THE COMMONWEALTH

FUND

Developing Innovative Payment Approaches:Finding the Path to High Performance

Stuart GutermanVice President, Payment and System Reform

Executive Director, Commission on aHigh Performance Health System

The Commonwealth Fund

Alliance for Health Reform Briefing on“The Innovation Center: How Much Can It

Improve Quality and Reduce Costs – and How Quickly?Washington, DC

July 18, 2011

THE COMMONWEALTH

FUND

“The country needs, and unless I mistake its temper, the country demands, bold, persistent experimentation. It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.”

Franklin D. Roosevelt, 1932

THE COMMONWEALTH

FUND

Problems with the Current Payment System and Goals of Reform

• Problems:– Fragmented care– Lack of coordination– Variable quality– High and rapidly-growing costs

• Goals:– Create incentives for providers to take broader accountability for

patient care, outcomes, and resource use– Provide rewards for improved care coordination among

providers– Slow growth in health spending– Put in place an infrastructure to support providers in improving

quality and efficiency

THE COMMONWEALTH

FUND

Center for Medicare and Medicaid Innovation

• Innovation Center to test innovative payment and service delivery models to reduce program expenditures under Medicare, Medicaid, and CHIP while preserving or enhancing the quality of care; current demonstration authority expanded

• Models to be selected based on evidence that they address a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable expenditures

• Emphasis on care coordination, patient-centeredness

• Could increase spending initially, but over time must improve quality without increasing spending, reduce spending without reducing quality, or both

• Evaluation should include quality of care, including patient-level outcomes, and changes in spending; could consider cross-program impact

• Secretary could expand duration and scope if model reduces spending without reducing quality

THE COMMONWEALTH

FUND

Models to be Tried by the Innovation Center• Patient-centered medical homes for high-need individuals,

women’s health care needs, and comprehensive or salary-based payment

• Promotion of innovative care delivery models with providers such as risk-based comprehensive payment or salary-based payment

• Using geriatric assessments and comprehensive care plans to coordinate care

• Promote care coordination through salary-based payment• Support care coordination for chronically-ill through the use of

health information technology• Vary payment to physicians ordering diagnostic imaging

services based on appropriateness criteria of the order• Use medication therapy management services• Establish community-based health teams to support small

practice medical homes• Support individuals in making health care decisions through the

use of patient decision support tools

(cont.)

THE COMMONWEALTH

FUND

Models to be Tried by the Innovation Center• Allow states to test and evaluate care for dual eligibles• Allow states to test and evaluate all-payer payment reform• Align nationally recognized, evidence-based guidelines of cancer

care with payment incentives• Improve post-acute care through continuing care hospitals• Fund home health providers offering chronic care management• Develop a collaborative of high-quality, low-cost health care

institutions to develop, disseminate, and implement best practices and provide assistance to other institutions

• Use electronic monitoring to facilitate inpatient care of hospitalized individuals at their local hospital

• Promote efficiency and timely access to outpatient services through models not requiring a physician or other health professional to make a referral

• Establish comprehensive payments to Healthcare Innovation Zones

THE COMMONWEALTH

FUND

Key Considerations for Successful Pilots

• Multi-payer involvement

• ‘Ground-up’ as well as ‘top-down’ development

• Array of potential models

• Flexibility in design and implementation

• “Innovation with Evidence Development”

• Establish infrastructure to support success

• Work with MedPAC, MACPAC/feed into IPAB deliberations

THE COMMONWEALTH

FUND

Improving the Process

• Transparency

• Site selection and approval

• Evaluation

• Translating pilots into policy

• Resource availability

THE COMMONWEALTH

FUND

“At this point, we can’t afford any illusions: the system won’t fix itself, and there’s no piece of legislation that will have all the answers, either. The task will require dedicated and talented people in government agencies and in communities who recognize that the country’s future depends on their sidestepping the ideological battles, encouraging local change, and following the results. But if we’re willing to accept an arduous, messy, and continuous process we can come to grips with a problem even of this immensity. We’ve done it before.”

Atul Gawande, 2010