FROM VOLUME TO VALUE:
Improving Care Coordination
Through Payment & Delivery System Reform
Harold D. Miller
President and CEO,
Network for Regional Healthcare Improvement
and
Executive Director,
Center for Healthcare Quality and Payment Reform
How Does a Patient with Chronic
Disease(s) Get Care Today?
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Patient w/
Chronic
Disease(s)
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
2
It May Start the Right Way...
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Patient w/
Chronic
Disease(s)
Primary
Care MD
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
3
Physician Sends Patient to Others
For Testing & Diagnosis
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Test s
Patient w/
Chronic
Disease(s)
Primary
Care MD
Specialist
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
4
Patient May Independently
See Other Doctors
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Test s
Patient w/
Chronic
Disease(s)
Primary
Care MD
Specialist1
Specialist2
“Medicare beneficiaries saw a median of
2 primary care physicians and 5 specialists
working in 4 different practices [during a year].”
Care Patterns in Medicare and Their Implications
for Pay for Performance
Hoangmai H. Pham, et al
New England Journal of Medicine, March 15, 2007
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
5
Duplicative Tests
May Be Ordered
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Test s
Patient w/
Chronic
Disease(s)
Primary
Care MD
Specialist1
Specialist2
Test s
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
6
Probably No Coordination of
Treatment by Involved MDs
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Test s
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Test s
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
7
Generally No Care Management
After Diagnosis/Medication Plan
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Care
Mgt
Test s
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Medicare and most insurance plans only pay
for face-to-face visits with a physician, not for
home visits/phone contacts with non-physicians
or phone/email contacts with physicians
between visits
Primary
Care MD
Rx3
Specialist1
Specialist2
Test s
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
8
Many Patients Will Be
Hospitalized for Exacerbations
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Care
Mgt
Test s
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Hospital Rx
Primary
Care MD
Rx3
Specialist1
Specialist2
Test s
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
9
Multiple New Physicians in
Hospital May Change Treatment
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Care
Mgt
Test s
Hospitalist
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Hospital Rx
Primary
Care MD
Specialist3
Specialist2
Test s
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
10
Lack of Post-Discharge
Care Coordination
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Care
Mgt
Test s
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
Test s
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
11
~20% Are Readmitted Within
30 Days (most w/ no PCP visit)
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Test s
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
Pittsburgh Regional Health Initiative analyses of Pennsylvania Health Care
Cost Containment Council data;
“Stephen Jencks et al, “Rehospitalizations among Patients in the Medicare
Fee-for-Service Program,” New England Journal of Medicine, April 2, 2009
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
12
Every Element is Paid Separately
and Some Are Not Paid For at All
How the Health Care System “Manages” a Patient with Chronic Disease(s)
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
Specialist2
Test s
$
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
13
What’s Needed for More
Coordinated Care?
• Paying for someone (the PCP?) to coordinate all of
the various providers and services
• Paying in ways that encourage multiple providers to
coordinate their services
• Creating and paying for the information infrastructure
that facilitates coordination of services
• Providing education/incentives to patients to allow
coordination to occur and adhere to treatment plans
• Creating organizational mechanisms to enable
efficient/effective coordination and accountability
without creating larger monopoly providers
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
14
Payment Solutions Being
Discussed and/or Tested
• Patient-Centered Medical Home
• Care Transitions
• Warranties/Penalties for Preventable Readmissions
• Bundled Payments for Hospitals and Doctors
• Acute Episode Payments (Warranties + Bundling)
• Accountability for Total Cost of Care
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
15
Solution 1: More Resources for
Primary Care Practices
Patient Centered Medical Home Payment
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Test s
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
WEAKNESSES:
• No accountability for outcomes/cost
• No incentives for other providers to coordinate
• No incentive for patient to participate
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
16
Solution 1a: Minnesota’s
DIAMOND Initiative
Patient Centered Medical Home Payment
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialists
paid to
consult w/
PCP w/o
requiring
patient visit
Specialist1
Specialist3
Rx5
Care
Mgt
Specialist2
Test s
Rx4
Primary
Care MD
