Paying for Care Coordination

• Gerard Anderson, PhD

Johns Hopkins University

Who Should Pay For Care Coordination?

• Providers?

• Patients?

• Insurers?

Perhaps A More Appropriate Question Is

• Who actually benefits from care coordination?

Current Practice

• Providers pay while patients and insurers benefit

Example – Medicare Program

• Medicare beneficiaries with 5+ chronic conditions

– 23% of beneficiaries, but 68% of spending

– 13 different physicians

– 50 prescriptions

Preventable Hospitalizations Among Medicare Beneficiaries

0

50

100

150

200

250

300

350

400

0 1 2 3 4 5 6 7 8 9 Morethan10Number of Types of Chronic Conditions (by MDC)

Rat

e p

er 1

000

Ben

efic

iari

es

ACSCs

Compications

Source: “Prevalence, Expenditures, and Complications of Multiple Chronic Conditions in the Elderly,” Archives of Internal Medicine, 2002

Annual Out-of Pocket Spending by Medicare Beneficiaries

0

500

1000

1500

2000

2500

0 1 2 3 4 5 ormore

Number of Chronic Conditions

Ou

t-o

f-p

ocket

Exp

en

dit

ure

s

($)

Source: “Medicare and Chronic Conditions,” NEJM, 2005

Medicare Does Not Pay for Care Coordination

• No care coordination payment

• No electronic medical record payment

• No disease management

Medicare is a program for people with chronic conditions…

And is beginning to learn

Medicare Modernization Act of 2003

• First steps in promoting care coordination

• Several care coordination provisions

National Standards for Electronic Prescriptions

• Purpose – to develop national standards for electronic prescriptions

Electronic Prescriptions Grants

• Purpose – Provide grants to MDs for purchase of computers

Specialized Plans for Patients with Special Needs

• Purpose – To provide incentives for managed care plans to enroll patients with complex chronic conditions

Chronic Care Improvement

• Purpose – Disease management companies were given contracts to improve adherence to evidence based medicine

Care Management for High Cost Beneficiaries

• Purpose- To involve clinicians in care management in fee-for- service Medicare

1 Chronic Condition

3%

4 Chronic Conditions

13%

3 Chronic Conditions

10%

2 Chronic Conditions

7%

0 Chronic Conditions

1%

5+ Chronic Conditions

66%

Beneficiaries With 5 or More Chronic Conditions Account for Two-Thirds of Medicare Spending

Source: Medicare 5% Sample, 1999

1 Chronic Condition

27%

4 Chronic Conditions

9%

3 Chronic Conditions

12%

2 Chronic Conditions

17%

0 Chronic Conditions

18%

5+ Chronic Conditions

17%

Beneficiaries With Multiple Chronic Conditions Are Over Half of Medicaid Spending

Source: Medical Care Expenditure Panel Survey, 2000

1 Chronic Condition

14%

4 Chronic Conditions

13%3 Chronic Conditions

14%

2 Chronic Conditions

15%

0 Chronic Conditions

13%5+ Chronic Conditions

31%

Subscribers with Multiple Chronic Conditions Account for Three Quarters of Private Health

Insurance Spending

Source: Medical Care Expenditure Panel Survey, 2000

Two Ways that Insurers Could Foster Care Coordination

• Electronic Medical Record

• Pay for Care Coordination

Electronic Medical Records – U.S. in “Dark Ages”

• Other countries have substantial head start

• Other countries have substantial governmental leadership

United States

• Office of the National Coordinator for HIT• Initiated 2006?, expected to be completed 2016• $125 million US invested as of 2005 ($0.43 per

capita)• Uses EHRs, PHRs, telehealth, health

information network

Australia

• HealthConnect formed by the National Health Information Group

• Initiated IT efforts in 2000• $97.9 million US invested as of 2005 ($4.93 per

capita)• Uses EHRs, point-to-point messaging

United Kingdom

• Established the National Programme for IT (NPfIT) – Anticipates creating an integrated care record

service, an electronic appointment system, and an electronic prescription transmission system and will build infrastructure and networks that will be accessible to all of the major health care providers by 2014

• $11.5 billion US invested as of 2005 ($192.79 per capita)

Canada

• Office of Health and the Information Highway launched Canada Health Infoway (2001), a nonprofit organization

• Initial efforts began in 1997– Expects to have EHRs for half of the population by

the end of 2009 • $1.0 billion US invested as of 2005 ($31.85 per

capita)

Germany

• Better IT for Better Health• First country to start developing a national HIT network

(1993) and first expected completion date (2006)• $1.8 billion US invested as of 2005 ($21.20 per capita)• Updating its smart-card technology to use advanced

security features to protect the stored personal medical data.

Norway

• Say @h!; Te@mwork 2007• Initiated IT efforts in 1997; expected completion

in 2007• $52.2 million US invested as of 2005 ($11.43 per

capita)• Uses EHRs, Norwegian Health Net

One Policy Option for U.S.

• Pay $5 for providers to submit an electronic medical record

• Cost - $10 billion annually

- $ 4 billion Medicare • Possible Savings to Insurers -

$25 billion (full participation)

Pay for Care Coordination

• Allow each person with 5+ chronic conditions to designate a care coordinator

• Care coordinators responsibilities :

– Serve as main contact person for patients

– Maintain contact with all other clinicians

– Resolve treatment issues

Additional Issues

• Cost Sharing

• Paying Managed Care plans

Cost Sharing

• Out-of-pocket spending nearly doubles with each chronic condition

• Create out-of-pocket maximum

Managed Care Plans

• Better risk adjusters needed

–Need to reflect number of chronic conditions

Vision for Future

Because insurers benefit from care coordination, insurers will pay for care coordination