Commonwealth of Massachusetts Executive Office of Health and Human Services. Uninsured Adults in Massachusetts

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1 Cmmnwealth f Massachusetts Executive Office f Health and Human Services Tward a Shared Visin f Health Refrm: Massachusetts Cmmissin n Payment Refrm and Next Steps Massachusetts Medical Sciety Octber 2010 JudyAnn Bigby, MD Secretary, Executive Office f Health And Human Services Uninsured Adults in Massachusetts Percent Health Care Refrm 10/06 1 1

2 Impact n Access and Affrdability Fewer peple reprt having an unmet need fr health care Mre peple, including racial and ethnic minrities, reprt having a usual surce f care Mre peple reprt seeing a dctr fr preventive care Fewer peple reprt having an unmet need fr health care due t csts Fewer peple reprt ut f pcket health care csts >$ % reprt have sme barrier t care due t csts 2 Per Capita Spending Is Prjected t Nearly Duble frm 2009 t 2020 (Assumes N Cst Cntainment Interventin) Massachusetts Per Capita Persnal Health Care Expenditures, $20,000 CAGR: Cmpund Annual Grwth Rate $18,000 $17,872 $16,000 $14,000 $12,000 $10,000 $10,262 $8,000 $6,683 $6,000 $5,021 $4,000 $3,249 $2,000 $ Nte: The health expenditures are defined by residence lcatin and as persnal health expenditures by CMS, which exclude expenditures n administratin, public health, and cnstructin. Data fr are prjected. Surce: Centers fr Medicare & Medicaid Services (CMS), Office f the Actuary, Natinal Health Statistics Grup,

3 Grwth in Health Spending Expected t Surpass Other Ecnmic Indicatrs Index f Health Expenditures Per Capita and Other Indicatrs in MA, Per Capita Health Expenditures: 550 in Per Capita GDP: 337 in Wage and Salary: 325 in Cnsumer Price Index (CPI): 224 in Per Capita Health Expenditures Per Capita GDP Average Wage and Salary CPI Bstn Surces: Part I : Per capita health expenditures: Centers fr Medicare & Medicaid Services (CMS), Office f the Actuary, Natinal Health Statistics Grup, 2007 ( data are prjected). Per capita GDP and wage and salary: Reginal Ecnmic Infrmatin System, Bureau f Ecnmic Analysis, U.S. Department f Cmmerce. CPI-Urban fr Bstn area: Bureau f Labr Statistics, U.S. Department f Labr. Part II (except fr health spending): US Scial Security Administratin, The 2008 OASDI Trustees Reprt, Supplemental Single-Year Tables, intermediate prjectin, Per capita GDP index: real GDP annual change + GDP price index annual change ppulatin annual change; wage index: average annual wage in cvered emplyment. 4 Creatin f the Special Cmmissin n Health Care payment Recgnizing the nexus between health care payment mdels and the quality and cst f health care, the Legislature enacted Sectin 44 f Chapter 305 f the Acts f 2008, An Act t Prmte Cst Cntainment, Transparency and Efficiency in the Delivery f Quality Health Care. Created the Special Cmmissin n the Health Care Payment System t investigate refrming and restructuring the payment system in rder t: Prvide incentives fr efficient and effective patientcentered care. Reduce variatins in the quality and cst f care. 5 3

4 A Visin f Higher Quality, Mre Cst- Effective Care The Cmmissin defined its visin fr: fundamental refrm f the Massachusetts health care payment system that will supprt safe, timely, efficient, effective, equitable, patientcentered care and bth reduce per capita health care spending and significantly and sustainably slw future health care spending grwth 6 Special Cmmissin s Recmmendatin Glbal payments with adjustments t reward prvisin f accessible and high quality care becme the predminant frm f payment t prviders in Massachusetts within a perid f five years Gvernment, payers and prviders will be required t share respnsibility fr prviding infrastructure, legal and technical supprt t prviders in making this transitin 7 4

5 Key Cmpnents f Recmmendatins Participatin by private and public payers Develpment f Accuntable Care Organizatins (ACOs) Patient-centered care and adptin f medical hmes Patient chice Cmmn cre perfrmance measures and cst and quality transparency Apprpriately balanced sharing f financial i risk between ACOs and carriers Strng and cnsistent risk-adjustment 8 Transitin Oversight Prpsed Bard t versee transitin: Define parameters fr a standard glbal payment methdlgy but the market will determine glbal payment amunts. Establish transitin milestnes and mnitr prgress, with a fcus n the prgress t glbal payments, prgress t greater payment equity, and per capita health care csts. Make decisins in an pen and transparent manner and seek brad stakehlder input frm prviders, health plans, gvernment, emplyers, and cnsumers. The versight entity will have authrity t assist and intervene, and make mid-curse crrectins if needed. 9 5

