Post on 13-Aug-2020
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The US Oncology Network is supported by McKesson Specialty Health. © 2015 McKesson Specialty Health. All rights reserved.Slide not to be share and/or copied without written permission from WM Herman
Surviving the Evolution/Revolution in
Healthcare Reimbursement
William (Bill) M. Herman
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The Foundation of this Workshop
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Progress in any human endeavour is a product of a
understanding of the circumstances in play, the tools
available to address the factors, and the resolve to take
actions required.
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This Talk’s
3
Define the current Healthcare “situation”Objectives:
“Tools/initiatives” being utilized to
affect change
Impact of these initiatives
Responses to these initiatives
Slide not to be share and/or copied without written permission from WM Herman
This Talk’s
4
Define the current Healthcare “situation”Objectives:
“Tools/initiatives” being utilized to affect
change
Impact of these initiatives
Responses to these initiatives
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Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group
Total health expenditures have increased substantially
over the past several decades
$74.6 Billion
$364.4 BillionIn 2014 Dollars
$3.0 Trillion
$0.0
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014
Total National Health Expenditures In Constant 2012 Dollars
Total National Health Expenditures, US $ Trillions, 1970-2014
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Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services,
Office of the Actuary, National Health Statistics Group
Health spending growth has outpaced growth of the
U.S. economy
6.9%
17.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1970 1973 1976 1979 1983 1986 1989 1992 1995 1998 2001 2005 2008 2011 2014
Total National Health Expenditures as a Percent of Gross Domestic Product, 1970-2014
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Payers have consolidated to survive
7
53M lives
33M lives
46M lives
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Performance of providers is becoming public
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Performance Historical Emerging
Measures Physician productivity Care team productivity
Tests ordered Patient outcomes and experience
Procedures performed Complications encountered
Decreasing unexplained clinical
variation in care
Improvement
OrientationIncreasing revenue/profit Outcomes, eliminating waste
Improving individually oriented
financially grounded metrics
Total cost of care
Defined performance metrics – team
oriented
Measurer Internal External
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This Talk’s
9
Define the current Healthcare “situation”Objectives:
“Tools/initiatives” being utilized to
affect change
Impact of these initiatives
Responses to these initiatives
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Factors that create progress in healthcare delivery
Quality
Science
Technology
Application/execution
Effectiveness
Research
Capital
Data
CostsUtilization
Price
Efficiency
Access
Reimbursement
Data
Outcomes
Healthcare Costs
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VALUE
QUALITY
COST
• Achieve better outcomes
• Increase safety
• Improve satisfaction
• Reduce avoidable medical
spending
• Decrease total cost of care
A market shift towards redefining value
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The transition to value-based care is complex and
well underway
Fee for service
P for PGain
ShareShared
RiskBundled
Payments
Episode based
payments
Partial or Full
Cap
Global Budget
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Payment and administrative complexity grows as risk is sharedPayment
Per unit
Payment for
outcomes
Different Types of Payment Models
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Payment model trajectoryCommercial payers leading the way
McKesson Sponsored Research Conducted February 2014 by ORC International with 350 providers and 114 payers participating
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Setting value-based payment goals — HHS efforts to
improve U.S. Health care*
“Our goal is to have 85% of all Medicare fee-for-
service payments tied to quality or value by 2016, and
90% by 2018. Perhaps even more important, our
target is to have 30% of Medicare payments tied to
quality or value through alternative payment models
by the end of 2016, and 50% of payments by the end
of 2018.”
*Sylvia M. Burwell, US Secretary of HHS. N Engl J Med 2015; 372:897-899, March 5, 2015
“Transforming Medicare from a passive payer to an active purchaser of high quality, efficient
healthcare”- CMS
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This Talk’s
15
Define the current Healthcare “situation”Objectives:
“Tools/initiatives” being utilized to affect
change
Impact of these initiatives
Responses to these initiatives
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Source: OECD (2013), "OECD Health Data: Health expenditure and financing: Health expenditure indicators", OECD Health Statistics (database).
doi: 10.1787/data-00349-en (Accessed on February 9, 2016).
Health spending growth has slowed, and is now on
pace with economic growth
9.3%
6.9%
4.2%
2.9% 3.1%
12.0%
10.0%
5.3%6.0%
3.2%
0%
2%
4%
6%
8%
10%
12%
14%
1970s 1980s 1990s 2000s 2010-2013
GDP Health Spending
Average annual growth rate of GDP per capita and total national health spending per capita, 1970 - 2013
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3%
6%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014
Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and
Medicaid Services, Office of the Actuary, National Health Statistics Group
Administrative costs have risen
Net cost of health insurance and administration, as a share of total health expenditures, 1970-2014
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2.1%
3.1%
4.4%
5.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Kaiser Family Foundation analysis of Consumer Expenditure Survey
On average, larger shares of household budgets are
devoted to health expenses than 10 years ago
Average portion of household budget devoted to health (nonelderly families), 2002-2012
Out-of-pocket costs:
Insurance premiums:
Total health expenses:
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To creation of abundance of quality metrics
CMS uses over 1,700 to measure/pay for quality
National Quality forum – 630
National Committee for Quality Assurance – 81
Joint commission 57 … 31 reported publicly
HHS
‒ 61 metrics for smoking cessation
‒ 113 for HIV
‒ 19 for obesity
‒ 68 for Perinatal health
Estimated to cost to collect = 1% of net patient revenue (Meyer et all., 2012)
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This Talk’s
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Define the current Healthcare “situation”Objectives:
“Tools/initiatives” being utilized to affect
change
Impact of these initiatives
Responses to these initiatives
Slide not to be share and/or copied without written permission from WM Herman
Physician-centric PCP ACOs
Value-based Cardiology
Value-basedOncology
Value-based Orthopedic
Shared objectives
Alignment and creating win-win strategies with
payers is paramount
Right time
Right place
Right care
Aligned incentives
Delivering… … …
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Oncology Care Example
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Source: OECD (2013), "OECD Health Data: Health status: Health status indicators", OECD Health Statistics (database).
