Aligning reimbursement-Aligning reimbursement-systems with value-based systems with value-based

care principlescare principles

Anna Essén, Ph D, Business AdministrationAnna Essén, Ph D, Business Administration

There is room for improvementThere is room for improvement

Health care delivery systems are not Health care delivery systems are not organized around value organized around value

Current reimbursement models do not Current reimbursement models do not encourage care providers to re-design encourage care providers to re-design their inter-organizational processtheir inter-organizational process

Previous work Previous work

Health care literature on payment modelsHealth care literature on payment models Informs our work, but…Informs our work, but…Does not tell us what to doDoes not tell us what to do

Issues to considerIssues to consider

Rewards vs penalties?Rewards vs penalties? Individual vs group level bonus?Individual vs group level bonus?Relative vs absolute incentives?Relative vs absolute incentives?Target vs improvement based?Target vs improvement based?Frequency and size?Frequency and size?

Value-Based Care TheoryValue-Based Care Theory

Our savior?Our savior?

Value-Based Care Principles Value-Based Care Principles

The purpose of care systems is to The purpose of care systems is to produce valueproduce value

Value= patient health outcomes/costsValue= patient health outcomes/costs

We need to evaluate care systems based We need to evaluate care systems based on the value they produceon the value they produce

Cost-effectiveness Cost-effectiveness

vs.vs.

ValueValue

Health OutcomesHealth Outcomes

Tier One: Health status achieved Tier One: Health status achieved (immediate outcomes)(immediate outcomes)

Tier Two: Process of recovery Tier Two: Process of recovery

Tier Three: Sustainability of health (long-Tier Three: Sustainability of health (long-term outcomes)term outcomes)

Risk adjustmentRisk adjustment

Adjusting for aspects that influence Adjusting for aspects that influence outcomes but are beyond the control of outcomes but are beyond the control of the providerthe provider

To avoid cherry pickingTo avoid cherry picking

CostsCosts

We need to estimate costs per patient We need to estimate costs per patient rather than cost per department, billing rather than cost per department, billing code etc.code etc.

ABC (Activity Based Costing)ABC (Activity Based Costing)

Who produces outcomes and costsWho produces outcomes and costs

Integrated Practice UnitsIntegrated Practice Units A dedicated team who provides the full cycel of A dedicated team who provides the full cycel of

care for the condition, encompasses inpatient, care for the condition, encompasses inpatient, outpatient and rehabilitative care and supporting outpatient and rehabilitative care and supporting servieces (nutrition, behavioral health), includes servieces (nutrition, behavioral health), includes patient education, engagement and follow up. patient education, engagement and follow up. Accepts joint accountability for outcomes and Accepts joint accountability for outcomes and costs. costs.

IPUs vs clinical path ways, integrated care IPUs vs clinical path ways, integrated care

Patients as co-producersPatients as co-producers

IPUs should IPUs should enableenable patients to produce patients to produce valuevalue

Treat patients as peers- integrate their Treat patients as peers- integrate their work in formal structureswork in formal structures

Facilitated networksFacilitated networks

Implication on reimbursementImplication on reimbursement

BundledBundledOutcome-basedOutcome-based

RheumatologyRheumatology

There is an outcomes-measurement There is an outcomes-measurement system in placesystem in place

There are routines for entering and using There are routines for entering and using data in everyday care practicedata in everyday care practice

Measurement has stimulated Measurement has stimulated improvementsimprovements

Current structures discourage reinventing Current structures discourage reinventing processes across care levels.processes across care levels.

RheumatologyRheumatology

Todays structures do not encourage care Todays structures do not encourage care providers to maximize the volume rather providers to maximize the volume rather than value produced. than value produced.

Agreement about outcomesAgreement about outcomes

Subjective, objective measures of Subjective, objective measures of outcome continuously accumulatedoutcome continuously accumulated

Uncertainty involvedUncertainty involved

Value-added process, solution shops, Value-added process, solution shops, facilitated networks (Christensen et al facilitated networks (Christensen et al 2009).2009).

How can we deal with these issues?How can we deal with these issues?

The projectThe project

Stockholm County Council (Purchaser)Stockholm County Council (Purchaser)Three clinics in Stockholm Councils Three clinics in Stockholm Councils

(Producer)(Producer)Patient representatives (consumers)Patient representatives (consumers)Researchers: Karolinska Researchers: Karolinska

Institutet/Karolinska Sjukhuset Institutet/Karolinska Sjukhuset (Ernestam,S. Lindblad S. ); Stockholm (Ernestam,S. Lindblad S. ); Stockholm University (Essén A); Harvard Business University (Essén A); Harvard Business School (Porter, M; Baron, J)School (Porter, M; Baron, J)

Suggesting an outcome based Suggesting an outcome based reimbursement model adjusted reimbursement model adjusted to the context of rheumatologyto the context of rheumatology

The medical condition in focusThe medical condition in focus

Rheumatoid arthritisRheumatoid arthritis

Defining the care cycleDefining the care cycle

The first care cycle: Response to The first care cycle: Response to diagnosis (ends 3 months after diagnosis)diagnosis (ends 3 months after diagnosis)

Critical outcomes: time to 1st visit; time to Critical outcomes: time to 1st visit; time to remission; disease activity; regaining work remission; disease activity; regaining work abilityability

Defining the care cycle Defining the care cycle

The second care cycle: long-term disease The second care cycle: long-term disease management and preventionmanagement and prevention

Critical outcomes: number, duration and Critical outcomes: number, duration and intensity of flares, maintaining good quality intensity of flares, maintaining good quality of life and functional ability. Controlling risk of life and functional ability. Controlling risk factors.factors.

Developing a prototypeDeveloping a prototype

Experimenting with different outcomes Experimenting with different outcomes and weightings using historical registry-and weightings using historical registry-datadata

Implementing a prototype in a shadow-Implementing a prototype in a shadow-budgetbudget

Following the case with quantitative and Following the case with quantitative and qualitative data generation methodsqualitative data generation methods

QuestionsQuestions

Is the model sensitive to important Is the model sensitive to important differences (does it reward effective differences (does it reward effective reorganization?)reorganization?)

The interplay between the model andThe interplay between the model andOther in/formal organizational and financial Other in/formal organizational and financial

structuresstructuresPersonal dispositions/motivations of individual Personal dispositions/motivations of individual

professionals and patientsprofessionals and patients

QuestionsQuestions

Risks, e.g. possibilities of manipulating the Risks, e.g. possibilities of manipulating the model and unintended incentives such as model and unintended incentives such as cherry picking and reduced non-financial cherry picking and reduced non-financial incentivesincentives

Risks: supervision of the present towards Risks: supervision of the present towards outlooking future possibilities of creating outlooking future possibilities of creating valuevalue

ContributionsContributions

Insights into how value-based care Insights into how value-based care principles operate in practiceprinciples operate in practice

Examples of how to apply and integrate Examples of how to apply and integrate this theory in chronic carethis theory in chronic care

Extending and refining the value-based Extending and refining the value-based care theory by learning from our contextcare theory by learning from our context

Philosophical issues e.g. value, human Philosophical issues e.g. value, human motivation, innovation motivation, innovation