WEAKNESSES:
• No accountability for outcomes/cost
• No incentive for patient to participate
www.icsi.org/health_care_redesign_/diamond_35953/
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
17
Solution 2: More Resources for
Discharged Patients
Care Transitions Support to Prevent Readmissions
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Test s
www.caretransitions.org
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
WEAKNESSES:
• Only applied to patients who’ve been hospitalized
• May be no connection to primary care MD
• No resources to continue after readmission window
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
18
Solution 3: Making Hospitals
Accountable for Readmissions
Warranties or Penalties for Readmissions
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Test s
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
WEAKNESSES:
• Most readmissions due to lack of
primary care, not failure of hospital care
• No resources to improve outpatient care
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
19
Solution 4: Encouraging
Coordination of Hospitals & MDs
“Bundled” Payment During the Hospitalization
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Test s
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
WEAKNESSES:
• Only improves efficiency and coordination
within the hospital stay
• No resources/incentive to improve outpatient care
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
20
Solution 5: Coordination and
Warranties for a Full Episode
Full Episode-of-Care Payment for Acute Episodes
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Test s
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
WEAKNESSES:
• Only applicable to patients who are hospitalized
• No resources to improve outpatient care
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
21
No Linkage of Primary Care &
Hospital Payment Changes
Medical Home + “Bundled” Hospital Pmt + Care Transitions
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Test s
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
WEAKNESSES:
• No resources/incentive for hospital and primary
care to coordinate or address common outcomes
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
22
Solution 6: Accountability for
Total Costs and Outcomes
Comprehensive Care Payment/Year-Long Episodes/Shared Savings
Care
Mgt
Test s
Hospital
Hospitalist
Home
Care
Hospital Rx
Rx3
Rx1
Patient w/
Chronic
Disease(s)
Primary
Care MD
Rx2
Rx3
Specialist1
Specialist2
Rx4
Specialist3
Primary
Care MD
Rx5
Care
Mgt
Test s
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
23
Alternative Methods of
Total Cost Accountability
• Capitation
– Still in use in some areas, particularly California
– Often “partial capitation,” excluding inpatient costs
• Shared Savings
– E.g. Physician Group Practice Demonstration
– E.g., “Accountable Care Organization” Proposals
• Comprehensive Care Payment/Year-Long Episodes
– E.g., Patient Choice
– E.g., PROMETHEUS
– E.g., BCBSMA Alternative Quality Contract
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
24
Shared Savings Proposed As
an Incentive to Control Costs
Healthcare
Spending
Spending Trend
2008
2009
2010
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
25
Shared Savings Proposed As
an Incentive to Control Costs
Initial Portion of Savings
Accrues to Payer
Healthcare
Spending
Share of Savings
Returned to Provider
Spending Trend
Savings Compared
to Expected Cost
2008
2009
2010
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
26
Medicare Physician Group
Practice Demonstration
• 10 Participating Large Group Practices (5,000 physicians)
–
–
–
–
–
–
–
–
–
–
Billings Clinic, Montana
Dartmouth-Hitchcock Clinic, New Hampshire
The Everett Clinic, Washington
Geisinger Health System, Pennsylvania
Middlesex Health System, Connecticut
Marshfield Clinic, Wisconsin
Forsyth Medical Group, North Carolina
Park Nicollet Health Services, Minnesota
St. John’s Health System, Missouri
University of Michigan Faculty Group Practice, Michigan
• Shared Savings Formula
– Medicare keeps first 2% of savings over risk-adjusted projection
– Physician group gets 80% of additional savings, up to 5%
– 50% of shared savings paid only if quality targets met
• Results (as of year 2 of 4-year program ended 3/31/09)
– 100% of groups achieved benchmarks on 25 of 27 quality measures
– 40% of groups received shared savings
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
27
Weaknesses of “Shared Savings”
as a Payment Reform Solution
• It’s P4P, Not Fundamental Payment Reform
– No change in what’s billable or appropriateness of prices in FFS
• It Gives Providers Risk Without Resources
– Managing care/costs requires an increase in upfront spending, with no
assurance that increased costs will be covered by shared savings
• It Rewards High Spenders Rather Than High Performers
– Communities with low costs/high quality don’t benefit unless they find
even more savings; 2% threshold is easier for high spenders to meet
• Providers Don’t Know Who They’re Accountable For
– Patients are “attributed” to doctors and health systems after the fact,
rather than providers knowing up front who their patients are
• Patients Have No Obligation/Incentive to Participate
– Patients can switch providers, see multiple providers, and not carry out
treatment plans, but the most frequently-seen doctor will be responsible
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
28
Instead of Health Plans Paying
Separately for Different Services...
