Payment Reform and Physician Realignment: The Road Ahead
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Transcript of Payment Reform and Physician Realignment: The Road Ahead
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Payment Reform and Physician Realignment:The Road Ahead
Collin-Fannin County Medical SocietyMay 24, 2011
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Annual Increase in per Capita Health Spending vs. Increase in Consumer Price Index
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National Health Expenditures per CapitaHealthcare spending in 2010 was $2.6 trillion, over17% of GDP.
Per capita spending has increased 70% over the past decade.
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Distribution of Healthcare Expenses for the U.S. Population
Percent of U.S. Population Ranked by Expenses
1977 1987 1997 2007
Top 1 Percent 27% 28% 28% 23%
Top 5 Percent 55% 56% 56% 50%
Bottom 50 Percent 3% 4% 3% 3%
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The Five Most Costly Medical Conditions end of lifeheart diseasepulmonary diseasemental disordercancer
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Mean Healthcare Expenditure per Person by Spending Group - 2008
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Mandated Medicare Payment Reductions 2012 - 2019
SGR - $380 Billion Cut payments for physician services under the Sustainable Growth Rate Formula.
Scheduled 27% reduction in 20013.
ACA - $500Billion reduce physician and hospital payments based on private, non-farm business
productivity growth. reduce disproportionate share hospital (DSH) payments reduce Medicare Advantage payments eliminate Medicare Improvement Fund
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Current law mandates almost $900 billion in cuts to provider payments over the next 8 years.
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Simulated Comparison of Relative Medicare, Medicaid and
Private Health Insurance Prices Under Current Law
Source: Office of the Actuary, Centers for Medicare and Medicaid Services 8
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What are the Alternatives?1. Congress allows the mandated cuts to take effect, and by 2019 over 20%
of US hospitals have negative operating margins and a large percentage of physicians have dropped out of Medicare.
2. Congress allows the cuts to take effect and implements “all-payer” rate-setting to prevent the gap between Medicare and commercial payers from becoming too wide.
3. Congress serially acts to delay and postpone mandated cuts in the name of preserving Medicare which, coupled with the projected $875 billion cost of expanded coverage, causes healthcare inflation and pressures on the federal budget to accelerate.
4. Congress acts to fundamentally change how healthcare is paid for, e.g., bundled and global payments.
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United States Income Statement FY 2012
FY2012 Revenue$2.47 Trillion
FY2012 Expenses$3.80 Trillion
Social Security$773B
Medicare +Federal
Medicaid$733B
Unemployment Insurance+ Other Entitlements
$746B
Security +Defense$868B
DiscretionaryNon-Defense
$450B
Net Interest$225B
Individual Income Tax
$1,165B
SocialInsurance Tax
$841B
CorporateIncome Tax
$237B
Other$226B
9%
47%
34%
10%
20%
19%
20%
23%
12%
6%
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How Healthcare is Currently Purchased
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How Physician Payments are Determined
PHYSICIANPAYMENT
ConversionFactor
Volume ofServices
Relative Pmt.Per Service
PaymentAdjustments
SustainableGrowth Rate
SGRFormula
PracticeExpense
Work
ProfessionalLiability
Provider/Location
HPSABonus
WorkRVU
WorkGPCI
Pract. Exp.RVU
Pract. Exp.GPCI
PLIRVU
PLIGPCIPerformance
BillableServices
RUCWeighting
ProfessionalEarnings
Non-MDWages
Floor
VariationShare
Office SpaceExpense
Equipment& Supplies
MedicalHome P4P Gain
Sharing
Svc Vol./MixPer Physician
PQRI
PracticeFee Areas
PracticeFee Areas
Cost ShareWeights
HOW PHYSICIAN PAYMENTS ARE DETERMINED BY MEDICARE
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Payment Reform Alternatives
Areawide budgets
Fee-for-service
Pay for performance bonuses for quality
Pay for performance bonuses for quality penalties for inefficiency
Episode based payments
Capitation
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Current Payment Reform Initiatives
Major CMS payment reform initiatives currently under way include:
Medicare Shared Savings Program (MSSP)
Pioneer Accountable Care Organization (ACO) Model
Value Based Purchasing Initiative
Bundled Payments Initiative
The market is moving away from utilization based reimbursement. The momentum of change is now mandating effective clinical integration, regardless of participation in any of these current CMS programs.
