDefine the spectrum of disease handled Excellent case identification methodsExcellent case identification methods Explicitly enroll the membersExplicitly enroll the members Able to manage geographically dispersedAble to manage geographically dispersed Therefore uses long distance managementTherefore uses long distance management

(calls to patients, calls to physicians, home visits)(calls to patients, calls to physicians, home visits)

Features of Superb Features of Superb Disease Management ProgramsDisease Management Programs

Evidence based principlesEvidence based principles Collect and analyze outcomesCollect and analyze outcomes Excellent information systems Excellent information systems

- registry registry - phone logs integrated with clinical and use phone logs integrated with clinical and use

infoinfo- all data retrievable as patient specificall data retrievable as patient specific

Time prompts able to be set variably Time prompts able to be set variably

VALUE

Rate Proposals

Health Plan

Site Visits

Foundation for Accountability

(FACCT) Measures

NCQA/CAHPSSatisfaction

Survey

GM Health CareInformation andAnalysis System

HEDIS Quality Measures

Quality Initiatives

NCQAAccreditation

Health PlanRequests

for Information

BenefitLevelAccess

ClinicalMeasures

PatientSatisfaction

FunctionalOutcomes

.

Cost

Value: Employer’s DefinitionValue: Employer’s Definition


Low HighCost Effectiveness

Managed Care ContinuumD

egre

e o

f M

anag

emen

t

an

d I

nte

gra

tio

nL

ow

H

igh

Unmanaged Indemnity

Managed Indemnity

PPO

POS HMO

IPA HMO

Group/Staff HMOHighly Integrated IPA

Corp. SponsoredFacility / Systems


Documents

Organization of Health Care Presentation to ITTP Class January 7, 2004 John E. Billi, M.D. Professor, Internal Medicine and Medical Education Associate