Health Reform, Medicaid Expansion and Challenges for Providers · Marches on, for Now. 9....

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Health Reform, Medicaid Expansion and Challenges for Providers

Jeff MoserVice President, Sg2

May 31, 2012

Market UpdateRedesigning Care

Agenda

Confidential and Proprietary © May 2012 Sg2 3

2012 Outlook: A Year Like No Other

Unprecedented ThreatsMarket share battles intensifyBad debt driven by deductibles/co-pays/tiered networksRisk-based payments pushed at providersMargin improvement paramountRole of the consumer IT implementation costs create riskNew market entrants challenge modelsHealth care mandates looming


The Timeline of Health Care Reform Marches on, for Now

Constitutionality challenge?Republican-led rollbacks?Health insurance exchanges?

2010–2013 2014–2017

The Prelude Market Expansion

Regulation and Restructuring

2018–2020


2014–2017: The Industry Is Getting Prepared

Market Expansion

Select Initiatives Within Health Reform Law, 2014–2017

DSH = disproportionate share hospital; FPL = federal poverty level.

Hospital Payment Cuts

Insurance Market Reforms Coverage Expansion

Medicare DSH payments cut by 75%Avoidable admissions

Guaranteed issueEssential benefit package definedInsurance industry moves to regulation

Medicaid expanded to 133% of FPL, estimated 16 million coveredState-based insurance exchangesIndividual mandate to purchase (subsidies up to 400% of poverty level)


What Won’t Change: The Era of Risk-Based Reimbursement Is Here

Oct 2010

Oct 2020

Hospital Medicare Payment at Risk, Year by Year

Value-Based Purchasing

30-Day Readmissions

Hospital-Acquired Conditions

1

%

1

%

3

%

3

%

3%3%

Oct 2011

Oct 2012

Oct 2013

Oct 2014

Oct 2015

Oct 2016

Oct 2017

Oct 2018

Oct 2019

1%1%

1%1% 2%2%

TOTAL 2

%

2

%

6%6%5%5%

2

%

2

%

Source: Sg2 Analysis, 2011.


Sg2 Perspective on the Growth of Risk Contracting, 2012–2020

2012 2013 2014 2015 2016 2017 2018 2019 2020

Medicare

Medicaid

Dual Eligible

Commercial

Self-Pay

Patients in Provider Risk Contracts


Emerging Payment Models Will Take Various Forms

High

HighLow

Scope of Risk

Fee for service

Inpatient case rates (DRGs)

Bundled episodes (inpatient only)

Clinical integration program

Insurance product

ACO

Bundled episodes (pre- and post-care included)

Global capitation

P4P/value-based purchasing

Disease-specific capitation

ACO = accountable care organization; P4P = pay for performance; DRG = diagnosis-related group.


Risk Readiness Varies Widely From Market to Market

Decision ScaleHighAbove AverageAverageBelow AverageLeastData Not Available

Leve

l of

Rea

dine

ss


What Does This Mean for a Typical Health System?

Focused on inpatient businessStrong physician referral channelED as the “front door” for majority of admissionsExcels at revenue cycle, LOS managementFew System of CARE linkagesLots of inappropriate utilization and readmissionsCFO pushed 5% cost reduction over the past 3 years

ED = emergency department; LOS = length of stay; CARE = Clinical Alignment and Resource Effectiveness.


Fast Forward to 2016

CMS = Centers for Medicare & Medicaid Services; PCP = primary care physician; PAA = potentially avoidable admission.

Hospital is a success!Hospital is growing and profitable.Physicians are happy.System wins best employer award.Weaker aspects of performance do not affect market or financial results.

Hospital is a success!Hospital is growing and profitable.Physicians are happy.System wins best employer award.Weaker aspects of performance do not affect market or financial results.

