Steven F. Schutzer, MD Medical Director, Connecticut Joint Replacement Institute President, Connecticut Joint Replacment Surgeons, LLC

Transcription

1 Steven F. Schutzer, MD Medical Director, Connecticut Joint Replacement Institute President, Connecticut Joint Replacment Surgeons, LLC

2 Steven F. Schutzer, MD Disclosures Medical Director, CT Joint Replacement Institute President, CT Joint Replacement Surgeons, LLC Investor, Renovis Surgical Technologies Unpaid Consultant, Renovis Surgical Technologies Editorial staff, J. Arthroplasty Principal, Novel Healthcare Solutions, LLC

3 Bias The entrepreneurial spirit of the independent private practice surgeon, working at an arms length relationship with a hospital partner, can more rapidly and effectively create sustainable healthcare value than other contemporary alignment models.

4 He who is not courageous enough to take risk, will accomplish nothing in life. Muhammad Ali

5 An important transition has begun in payment for health care delivery in the US: organizations that have long been paid for transactions, such as visits or procedures are beginning to be paid for producing outcomes for populations. Adapted from NEJM 361:16 8/9/09 Bohmer and Lee

6 Traditional healthcare contracting Zero Sum Competition 1. Cost shifting 2. Bargaining clout 3. Restricting choice/access 4. Dispute resolution via Court System (tort)

7 Traditional healthcare contracting Zero Sum Competition 1. Cost shifting 2. Bargaining clout 3. Restricting choice/access 4. Dispute resolution via Court System (tort) Provider financial success = Patient success

8 Professor Porter: Create the right kind of competition Positive Sum Competition Based on creation of healthcare value and market competition aligned with outcomes/cost for a specific medical condition.

9 How can you achieve healthcare value? 1. Integrated Practice Units 2. Integrated delivery networks 3. Scale it up 4. IT platforms 5. Measure outcomes and cost 6. Manage risk 7. Bundled Payments

10 What is a bundled payment single package price for a comprehensive and specific set of healthcare services that provides a positive margin for services delivered to a patient by multiple providers over a defined period of time (episode)

11 Bundled Payment: why is CMS interested in this option? The enemy is fragmentation. We just don't seem to form the coalitions (read: alignments), nor the communities we need to make progress.

12 Bundled Payments: the hypothesis Create financial motivation to collaborate/integrate/align and to implement effective care redesign strategies: 1. coordinate patient care 2. reduce variability 3. improve operational efficiencies 4. reduce low volume services

13 2 key re-alignments necessary for sustainable healthcare value 1. Providers, Payers and Patients 2. unit of reimbursement with the unit of healthcare value delivered to the patient Bundled Payments the most effective strategy?

14 What is the evidence that Bundling works in healthcare? 1. Medicare 5 year CABG Demonstration NEJM article 3. Prometheus models/pilots 4. Provencare experience 5. Medicare ACE Demonstration project 6. CJRI data

15 Medicare ACE demonstration for Orthopedic Surgery 5 Hospitals, In-patient costs (THA and TKA) combined Part A & B Pilot began 2009 Surgeon incentives (reimbursement up to 125% of Medicare fee) Patient incentives: Medicare will share 50 percent of the savings it gains under the demonstration with the Medicare beneficiary up to a maximum of the annual Part B premium, currently $1,259.

16 Medicare ACE demonstration for Orthopedic Surgery 1. Closer ties with surgeons (changed behavior) 2. Significant investment necessary (2.5 FTE) 3. Profits arise from spillover benefits 4. Savings from device cost reductions 5. Substantial quality benefits Ardent Health ABC White paper, Jan. 2012

17 Physician/Hospital alignment strategies 1. Co-management models a. True Co-management models b. Consultant Agreement without gain sharing c. Consultant Agreement plus gain sharing 2. Bundled Payment models a. Pure gain sharing b. Consultant Agreement without gain sharing c. Consultant Agreement plus gain sharing 3. Employment models a. Performance bonus b. Gain sharing

18 Provider alignment strategies: Bundled payment Under BP contracts (without gain sharing) alignment is achieved by tying Physician reimbursement for services with compliance with consensus based best practices/ebm protocols.