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Candidates for Episode Based Payment
Any medical condition that meets the following criteria would be a potential candidate:
has a high cost per event is subject to wide variation in treatment requires services that are currently not adequately reimbursed,
e.g., case management, provision of patient care outside an office setting, etc.
has clear beginning and end points that could readily be documented by clinicians
has generally agreed upon clinical practice guidelines
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Episode Based Payment Options
Type of Case
Trigger Time Window Examples
Chronic Medical
OutpatientProfessional
One year from trigger Diabetes, CHF, COPD Asthma, CAD, HTN
Acute Medical
InpatientFacility
3-day look-back;30-day look-forward
AMI, Stroke, Pneumonia
InpatientProcedural
Inpatient Facility
30-day look-back;180-day look-forward
Hip/Knee Replacement, Bariatric Surgery,
CABG
OutpatientProcedural
Outpatient Fac./Professional
30-day look-back;180-day look-forward
PCI, Hernia, Knee Repair, Ligaments
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Current Practice
PCP
SurgeonPHYSICIANS
DEVICES/EQUIPMENT
DRUGS
FACILITY
NON-MDSTAFF
PCP PCP PCP
Other Specialist
Surgeon SurgeonOther Specialist
Surgeon
Home CarePCP Care
Mgr
HospitalStaff
HospitalStaff
Hospital HospitalRehab FacilityLong-Term Care
Drugs Drugs DrugsDrugs
Imaging ImagingImplants,
etcImaging Imaging
DRG DRG
Pre-Admission
Hospitalization
Post-Acute Care
Readmission
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Episode Based PaymentHospital “Warranty”
PCP
SurgeonPHYSICIANS
DEVICES/EQUIPMENT
DRUGS
FACILITY
NON-MDSTAFF
PCP PCP PCP
Other Specialist
Surgeon SurgeonOther Specialist
Surgeon
Home CarePCP Care
Mgr
HospitalStaff
HospitalStaff
Hospital Rehab FacilityLong-Term Care
Drugs Drugs DrugsDrugs
Imaging ImagingImplants,
etc
Imaging Imaging
DRG DRG
Pre-Admission
Hospitalization
Post-Acute Care
Readmission
Hospital
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Episode Based PaymentAll Inpatient Services
PCP
SurgeonPHYSICIANS
DEVICES/EQUIPMENT
DRUGS
FACILITY
NON-MDSTAFF
PCP PCP PCP
Other Specialist
Surgeon SurgeonOther Specialist
Surgeon
Home CarePCP Care
Mgr
HospitalStaff
HospitalStaff
Hospital HospitalRehab FacilityLong-Term Care
Drugs Drugs DrugsDrugs
Imaging ImagingImplants,
etc
Imaging Imaging
DRG DRG
Pre-Admission
Hospitalization
Post-Acute Care
Readmission
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Full Episode Based Payment
PCP
SurgeonPHYSICIANS
DEVICES/EQUIPMENT
DRUGS
FACILITY
NON-MDSTAFF
PCP PCP PCP
Other Specialist
Surgeon SurgeonOther Specialist
Surgeon
Home CarePCP Care
Mgr
HospitalStaff
HospitalStaff
Hospital HospitalRehab FacilityLong-Term Care
Drugs Drugs DrugsDrugs
Imaging ImagingImplants,
etc
Imaging Imaging
DRG DRG
Pre-Admission
Hospitalization
Post-Acute Care
Readmission
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The Patient-Centered Medical Home Personal physician - each patient has an ongoing relationship with a
personal physician trained to provide first contact, continuous and comprehensive care.
Physician directed medical practice – the personal physician leads a team of individuals at the practice level who collectively take responsibility for the ongoing care of patients.
Whole person orientation – the personal physician is responsible for providing for all the patient’s health care needs or taking responsibility for appropriately arranging care with other qualified professionals. This includes care for all stages of life; acute care; chronic care; preventive services; and end of life care.