2011 2016CMS docks hospital 5% of revenues for PAAs, readmissions.Hospital is excluded from private payers’preferred tier networks.Patients shop to manage their out-of-pocket liability.PCPs redirect cases away to maximize their incentives/reduce penalty exposure.Profitability and market share erode.

CMS docks hospital 5% of revenues for PAAs, readmissions.Hospital is excluded from private payers’preferred tier networks.Patients shop to manage their out-of-pocket liability.PCPs redirect cases away to maximize their incentives/reduce penalty exposure.Profitability and market share erode.


Start by Asking New Questions

How are volumes?

How are volumes?

Should we become an

ACO?

Should we become an

ACO?

New

How good is our product?How good is our product?

How are we changing the total cost of care?

How are we changing the total cost of care?

Old

What is our product?What is our product?


The Scope of Your Strategy Must Encompass the System of CARE

Retail Pharmacy

Wellness and Fitness Center

Diagnostic/ Imaging Center

Urgent Care Center

HospitalAcuity

Community-Based CareAcute Care

Post- Acute

Care

Physician Clinic

Ambulatory Procedure Center

OP Rehab

IP Rehab

SNF

CARE = Clinical Alignment and Resource Effectiveness; IP = inpatient; OP = outpatient; SNF = skilled nursing facility.

Home

Home Care

Market UpdateRedesigning Care

Agenda


Outpatient (OP) Growth Opportunities Will Overwhelm Inpatient (IP) Decline

Population-Based Forecast

Sg2 Forecast –3%

+18%

Forecast excludes 0–17 age group and psychiatry and obstetrics service lines.Sources: Impact of Change® v10.0; NIS; Pharmetrics; CMS; Sg2 Analysis, 2011.

Population-Based Forecast

Sg2 Forecast +32%

+15%

Millions Billions

Adult IP Forecast

US Market, 2011−2021Adult OP Forecast

US Market, 2011−2021


Patients Are Coming From Mars, Physicians Are Leaving for Venus

Dr Jones, I’m having knee pain. I can’t keep up with my child anymore.

Your blood pressure is high, and I am worried that you cannot walk up

a flight of stairs. Let’s have you come back

next week to talk about your knee.

The Complicated Universe of Ambulatory Care

I should schedule him for a treadmill in case he has silent

ischemia with his diabetes.

How could they schedule this man for a

15-minute visit?

I hope she doesn’t tell me I am fat.

My wife is really unhappy that I

lost my job.


MDs Challenged With Aligning Patients’ Clinical Needs While Lowering Costs

ICU = intensive care unit; MLP = midlevel provider.

Care Customization

Team MLPPhysician

PhysicianMLP

MLPSocial workerNurse Physician

Nurse Social workerMLPPhysicianBehavioralists

Setting Office Office Multispecialty practice Multispecialty practiceExample Sprained

ankleMultiple issues, pick 1

Serious chronic condition(s)

Overweight smoker, uninsured

Ambulatory ICUPriority Delivery

Simple Visit

Social ICU


Advantages Time saving (2 hours = 20 patients)Cost-effective (generate ~$15,000/physician/year)Addresses projected demandIncreased access to PCPs

Disadvantages Uncertain reimbursement coverage (eg, no CPT® code)Concerns over patient confidentiality Unclear how to document every patient encounterHigh attrition rates

Key to Customizing Priority Delivery Care: Increased Efficiency

Utilize group visits to manage patients with similar diseases. Utilize group visits to manage patients with similar diseases.

CPT is a registered trademark of the American Medical Association. CPT = Current Procedural Terminology. Source: Jaber R et al. Fam Pract Manag 2006;13:37–40.

EncounterExpectationCommunicationServiceSupply & Demand



Segmenting Patients by Risk— Welcome to the “Ambulatory ICU”Ambulatory ICU aims to reduce costs and improve quality.