doi: 10.1787/data-00349-en (Accessed on November 6, 2014). Notes: Break in series in 1987 and 1997 for Switzerland; in 1995 for Switzerland; in 1996 for Netherlands; in 1998 for Australia, Belgium, and Germany; in 1999 for United States; in 2000 for Canada and France; and in 2001 in the United Kingdom. All breaks in series coincide with changes in ICD coding.
Although the mortality rate for cancers has been
falling in the U.S. and across comparable countries
Age-adjusted neoplasms mortality rate per 100,000 population
242
203
262
212
0
50
100
150
200
250
300
1980 1985 1990 1995 2000 2005 2010
Comparable country average
United States
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Oncology costs/value is a challenge
Variations in Care
Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health Cost
Guidelines 2009, Fitch K, Iwasaki K, Pyenson B. Cancer Patients Receiving Chemotherapy: Opportunities for Better
Management. March 30th, 2010, Milliman
1000%
900%
800%
700%
600%
500%
400%
300%
200%
100%
0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cancer Drugs
Cancer Medical
Healthcare
US GDP
Inflation
Rapidly Rising Aggregate Costs
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Understanding the cost of cancer care
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Pathways /
Care MgmtEpisodes
Oncology
Medical Home
▪ Pre-defined, evidence-based
recommendations for
delivering care specific to
patient presentations
▪ Reimbursement dependent
on adherence to pathway
▪ Single upfront payment for
each episode
▪ Drugs reimbursed at
ASP+0%
▪ Episode payment can
increase if outcomes
improve or total cost of
care decreases
▪ Comprehensive program
of payment reform, care
redesign, and measurement
▪ Reimbursement may include
care management fee, drug
costs, infrastructure
payments, enhanced service
fees, and shared savings
Examples: Example: Example:
Resulting in new oncology payment models that
emphasis value and shift risk
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Customers/patient expectations rising
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Gap=.25
Treatment Experience … 60% driver of Loyalty
• Care provided by physician and nurse
• Courteousness of physician
• Explanation of diagnosis and treatment plan by physician
• Understanding of financial responsibility
Market Perceptions … 24%
Conducts clinical trial research
Has high quality nurses and support staff
Practice Administration … 17%
Responsiveness to concerns/complaints
Courteousness/helpfulness of receptionist
Time between appointment scheduling and actual visit
Loyalty Score*
* Statistical results from over 7,500 patient survey
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Requiring a comprehensive oncology toolkit
Clinical
Quality
Benchmarking
Advance Care
Planning
Level I
Pathways
Program
Lean Six Sigma
Process
Improvement
Research
Trials
Patient
Support
Services
Loyalty
Surveys
Peer Review
Tool Kit
Culture of
Continuous
Improvement
Clinically AND
Financially Strong
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That provide solutions to manage outcomes and costs
Pathways SurvivorshipValue Based
Palliative Care
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Market a value oriented oncology program to
payers and customers
Diagnosis Prescription Treatment Follow-Up
Specialized Pathology /tissue registry
Specific reference lab for advance
hematology and oncology needs
Diagnostic image read by
Radiologists who specialize in
oncology
Tumor board participation
Assess to expansive research trials
Evidence based Care Paths … capsulizing
IOM’s
Proactive Patient Surveillance Program
– Symptom management
– 24/7 proactive patient management
Tiered drug pricing program
Correct Diagnosis = Correct Treatment Evidenced Based Treatment Respecting The
Patient’s Wishes
Patient Value based end
of life program
Survivorship program
Genetics programs
Community
Practice
Pathways endorsed by NCCN for
outcomes & cost effectiveness
Hospital
Community Practice95%
5%
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IOM grounded treatment plan
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Objectives:
- Lower patient
anxiety
- Care team
coordination
- Cost management
Key Tools/Best Practices - Patient check in process
- Follow-up protocol & scripts
- High risk patient screen
- Pain mgmt protocol
Key IT Needs- Call and tracking log
- Communication
Who- Delivery: Clinical Team
- Outbound Calls: RN/MA
- Follow-up visits: APP
Key Data Elements- Number of ED visits
- Reconcile medication
- ESAS status updates
Critical Success Factors
- Clarity and acceptance to roles
and responsibility
- Execution discipline
- Forum for feedback and
improvement
Centralization
Opports.- All outbound calls
Detail processes: patient surveillance example
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To get favorable contracting results
Metric based P4P program
Episodes of care rates
Case rates/bundled payments
Oncology medical home
ACO partnerships tied to
managing “total cost of care”
Preferred status
No pre-authorizations
Bonus
Fee per member per month
Exclusivity
Value Based Contracting Structures …
… Actual Wins
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Recapping progress in healthcare
Patients: are now consumers and more engaged in their care
Legacy fee for service is fading away
The value based shift emphasizes quality and cost over volume
Alignment is required among payers and providers of resources and
information around populations
Focused on full continuum of care versus episodes
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Better Health, Better Care, Reduced Cost
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Thoughts?
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