Care is coordinated and/or integrated across all elements of the complex health care system (e.g., subspecialty care, hospitals, home health agencies, nursing homes) and the patient’s community (e.g., family, public and private community-based services).
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Identification andmonitoring (registry)
Care plans andcare coordination
The Care Triad
Primary Care Medical Home
Chronic Condition Management
Preventive Care Services
Well child visits
Immunizations
Screening and identification
Acute Illness Management
Acute illness visits
Emergency room care
Hospitalizations
Telephone triage
CCM office visits
Other (patient education,advocacy, outreach)
Co-managementwith specialists
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Treatment of Stage III Colorectal CancerActivity Person
Counseling on need for colonoscopy Primary care provider
Colonoscopy Gastroenterologist
Biopsy Pathologist
Visit to review biopsy Gastroenterologist
Appointment regarding surgery Surgeon
Resection Pathologist
Hospital stay and surgery (3-5 days) Hospital, Surgeon and hospital staff
Review data for stage III disease Medical oncologist
Visit social worker Social worker
Visit chemo nurse for teaching Chemotherapy nurse
Decide on drug therapy Medical oncologist
Lab for pre-chemo CBC, CMP, liver, CEA Lab
Meet with clinical trial staff regarding protocol Trial staff
Chemotherapy and follow-up visit every two weeks (24 visits) Medical oncologist, chemo nurse
Evaluate and treat potential problems: nausea, diarrhea, fever, etc. Medical oncologist, nurse
One month post therapy, review drug therapy and survivorship likelihood Medical oncologist
Follow-up visit every 3 months Medical oncologist
Ongoing disease and case management Medical oncologist and/or PCP
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Key Implementation Issues
New types of organizations will need to be established to receive and distribute bundled payments and to determine:
♦ How evidence-based standards of appropriate care will be determined.
♦ How adherence to clinical guidelines will be monitored and enforced.
♦ How the performance of individual service providers will be monitored and evaluated.
♦ How clinical outcomes data will collected and reported.
♦ What new billing and collections systems will be needed.
♦ What new information technology capabilities will be required.
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Trend of Payment Reform
Global Capitation
Fee for Service
P4PValue Based
Purchasing
Episode Based
Payments
Level of financial risk borne by providerLevel of financial risk borne by payer
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Physician-Hospital Alignment
medical directorships department/program chairs committee participation
clinical co-management of service lines, centers or institutes
focus on practice management quality and safety initiatives
physicians active on board and executive team
dyad leadership models shared strategic objectives
minimal financial linkages or risk sharing
group practice contracts on-call contracts
gainsharing in specific programs
ambulatory and ancillary joint ventures
bundled reimbursement common payer contracting
strategy
common HIT limited but growing
MSO/PHOs provide support services to affiliated physicians
integrated/interfaced EHR shared service agreements for
select business functions
integrated information management
service line management across the organization
shared effectiveness/efficiency goals
volume focused quality and safety
management programs in place
delivery system provides continuity of care
organizational commitment to quality and safety
value based ACO delivery model
clinical protocol management is core competency
continuous quality improvement
Leadership
Financial
Operations
ClinicalServices
Low Degree of Alignment High
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Trend of Physician Realignment
Large Virtual Multi-Specialty Medical Group
Large Multi-Specialty Group
Practice
Large Single Specialty Group
Practice
Virtual or Clinically
Integrated Group
Independent Practice Group
Solo or Small Practice
Independent Medical Staff
Physician-Hospital
Organization
EMR Clinical Integration
Employed Medical Group
Virtual Clinical
Integration
Physician – Hospital System Integration
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Everybody On the Bus … but Who’s Driving?
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Hospitals and ClinicsPCPs
SpecialistsNursesImaging
PharmaceuticalsRehab
Home HealthSocial Workers
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This presentation can be downloaded from the Collin-Fannin County Medical Society
webpage under the Events/Announcements tab.
To stay current on these issues, visit:
http://healthaffairs.org/
http://healthaffairs.org/blog/
http://hschange.org/