The Journey to High-Value Healthcare

Susan DeVorePresident and CEO

Premier healthcare alliance

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Rowland-Hite Health Planning Seminar

May 5, 2011

Journey to top performance

Our current model is unsustainableP

erce

nt o

f GD

P

1966 1972 1978 1984 1990 1996 2002 2008 2014 2020 2026 2032 2038 2044 20500

5

10

15

20

25Actual Projection

2.5 Percentage Points

1 Percentage Point

Zero

Differential of:

Source: Congressional Budget Office

Tax rates 2050:10% 26%25% 66%35% 92%

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Provider perspective on reform

Cuts to Existing FFS System• Market basket reductions• DSH cuts• P4P & nonpayment for

anything preventable or unnecessary

Cuts to Existing FFS System• Market basket reductions• DSH cuts• P4P & nonpayment for

anything preventable or unnecessary

Disrupt Existing System• Bundled Payments• Innovation Center/

demonstrations• ACOs

Disrupt Existing System• Bundled Payments• Innovation Center/

demonstrations• ACOs

Track 1 Track 2

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What are we trying to incent?

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Common sense

Healthy person

Preventable condition

Worsened condition

Acute care episode

Primary prevention

Secondary prevention

Medical care & treatment required

Hospital care

Continued health

Preventable condition

Resumed health

Worsened condition

No hospitalization

Acute care episode

Successful outcomeHigh cost outcomeComplications

Acu

ity a

nd c

osts

incr

ease

Source: Harold Miller. How to CreateAccountable Care Organizations, 2009

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Health status

• Americans are sick, with high chronic disease rates

• 8% of Americans have diabetes, 15% have high cholesterol, 8% have asthma, 12% have heart disease and 35% are obese, 20% smoke cigarettes

• Aging population

Healthcare expense

• 35% of people with insurance spend more than $1,000 a year on out of pocket expenses; one-third spend more than 10% on healthcare

• 43% of Americans report difficulty getting and affording insurance as individuals

• 25% of people skip tests, fail to fill a prescription or fail to schedule specialist care due to expense

Care control• People want to decide what care they need in cooperation with

clinicians, not an insurer.

Choice• People want the right to select their doctors

• Less interest traditionally in selecting hospitals or insurers

Market forces for change - consumers

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Health reform

• Increasing efforts to pay for value, not volume (VBP, readmissions, HACs, etc.)

• Tremendous risk in FFS, and shared savings provides temporary partial relief

• A step ahead of where the system will be moving

• Managing more patients at Medicaid-like reimbursement rates

Market competition

• If you don’t move toward integration, physician organizations, clinics, insurers and employers will

• Market consolidation is inevitable

• Early adopters are early winners

Employers • Employers may be in the position to direct care to you, or not

Mission• Opportunity to improve the health of your population

Market forces for change - providers

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Health reform

• 80-85 of all premiums must go to medical expenses

• Premium rates are under intense scrutiny

• Medicare Advantage cuts, new state exchanges

Market competition

• Transparency on cost and quality demanded by patients, reform law

• Insurers will need to compete on value

• Market consolidation is perceived as enabling cost increases

Employers• Employers must cut their healthcare spend

• ACOs are an attractive way to cut costs, while possibly offering better benefits

CMS

• CMS pilot programs will test payment reform

• There is clear direction that CMS is moving toward pay for value models

• Representing a large chunk of reimbursement volume, CMS will impact the market

• Medicaid expansion and dire straits for state budgets

Market forces for change - payors

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Improve population

health

Improve care

experience

Reduce per capita costs

Partnerships across the

care continuum

People-centered

foundation

A new way to envision care

• Colorectal screening• Breast cancer

screening• Flu shot• Pneumonia

vaccination• Diabetes care• Harm prevention• Risk adjusted mortality• Evidence based care

• Provider network• Payor partners• Community services

partnerships• Shared management

and contracting• Medical management• Patients

• Total cost PMPM• Admits per 1000

members/year• 30 day readmissions• ED visits/1000• Hospital admissions

for ambulatory care sensitive conditions

• Global rating of all healthcare

• Global rating of personal doctor

• Global rating of specialist seen most often

• Getting needed care• Shared decision

making

How do we know it will work?