Multidisciplinary team approach to intensive care management for the highest-risk patients (80/20 rule) Eligible patients suffer from multiple chronic conditions.Dedicated care manager (eg, registered nurse, social worker)Strengthens primary care relationships and patient engagement through proactive outreach (eg, calls, emails, visits)Creation of personalized care planThorough education in disease self-managementPrompt access to care team for appointments and questions Use of evidence-based practices/medical assistance software to improve visit efficiency

Source: California Healthcare Foundation. The ambulatory intensive caring unit: early experiences. www.chcf.org/events/2010/cin-webinar-05-26-2010. Accessed October 2011.


Segmenting Patients by Nonmedical Needs: Welcome to the “Social ICU”

Social ICU Addresses Nonhealth Factors Working Against Seamless Care

Model this after the ambulatory ICU (eg, multidisciplinary care team, patient education, proactive outreach).Focus on managing social factors that drive clinical conditions.

Care manager determines social barriers (eg, uninsured, domestic violence, depression, substance abuse, air quality in home, access to healthy food).Team works with community support network to address these issues.

Clinicians able to focus on treating disease after social issues are resolved.

SES = socioeconomic status. Sources: Schroeder SA. N Engl J Med 2007;357:1221–1228; Wilper AP et al. Ann Intern Med 2008;149:170–176; Partnership for Clear Health Communication. What is health literacy? www.npsf.org/pchc/health-literacy.php. Accessed October 2011.

Social ICU Patient

Personal Behaviors




9,000 patients with high utilization were responsible for 42% of the net hospital losses.

Identified 4 patient classification for the programEstablished an expanded care team: physician, social worker, nurse practitioner, 4 community health aidsEmpowered care team to “do whatever it takes”Created a program phone line to be a direct point-of-contact

ResultsAnecdotal evidence shows a reduction in ED and hospital utilization.

Texas Hospital

System Optimization: “Extensivist” Clinic Created to Care for Uninsured Patients

Impact: Hospitals that create innovative care models can improve patient care–with the right patient, right setting and right care.

Impact: Hospitals that create innovative care models can improve patient care–with the right patient, right setting and right care.

Animated


Consider the Rapidly Changing Role of Health System in Patient Engagement

BeforeGlucose readings reviewed quarterly in diabetes clinic.Handwritten logs incomplete, time consuming to analyzeDelays in insulin dose changes, phone tagDelayed gratification, poor complianceElevated hemoglobin A1cAdmitted for hyperglycemia

BeforeGlucose readings reviewed quarterly in diabetes clinic.Handwritten logs incomplete, time consuming to analyzeDelays in insulin dose changes, phone tagDelayed gratification, poor complianceElevated hemoglobin A1cAdmitted for hyperglycemia

NowOnline monitoring toolsFrequent care team contact via e-visitsContinuous glucose monitoring results sent electronicallyInsulin dosage changes made in real timeLower hemoglobin A1cNo hospitalizations for uncontrolled diabetes

NowOnline monitoring toolsFrequent care team contact via e-visitsContinuous glucose monitoring results sent electronicallyInsulin dosage changes made in real timeLower hemoglobin A1cNo hospitalizations for uncontrolled diabetes

14-Year-Old Patient With Diabetes


Next Steps: Prepare for Care Redesign

Benchmark performance against competitors.

Understand market forecast for services.

Anticipate how quickly your market may move toward new payment models.

Identify diseases/service lines with subpar performance, high cost/low margins, quality variability, etc.

Target efforts to services that are key to the goals established in the organization’s strategic plan.

Assemble a team of physicians, clinical staff, administrators, operations staff, patient advocate, etc.

Address potential hurdles from the outset: physician resistance, questionable leadership support, insufficient IT, etc.


Sg2’s analytics-based health care expertise helps hospitals and health systems integrate, prioritize and drive

growth and performance across the continuum of care. Over 1,200 organizations around the world rely on Sg2’s

analytics, intelligence, consulting and educational services.

www.sg2.com + 1 847 779 5300

Health Reform, Medicaid Expansion and Challenges for Providers · Marches on, for Now. 9....

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