6 Cmmnwealth Fund Cmmissin n a High Perfrmance Health System 1. Extend affrdable health insurance t all 2. Align financial incentives t enhance value and achieve savings 3. Organize the health care system arund the patient t ensure that care is accessible and crdinated 4. Meet and raise benchmarks fr high-quality, efficient care 5. Ensure accuntable natinal leadership and public/private cllabratin MA ranks 7th amng states verall n the 2009 Cmmnwealth Fund State Screcard, but ranks 33rd n measures related t avidable hspital use and csts. 10 Cmprehensive Health Care System Refrm Access Uninsured Financial barriers t care Csts High and grwing csts Vlume driven Fee-fr-service HIT Sptty implementatin Lack f interperability Ptential nt met Systems Incnsistent Quality Errrs and adverse events Misuse, veruse, and duplicatin Inequities in care Disrganized, prly crdinated Nt always evidenced based Emphasis n specialty care Payment Refrm Health Care Wrkfrce Planning Health Resurces Planning Insurance Prduct Redesign Malpractice Refrm All insured Financial and structural barriers t access remved Value/Quality driven Wide adptin Interperable Infrms and transfrms clinical practice Predictable utcmes Patient safety Apprpriate use Disparities eliminated Crdinated, integrated care Evidenced based Patient centered primary care 11 6

7 The HCQCC Radmap t Cst Cntainment: System-wide Strategies 6. Implement health plan design innvatin t prmte use f high- value care 7. Enact malpractice refrm and peer review prtectins 8. Implement administrative simplificatin 9. Engage cnsumers 10.Encurage healthy behavirs 11.Further prmte transparency 1. Adpt cmprehensive payment refrm 2. Adpt and use health infrmatin technlgy 3. Implement evidencebased cverage infrmed by cmparative effectiveness infrmatin 4. Develp health resurce planning 5. Supprt system redesign 12 Cmprehensive Payment Refrm State shuld encurage glbal payments as majr mdel fr health care payments. An independent Bard shuld be established t guide and mnitr implementatin. Public and private payers shuld increase use f payment methdlgies that will supprt health care delivery redesign during the transitin t glbal payments, including: Increased use f pay-fr-perfrmance and alignment f P4P acrss prviders Implementatin f bundled r episde-based payments Supprt fr patient-centered medical hmes multi-payer initiative lead by MassHealth Reduced payments fr avidable hspitalizatins and preventable readmissins 13 7

8 Cmprehensive Payment Refrm The Cuncil shuld mnitr cst grwth and explre the ptential impact f gvernment rate regulatin ptins if cst cntrl targets nt met. The state t shuld cntinue effrts t wrk with CMS n system redesign initiatives, including implementatin f medical hmes and effrts t efficiently prvide cverage t Massachusetts residents that are dually eligible fr Medicare and Medicaid. Further, the state shuld wrk with CMS t utilize its Center fr Innvatin t include Medicare s participatin in payment refrm effrts in Massachusetts. Applicatin t Advanced Primary Care demnstratin thrugh multipayer PCMH initiative Medicare waiver, prpsals t CMS Innvatin Center 14 Rle f Gvernment Balance between regulating cnditins f change and prmting innvatin and flexibility Ensure prvider and cnsumers prtectins Mnitr and reprt prgress tward agreed upn utcmes Supprt fr thse n the margins vs letting the market determine all utcmes Ensure essential services delivered Ensure scietal gd Supprt early adpters and help t reprt their experiences 15 8

9 Legislatin is necessary T establish a mechanism t ensure desired utcmes related t Ensuring and imprving access t care Ensuring and imprving quality f care Cntaining csts f care T prmte transfrmatin f the health care delivery system nt just t intrduce a new payment system Establishment f Oversight Bard Defining pwers and duties f the Bard Establishment and regulatin f ACO Regulatin f ACO risk assumptin Ensure services are delivered Allw data cllectin, analysis, and reprting Cnsumer prtectins Anti-trust, fraud and abuse, physician self-referral 16 Respnsibilities f Bard Set parameters fr ACO s while allwing flexibility and diversity ACOs are cmpsed f hspitals, physicians and/r ther clinician and nn-clinician prviders wrking as a team t manage prvisin and crdinatin f full range f services Incrprated rganizatins r cntracted netwrks f prviders Include primary care as patient centered medical hmes At least ne physician n gverning bard Pssess r prcure ppulatin management functins; care management; financial management; cntract management; quality management; and patient and prvider cmmunicatin capabilities ACOs accept glbal payment fr all r mst care prvided t an enrllee with a primary care physician within an ACO s netwrk ACOs make adjustments based n perfrmance against aggregate ACO glbal payments and perfrmance, access, and quality incentives. 17 9