19 Connecticut Joint Replacement Surgeons, LLC incorporated November, community Arthroplasty surgeons from 5 different private orthopedic practices Shared vision create a world class Institute for Joint Replacement surgery Commitment to standardization Commitment to data driven decision making

20 CJRS, LLC incorporated November, Core principles of our MOU: 1. Surgeon management 2. Dedicated multidisciplinary staff 3. Separate line of business 4. hospital within a hospital 5. Research investment (4 FTEs and Registry)

21 CJRS, LLC incorporated November, 2006 Consulting Services Agreement signed July 27, 2007 CJRS, LLC manages CJRI (an Arthroplasty service line) Our work has been valued by an outside source The LLC receives a monthly stipend for it s work No gain sharing First case done July 31, 2007

22 The Bundled Payment program at CJRI: Step Ahead plan Three Parties (Anesthesia, Saint Francis, CJRS) started negotiations in July, Our Basket of Care Agreement was signed in August, 2010.

23 Implementing a Bundled Payment program: essential elements 1. CEO/Hospital Administration 2. Physicians Leaders/Physicians 3. Trust and transparency 4. Savvy Legal Counsel 5. Robust quality and cost monitoring systems clean data 6. Mature service line 7. Adequate case volume

24 8 Steps to Development of a Bundled Payment program 1. Build the dedicated team 2. Define the episode 3. Define performance measures (Cost and Quality) 4. Develop the Care Models 5. Cost reduction opportunities 6. Price the Bundle 7. Gain-sharing or other methods of compensation 8. Develop Continuous Process Improvements 9. Align with Post-acute providers

25 1. Build the dedicated team For the effort to succeed, there needs to be a cultural transformation focused on creation of a new healthcare delivery model

26 Building the Dedicated Team Overcoming Institutional Memory

27 1. Build the dedicated team Surgeon Co-Medical Directors Anesthesiologists Executive Director Program Director Hospital COO Hospital CFO Hospital CNO Legal Representation

28 2. Define the Episode Detailed definitions: 1. which Parties involved 2. duties of each Party 3. define the bundle 4. define the time frame (EOC)

29 2. Define the Episode 5. warranty (define covered service and time frame) 6. cost over runs 7. best practices and EBM

30 2. Define the Episode Duties of each Party: Hospital Provide the infrastructure necessary to operate the program and service line including facilities, staff, support services, marketing, data resources, Registry and billing and collection for all 3 Parties.

31 2. Define the Episode Duties of each Party: Surgeon 1. Appropriateness for surgery 2. Perform surgery 3. Routine post-op in-patient care 4. Adhere to any and all guidelines and protocols 5. Coordinate daily patient care 6. Strategic leadership in development and implementation of the Program and best practices

32 2. Define the Episode Duties of each Party: Anesthesia 1. pre-op patient review to determine eligibility and risk stratification ( none or minimal systemic disease ) 2. Customary Anesthesia services 3. Adhere to best practice and protocols 4. Post-op pain management

33 The Step Ahead program at CJRI is offered to patients less than 70 years of age who are candidates for standard primary THA or TKA with either none or minimal systemic disease (would also exclude patients with certain conditions)

34 2. Define the Episode expenses and excess costs Cash reserves: (a) Operating reserve (b) Claim reserve Cost over runs: shared and not shared Claims: Low claim, High claim, Insured claim Stop Loss coverage

35 2. Define the Episode expenses and excess costs Cash reserves: (a) Operating reserve (b) Claim reserve Cost over runs: shared and not shared Claims: Low claim, High claim, Insured claim Stop Loss coverage

36 Excess costs: not shared Excess costs resulting from unwarranted or deliberate deviation from the approved protocols.

37 Excess costs: shared a. Low claimcost over runs under $5K come off the top b. High claimcost over runs in excess of $5K (but less than $10K) are deducted from the claim reserve c. Insured claimcost over runs in excess of $10K

38 Step Ahead Stop Loss policy Provided by our Med Malpractice carrier $250,000 annual contract limit $10K deductible per claim Shared excess costs greater than $10K become an Insured claim

39 2. Define the Episode Patient Warranty Negotiable terms Re-admissions for surgical site complications: wound complications (hematomas, infections, cellulitis, dehiscence) peri-prosthetic fractures instability

40 3. Define Performance Measures: Cost Outcomes and Quality Patient Reported Outcomes

41 Achieving the Triple Aim Population Health Patient care experience Per Capita Cost 41

42 3. Define Performance Measures: Cost Hospital cost/case Surgeon s cost for services Anesthesia cost for services Cost/case for re-admissions

43 3. Define Performance Measures: Outcomes and Quality Re-admissions (30, day) Complications (30, 60, 90 day) HCAHPS scores SCIP measures Press Ganey scores LOS Post-acute discharge (home vs ECF)

44 Data Sources Billing Database (SFS) O.R. Database (CPM) Hospital EMR (CareLink) Physician Assistants Complication Log Data Warehouse (HPM) CJRI Registry 60 Day Follow-Up Phone Calls Surgeon Self Report Incident Reports Functional Outcome Instrument Database Outpatient Office Note System Press Ganey HCAHPS

