Future Healthcare Payment Models An Overview Carter Dredge
THERE IS A CRITICAL NEED TO TRANSFORM HEALTHCARE DELIVERY & PAYMENT 2
Significant Variation in Population Utilization Spine Surgeries per 1,000 Medicare Enrollees Source: Dartmouth Atlas of Healthcare
Significant Variation in Intra-Episode Utilization 4
Paying for Medicare Income taxes would have to increase by more than 160% to finance growth at the historical rate of 2.5 percentage points faster than GDP growth, increasing the income tax rate in the top bracket, for example, to 92% from 35%. The Economics of Financing Medicare, New England Journal, July 2011
Getting to Affordability Intermountain Healthcare Patient Services Net Revenue in Millions $6,000 Lower Revenue Rate Increases Manage Utilization $5,500 Historical Revenue Growth Trend $5,000 $4,500 $4,000 $3,500 $3,000 2011 2012 2013 2014 2015 2016
We Have A Number of Options for Payment Reform Reference: APII Public Meeting
If I took the liberty to update this today * * ** *** Where we will focus on our discussion Episodic and Global Payment the Clear Winners *Robert Mechanic & Stuart Altman (Health Affairs -2009)
Total Cost Per Person Cost = Per X Process Processes Per Episode X Episodes Per Person Examples Cost per Day in a Hospital # of Days in a Hospital A Hospital Stay Incentive Efficiency Intra-Episode Utilization Population Utilization FFS Bundled Global
Bundled Payment Cost Example Total Knee Replacement Payment Hospital Inpatient (i.e. DRG pmt) $ 10,500 Hospital Outpatient $ 500 Inpatient Rehab (IRF) - 25% $ 5,000 Skilled Nursing Facility (SNF) 15% $ 1,500 Home Health 25% $ 750 Home 50% $ 500 Part B Professional (i.e. Professional Fee) $ 3,000 All other Part B (i.e. Pharmacy, DME, etc.) $ 300 Total Episode Cost $ 22,050 10
Risks and Rewards Risk = Uncertainty of the level of spending and clinical outcomes Risks and rewards go together More risk is not inherently bad, and typically speaking, the larger the risk, the larger the potential reward; managing risk is about influence, control, and scale Two main classifications of risk for healthcare payment: Actuarial Risk: (e.g. someone getting sick) Performance Risk: (e.g. errors, inefficiencies, patient behavior) Payment reform is about shifting performance risk to providers, with the logic that those providers have more control over these risks RISK CASH TRANSFER 11
Clinical Evolution Population Needs- Based Care Management, Evidence Based Prevention and Wellness CDS, Continuum of Care Analytics, Transition Management, Predictive Modeling Value improvement benefits flow exclusively to payers Payment model rewards providers for higher value care Registries, Basic Care Management, Population Analytics, EBM Protocols Limited Capability Payment model rewards focus on acute, episodic care Unmanageable risk for providers Independent Physicians and Hospitals- FFS Insurance Company Bears Financial Risk for a Population Care Coordination Fees- PCMH Bundled Case Rates Payment Evolution Population- Based Risk Contracts Health System Bears Financial Risk for a Population
Barriers to Adopting New Forms of Payment Individual payer initiatives can create first-mover disadvantages Need to reach the tipping point Different episode definitions and a lack of a payment distribution mechanism/network In short Free-riding Not Enough Critical Mass Complexity These Can Be Solved Through Strategic Leadership!
In Summary Organizations that want to seriously move to Population Health Management need to do the following key things: Manage the full spectrum of a member s health Accept financial risk to a much broader degree Significantly increase the level of evidence-based high value care provided Engage with patients, clinicians, any many other new partners in new ways Intermountain Healthcare, 2014
Retrospective Reconciliation Overview Reference: AHCPII Public Town Hall Hall Meeting
Retrospective Reconciliation Thresholds Reference: AHCPII Public Town Hall Meeting
Retrospective Reconciliation Gains and Losses Reference: AHCPII Public Town Hall Meeting Reference: AHCPII Public Town Hall Meeting
"Because of the way we measure things, it doesn't make sense to do what makes sense. Clayton Christensen
Miles Per Gallon 32 Ton-Miles Per Gallon 17 How Do We Measure Success? 12 7 2.5 130.15 490 Source: Greg Poulsen, 2016 Trustee Conference Presentation
Population Health Value DME $1 spent on mobility HME potential savings of $17 in fall related costs $1 spent on supplemental O2 therapy potential savings of $10 in avoided COPD complications $1 spent on CPAP therapy potential savings of $7 in obstructive sleep apnea (OSA) complications Source: VGM - 2016 Spring Meeting (www.vgm.com)
Team-Based Care (i.e. PPC & MHI) Results 13.73% p<0.0001 Emergency Visits Hospital Admissions 4.15% p<0.0001 Specialty Visits Laboratory Tests Radiology Tests 2.20% p<0.0001 PCP Visits Urgent Care Visits 1 1-0.36% p=0.75-1.86% p=0.002 Prescriptions -13.94% p=0.01-13.01% p<0.0001-30.09% p<0.0001 % Change in Utilization Routinized TBC vs. No TBC
Team-Based Care (i.e. PPC & MHI) Results All Patients None 1 condition 2 conditions 3 conditions 4 conditions >5 conditions $-115 p=0.008 $-72 p=0.184 $-191 p=0.010 $-285 p=0.025 $-981 p<0.0001 $-745 p=0.029 PMPY Impact (Delivery System Payments) by # of Chronic Conditions Routinized TBC vs. No TBC $-1349 p=0.060
TeleHealth PPC & MHI Continuous Improvement and Analytics Patient Education Health Promo & Wellness New SelectHealth Products Capital Budgeting Pricing / Transparency Building The Bridge Integrated Care Management Regional Alignment Structure Payer Contracts Shared Dec Benefit Design Fee for Service World Evidence Based Medicine Used Evidence Based Medicine Defined Physician Pmt Model Homecare Services Population Health Management World
WHY SHOULD WE TRANSFORM HEALTHCARE PAYMENT?
Thank You! Questions? Carter Dredge