Process Improvement(Evidence-Based Care)

Systematic improvement (Inpatient/outpatient

value)

Population total value

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HQID inspired, but did not define VBP Rule

VBP Rule – Released April 2011

Concerns• HCAHPS Weighting• Performance thresholds• Harm/HAC’s – double

jeopardy• Measures

Ensuring pay-for-performance success

Observed to Expected Mortality Ratio

Composite Harm Index

HCAHPS Top Box Global Measures Composite,

stratified by demographics

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Reduce Preventable Readmissions

Evidence-Based Care Performance % “All or

Nothing”

- Total Inpatient Cost per Case Mix Adjusted Discharge

- Waste report and focus on appropriate utilization

Year 1 18 Months Year 2 30 monthsLives saved 8,043 14,649 22,164 25,235Dollars saved $577M $1.036B $2.13B $2.85BPatients receiving EBC 24,818 41,130 43,741 63,094

QUEST collaborative driving improvementsYear 1 and Year 2 Results

25% 25%

50%

71%

49%59%

94%

68% 71%

Evidence-Based Care Mortality Cost of Care

% of Hospitals in the QUEST Top Performance Threshold (TPT)

BaselineYear 1Year 2

6

33

76

Baseline Year 1 Year 2

# Hospitals Achieving QUEST TPT in all 3

Dimensions

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Bending the cost curve

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

$9,000

$9,500

3q06 4q06 1q07 2q07 3q07 4q07 1q08 2q08 3q08 4q08 1q09 2q09 3q09 4q09 1q10 2q10

Case Mix Adjusted Cost Per DischargeNot Adjusted for InflationFour‐quarter Moving Averages

Source: Quality Advisor™

Non‐Participants (N = 146) QUEST Participants (N = 146) National Trend

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21% increase

4% increase

% change over last 2.5 years

Needs improvement: Harm & patient satisfaction

0.4

0.45

0.5

0.55

0.6

2q08 3q08 4q08 1q09 2q09 3q09 4q09 1q10 2q10

Harm Com

posite

QUEST  vs Non‐QUEST Harm Composite4 Quarter Moving AveragesSource: Quality Advisor™

NonQUEST QUEST

2Q 2008 – 2Q 2010

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Readmissions Reform provisions & QUEST approach

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Need for increased physician alignment

Strong focus on care transitions

Coordination with post-acute providers

Additional measures to be

developed

Reform Provisions Key Drivers QUEST Approach

Cut to all DRGs based on excess readmissions

Penalty Escalation FY2013 Up to 1% FY2014 Up to 2%

FY2015 not to exceed 3% in and beyond

Populations of focus (Medicare pop):

Initial: AMI, CHF, PN FY2015 Expansion::

COPD,CABG, PTCA and other vascular

30 day risk-standardized readmission rate (RSRR)

HHS to make available PSOs to assist low-performing hospitals

Hospital-specific impact and comparative

analyses

Planned measure: 30-day all cause same

hospitals unadjusted readmission – all DRG

and all Payor*

Currently engaging with Harlan Krumholz as

SME for risk-adjustment

Improvement Sprints focused on key strategic

areas Educational best

practice webcasts

*TPT 25th percentile

Preventing hospitalizations: Focus on ambulatory-care sensitive conditions

Focus conditions Resultingadmissions

Cost per admission

Congestive heart failure 31.8% $10,300

Bacterial pneumonia 25.5% $ 7,000

COPD 11.9% $ 4,900

Urinary infection 11.2% $ 7,200

Dehydration 7.1% $ 7,600

Adult asthma 3.3% $ 7,600

Hypertension 2% $ 4,200

Diabetes short—term complication

0.5% $18,400

Ambulatory care sensitive admission rates, Milliman, Jan 2009

Patient-centered integrated care delivery

• Accountable care capabilities framework

• Collaborative sharing• Alternative care delivery

models• Core component guidebooks• Clinical integration and

physician alignment models• Data and information• Payor contracts, legal guidance• Financial models• Payment model impact analysis