45 4. Develop the Care Models A unique opportunity to map out, end to end, the patient experience and then perform a complete care re-design of your program

46 4. Develop the Care Models 22 Clinical Protocols and Best Practices: 1. pre-op documentation (5) 2. Intra-op documentation (6) *use of an approved prosthetic implant 3. Post-op In-patient documentation (4) 4. Discharge documentation (4) 5. Post-discharge documentation (3)

47 Physician Agreement and Acknowledgement Each Orthopedic surgeon and Anesthesiologist that performs BP surgery will participate in an in-service that outlines in detail their specific responsibilities, the protocols/best practices, and their own personal financial risks for noncompliance.

48 Patient Agreement and Acknowledgement Patient responsibilities: 1. follow post-op instructions 2. report complications to surgeon 3. seek emergency care at our hospital

49 5-6. Cost reduction opportunities and pricing the bundle While re-designing care plans, drill down on the direct cost associated with each step to eliminate waste, duplication and unnecessary services cost reduction. Determine the base cost of the hospital component of the Bundle first step in pricing the bundle.

50 5-6. Cost reduction opportunities and pricing the bundle Hospital Base cost per case History and Physical Laboratory Medical supplies (including prosthetic implants) Nursing DME Pharmacy Radiology (hips only) Physical Therapy Surgical supplies

51 Fair market value Physician base cost per case: 1. Time, resources, expenses 2. The warranty provided to the patient or purchaser for post-acute complications 3. The financial risk assumed by the Party 4. Current market reimbursement rates

52 5-6. Cost reduction opportunities and pricing the bundle Surgeon Base cost per case Calculate Surgeon s practice cost/hour Calculate the Surgeon s time involved with each step of patient flow from initial visit to the 3 month post operative office visit = total hours of care Surgeon s practice cost/hour x total hours

53 5-6. Cost reduction opportunities and pricing the bundle Anesthesiologist Base cost per case Our Anesthesiologists were asked to undertake the same analysis to determine their base component of the package price.

54 Total Bundled Payment for Primary THA and TKA Hospital base cost + margin* PLUS Surgeon s base cost + margin* PLUS Anesthesia base cost + margin* PLUS *same for all 3 Parties Small % added to package price for two cash reserves = total package price for BP services % package = % risk for shared over runs

55 5-6. Cost reduction opportunities and pricing the bundle Focus on Hospital Re-admissions Emergency Department protocol: Within 90 day post-op period, establishes a mechanism to determine appropriateness for additional treatment or re-admission for all BP patients. The Orthopedic PAc is the designated point person.

56 7. Gain-sharing Incentives (or other methods of compensation) CJRI Service Line Co-Management model: Shared risk would be looked upon favorably by the OIG but not shared savings we are already compensated for identifying cost savings for the service line. This particular model is not a Gain-sharing arrangement

57 8. Develop a Continuous Process Improvement Plan (a) Clinical Integration Data Registry Standard/consistent clinical protocols Shared IT for cost/quality analysis Shared financial risk

58 8. Develop a Continuous Process Improvement Plan (b) Utilization Review 1. Annual review of clinical protocols 2. Monitor compliance 3. Provide feedback for variances 4. Quarterly quality data review 5. Annual review of cost of services and opportunities for additional savings

59 Process Improvement measure adjust protocol assess implement change protocol

60 Process Improvement Blood Transfusion Transfusion rate for TKA and THA cases reduced to 4% measure Transfusion rate for THA and TKA 21% adjust protocol assess Implemented May 2011 implement change protocol Based on FOCUS trial, transfusion for symptoms

61 Process Improvement Blood Transfusion Between May, 2011 (new protocol instituted) and January, % Transfusion rate reduced to 4% units of RBCs/year cost savings

62 9. Develop relationships with Postacute providers 1. ECFs 2. Homecare Agencies Both participated in our TDABC project with the Harvard Business School

63 Implementing Bundled Payments: Value added? Value = Health outcomes Cost of delivering the outcomes

64 Implementing Bundled Payments: Value added? Value = Health outcomes Cost of delivering the outcomes

65 Implementing Bundled Payments: Value added? Length of stay HCAHPS/Press Ganey scores Re-admission rates outcomes Implant costs Cost per case Contribution margin cost