10 Respnsibilities f Bard Methdlgies utilized fr glbal payments (base payment and incentive payment) Establishes standard risk adjusters fr use by all payers and accunt fr past cst experience, clinical health status, sciecnmic status, gegraphic lcatin but payments must be cnsistent with DOI risk reserve requirements Establish safeguards against underutilizatin f services by ACO s, inapprpriate selectin f lw-cst patients Establish payments fr teaching, disprprtinate share status, sle cmmunity prvider status, stand-by services and ther factrs Certain classes f services may be exempt frm glbal payment 18 Key Cncerns Ability f the health care cmmunity t deal with glbal payments Cst f and surce f funding fr refrm Hw t redirect existing resurces Hw can thse wh are nt ready be brught alng? Hw will the shifting f risk frm payers t prviders be addressed? If risk is transferred, hw t ensure that insurance prducts are cnsistent with prvider risk? Hw can we ensure the transfer f risk is based n the prvider s scpe f cntrl? Impact f glbal payments n cnsumer chice Are cnsumers ready t accept limitatins? Hw will they be engaged in this transfrmatin? Will insurance prducts supprt this? Will the business cmmunity supprt this? Mechanisms t fairly set payments, given the current limitatins f risk adjustment methdlgies Current risk adjustment mdels nly capture abut tw-thirds f cst variatin due t patient acuity. Hw will the payment methdlgy accunt fr this? Hw d these mdels tday crrelate with perfrmance n ttal medical expenditures? 19 10

11 Opprtunities ACO develpment can lead t mre integrated health care delivery systems but if we simply rganize what exists we have nt necessarily imprved the system Prmting a cntinuum f care acrss the life span shuld be an essential principle f the system 20 Health Infrmatin Exchange: Health Prvider Netwrk f Netwrks and Readiness t Cnnect = Ready t Cnnect = Minr Imprvements Needed t Cnnect = Has EHR, Needs HIE Interface = N EHR, Use Push Prtal = 2 nd Tier Cnnectivity Targets IDN HIE IDN CHC PCP IPA PCP IDN PCP HIE Hsp IDN PCP Hsp State-wide HIE: Netwrk f Netwrks Independent Labs Independent Pharmacies Hme Health Physical Therapy Oral Health Lng Term Care Behaviral Health HIE/ EHR Vendrs Payers Public: State, BPHC, etc Scial Services Hmepathic 21 11

12 Opprtunities ACO develpment can lead t mre integrated health care delivery systems but if we simply rganize what exists we have nt necessarily imprved the system Prmting a cntinuum f care acrss the life span shuld be an essential principle f the system T imprve preventin strategies T imprve care fr vulnerable ppulatins T imprve chrnic disease management T decrease gaps in transitins in care T imprve palliative and end-f-life care Explicit statement abut the scial respnsibility f all payers and prviders Behaviral health, medical educatin and training, essential cmmunity services (e.g. emergency departments), stand-by services, catastrphic cases 22 Opprtunities Prvide incentives fr institutins t transfrm t new business mdels t better supprt the needs f cmmunities Prmte partnerships amng rganizatins t prmte and imprve ppulatin health Align with federal refrm effrts 2010 Medicaid Glbal Payment System Demnstratin 2011 HHS t develp natinal quality strategy Center fr Medicare and Medicaid Innvatin - CMI 2012 Shared savings prgram t prmte Accuntable Care Organizatins Independence at Hme Demnstratin Prject 2013 Pilt prgram fr bundled payments 23 12

13 Summary Ecnmic Imperative t mitigate cst grwth Transitin system t reward value ver vlume Vlume decreases due t avidance f unnecessary interventins and imprved utcmes Csts decrease due t right care in the right place (primary care vs specialty care) Price decreases due t transparent payment methdlgy fr bundled services tied t utcme Reductin / cnversin in capacity f ver utilized resurces New business mdels fr care delivery in cmmunities are necessary Develp integrated care systems - ne stp shpping that prmtes wellness and maintenance f functinal status acrss the cntinuum f care and acrss life cycle Nt simply rearranging the deck chairs Patient preference sught and respected Savings accrue t cnsumers, emplyers, and gvernment 24 13