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42 States redesigning care

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*Source: Article by Stephen M. Shortelland Lawrence P. Casalino

The models are different

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Integrated delivery systems/networks

(IDN)Multispecialty group practice

Physician hospital organization

(PHO)

Independent practice

association (IPA)Virtual physician

organization

Payor and Employer partners are at the table(representative list)

Employers

IBM

Caterpillar

Eastman Chemical

UNITE HERE Local 54 representing:

• Trump Entertainment Resorts, Inc.

• Harrah’s Entertainment

• Hilton Hotels Corp.

• MGM Mirage

Provider-sponsored Plans Private Plans

Anthem/WellPoint

Cigna

Coventry

HealthSpring/Bravo

Medica

United

Aetna

BCBS MT

HMSA

Horizon BCBS

New West

BCBS MA

Geisinger Health Plan

Presbyterian (NM) Health Plan

Health New England (Baystate)

SummaCare (Summa)

Billings Clinic

First Health

Government Payors

CMS

State Medicaid plans

S-CHIP plans

VA

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Baseline assessment

*Data from 26 markets**Data from 46 assessments

Blue = HighGreen = Average

Red = Low

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Implementation Collaborative Overall Assessment *

Readiness Collaborative Overall Assessment **

Common Gaps in moving towardPatient Centered Integrated Care Delivery

• Substantive change leadership support• Physician integration/alignment models and implementation

support• Care delivery models/maps across the continuum of care• Health home development and implementation support• Coordination of care execution care• All payor and population data modeling capabilities• Advanced payor contracting models/analytic capabilities• Partnership building models and capabilities across the

continuum• State-based (Medicaid and exchange driven) models for

accountable care

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0%10%20%30%40%50%60%70%80%90%

Target population, by prevalence

This population’s care costs $15,000 a year, 4X the average

Population selection: AtlantiCare example

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Special Care Center Outcomes Measures

Population health

Chronic disease outcomes in top decile

Reduction or elimination of racial/ethnic

disparities

98% medication compliance

Cost effectiveness

40% reduction in hospital and ED usage

10-25% reduction in overall care costs

Experience of care

2X improvement in care experience

scores

Measures selection: AtlantiCare example

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• 63% of heart and lung patients quit smoking• Prescription fill rates between 97%-99%• For patients with high blood pressure, the average drop after 6

months was 26 points • For patients with diabetes, A1C dropped 2.38 points on

average• 30 day hospital readmissions range from 4 to 5 percent,

compared to baseline of 10 to 12 percent• Net healthcare costs in the first year declined12.3%

• 23% drop in outpatient procedures• 41% fewer inpatient hospital admissions• 48% percent fewer ED visits

Outcomes: AtlantiCare example

CMS ACO Shared Savings Rule – 2 Tracks

Bonus only in years 1 and 2– no downside riskTwo-sided risk at year 3Up to 52.5% shared savingsCaps savings at 7.5% of benchmark in years 1 & 2 and 10% in year 3Caps losses in year 3 at 5%Threshold of 2%-3.9% depending on size of population

Two-sided risk starting in year 1Up to 65% shared savingsFirst dollar savings/loss after threshold surpassedCaps savings at 10% of benchmarkCaps losses at 5% in year 1, 7.5% in year 2, 10% in year 3Threshold of 2%

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Track 1

Track 2

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Proposed ACO regulations

What we like:

What we want:

•Timely data from CMS•Educating beneficiaries•Multiple payment models•Clinically integrated for antitrust purposes•Safe harbors•Consensus-based measures•Antitrust safety zones •Expedited advisory opinion process

•Higher shared savings and no withhold•Payment model with no risk•Preference to ACOs in private market•Relax EHR MU requirement•Capitation model•Broadened legal waivers•Exclusion of IME/DSH•Wage adjustment•Medicaid•Adjust risk scores each year

We must move forward, regardless of reform

Why all this matters

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