66 LOS: 17.5% CJRI July 09 July 10

67 CJRI July 09 July 10 LOS: 17.5% HCAHPS: 84 th 98/99 th percentile

68 CJRI July 09 July 10 LOS: 17.5% HCAHPS: 84 th 98/99 th percentile Readmission rate: 6-7% 2-3%

69 CJRI July 09 July 10 LOS: 17.5% HCAHPS: 84 th 98/99 th percentile Readmission rate: 6-7% 2-3% Implant cost: THA 7.5% TKA 19%

70 CJRI July 09 July 10 LOS: 17.5% HCAHPS: 84 th 98/99 th percentile Readmission rate: 6-7% 2-3% Implant cost: THA 7.5% TKA 19% Average Direct C/C: 9.9% 5.0%

71 CJRI July 09 July 10 LOS: 17.5% HCAHPS: 84 th 98/99 th percentile Readmission rate: 6-7% 2-3% Implant cost: THA 7.5% TKA 19% Average Direct C/C: 9.9% 5.0% CM/case: 89% 62%

72 CJRI Review of Surgeon and Anesthesiologist compliance with Bundled Payment clinical protocols 100% compliance with no variances

73 Life cycle of a Bundled Payment claim Distribution of Funds Surgeons Office Accounts Payable Provider Step Ahead Administration at CJRI at CJRI OR Booking Registration Accounting/ Claims Pre Assessment Surgical Screening Center

74 Life cycle of a Bundled Payment claim Distribution of Funds Surgeons Office Accounts Payable Provider Payment to all Parties by 42 dayscj RI OR Booking Registration Accounting/ Claims Pre Assessment Surgical Screening Center

75 The Step Ahead Plan at CJRI Six prongs to our Marketing efforts: 1. Commercial Payers 2. CMMS/CMMI 3. Large self-funded Employers/TPAs 4. Medical tourism industry 5. Large PCP groups or ACOs 6. Uninsured or underinsured patients

76 The Step Ahead Plan at CJRI One signed commercial contract with Connecticare (June, 2012) with just over 300 patients under contract to date. Letter of Intent pending with one National Payer. Negotiating with commercial TPAs. Uninsured and under-insured patients.

77 The reality of Implementing a Bundled Payment program 1. Time commitment 2. Financial commitment 3. Financial risk 4. Legal and Regulatory obstacles 5. Contracting challenges

78 The reality of Administrating a Bundled Payment program 1. Calculating cost of manual processing 2. Calculating cost of monitoring over runs 3. Double billing issues 4. retro eligibility issues - hospital absorbs the loss 5. Collection of Co-Pay and deductibles - hospital absorbs the loss

79 Bundled Payment plans: Pitfalls and Risks 1. Unclear definitions and time frames 2. Imperfect risk adjustments 3. Financial loss related to risk bearing 4. Does it support low level of care? 5. Does it encourage un-bundling and delay in treatment 6. Administrative burden > anticipated 7. What are we going to do with the excess capacity?

80 Bundled Payment plans: Risks 8. Caution: Is it just another way for the Commercial Payers to make more money by shifting risk and administrative burden?

81 Bundled Payment plans: Benefits of implementation 1. Changes culture of distrust 2. Aligns incentives and goals 3. cuts the fat and waste 4. Keeps the patient at the top of the pyramid 5. Preserves entrepreneurial spirit 6. Encourages healthy re-alignments

82 Bundled Payment plans: Benefits of implementation 7. The entire process drives operational efficiencies A total of 95% of excessive costs of elective surgical procedures were due to inefficiency and only 5% were due to higher-than-predicted adverse outcomes rates. Fry, DE et al. JACS, 2011

83 Bundled Payment Plan We recently completed a re-evaluation of our BP program including post-acute services together with the Harvard Business School and IHI s JRLC using Time-Driven Activity Based Costing methodology.

84 Professors Porter and Kaplan Value measurement in Healthcare

85 Elements of a successful Value journey Time Patience Discipline Steady Physician leadership Real $$ cost Opportunity cost

86 Conclusions Despite movement towards restructuring healthcare delivery, competing agendas and misaligned priorities still remain between payers and providers Broad adoption of the Value Agenda will not be easy Performing TDABC, embedding PFCC and implementing bundled payments adds considerable value nonetheless YOU must be a player in this space!

87 Bundled Payment Plan The end game for your entity will be a realignment of incentives amongst all Participants toward delivering the highest quality of care at the lowest cost to the patient and purchaser. This will allow you to compete in the new Healthcare market based on Value.

88 This was done by a bunch of community Orthopedic surgeons

89 Healing is an Art, Medicine is a Science Healthcare is a business

90 Thank you for your attention and good luck with this work

91 Streamlining Orthopedic Episodes of Care 91