Health Insurance Plan
Fee-forService
Fee-forService
Fee-forService/
DRGs
Cost of
Practice Based
Services
Cost of Other
Outpatient
Services
Cost of
Hospitalizations
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
29
...Comprehensive Care Payment
Gives One Provider Responsibility
Health Insurance Plan
Accountable
Care Organization
Comprehensive Care Pmt
Cost of
Practice Based
Services
Cost of Other
Outpatient
Services
Cost of
Hospitalizations
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
30
Examples of
Comprehensive Care Payment
• Patient Choice (www.patientchoicehealthcare.com)
– “care systems” bid on risk-adjusted (total) cost of patient
care and patients select care systems based on cost/quality
– built on fee for service, but with addition of new codes to
cover previously unpaid services
• PROMETHEUS Payment (www.prometheuspayment.org)
– “Year-Long Episodes of Care” for major chronic diseases
– Provides a prospective budget for spending
• Alternative Quality Contract (Massachusetts BC/BS)
(www.bluecrossma.com)
– Severity-adjusted capitation payment
– Quality incentives
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
31
Results of Patient Choice With
Cost-Tiered Providers
2005 LOW COST TIER
Change in Members, 2004-2005
30%
2005 MEDIUM COST TIER
20%
ST CROIX
PARK
VALLEY
NICOLLET
ACCESS
0%
-10%
System Moved To Lower Cost Tier
System Moved to Higher Cost Tier
System Stayed in Same Cost Tier
MHN
10%
2005 HIGH COST TIER
ALLINA
FHSM
FPA
ASPEN
NORTH
MEMORIAL
UMP
HPI
HFA
HEALTHEAST
CPHO
ABBOTT
NW PHO
NORTH
CLINIC
-20%
Source: Ann Robinow, Robinow Consulting
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
32
Challenge: Most MDs in the U.S.
Are in Small Practices
% of Physician Practices in Pittsburgh Region by Practice Size
25%
20%
15%
10%
5%
0%
1 2 3 4 5 6 7 8 9 101112131516181921222528
Size of Physician Practice
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
33
Michigan BC/BS Physician Group
Incentive Program
Fee-for-Service
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
34
Michigan BC/BS Physician Group
Incentive Program
Phase I
Fee-for-Service
Fee-for-Service
P4P for QI
Virtual MD Group
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
Virtual MD Group
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
35
Michigan BC/BS Physician Group
Incentive Program
Fee-for-Service
Phase I
Phase II
Fee-for-Service
Fee-for-Service
P4P for QI
P4P for QI
Medical Home $
Virtual MD Group
Virtual MD Group
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
MD
Virtual MD Group
Virtual MD Group
www.bcbsm.com/provider/value_partnerships/pgip/index.shtml
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
36
Payment Changes Need to Be
Made by a Critical Mass of Payers
Payer
Better
Payment
System
Payer
Current
Payment
System
Payer
Current
Payment
System
Provider
Patient Patient Patient
Provider is only compensated for changed practices
for the subset of patients covered by participating payers
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
37
Payer Coordination Is Beginning
to Occur Around the Country
• Examples of Payer Coordination:
– Minnesota: All private payers have agreed to pay for care
managers in primary care practices and consult fees to
psychiatrists to help manage patients with depression
– Pennsylvania: All commercial payers have agreed to pay
for medical home/chronic care services in primary care
practices
– Rhode Island: All-payer medical home demonstration
• A Facilitator of Coordination is Needed
– Minnesota: Institute for Clinical Systems Improvement
– PA & RI: State Government
• Medicare Needs to Participate in Local Projects
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
38
Payment Changes Only Affect
One Side of the Relationship
Payment
System
Patient
Provider
Ability and
Incentives to:
• Keep patients well
• Avoid unneeded
services
• Deliver services
efficiently
• Coordinate
services with other
providers
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
39
Benefit Design Changes Are
Also Critical to Success
Ability and
Incentives to:
• Improve health
• Take prescribed
medications
• Allow a provider to
coordinate care
• Choose the
highest-value
providers and
services
Benefit
Design
Payment
System
Patient
Provider
Ability and
Incentives to:
• Keep patients well
• Avoid unneeded
services
• Deliver services
efficiently
• Coordinate
services with other
providers
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
40
Lack of Coordination Between
Pharmacy & Medical Benefits
Single-minded focus on
reducing costs here...
Pharmacy Benefits
Drug
Costs
...could result in higher
spending on hospitalizations
Health Insurance
Hospital
Costs
• High copays for brand-names
when no generic exists
• Doughnut holes & deductibles
Physician
Costs
Other
Services
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
41
Coordinated Functions Needed
for More Coordinated Care
Consumer
Education/
Engagement
Education
Materials
Consumer
Education/
Engagement
Quality/
Cost
Reporting
Quality/Cost
Measure
Design
Engagement
of
Purchasers
Quality
Reporting
Cost/Price
Reporting
Alignment of
Multiple
Payers
Value-Driven
Delivery
Systems
Value-Driven
Payment Systems
Benefit
Design
Payment
System
Design
Technical
Assistance
to Providers
Design &
Delivery of
Care
Provider
Organization/
Coordination
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
42
Coordinated Support for All
Functions at the Regional Level
Education
Materials
Consumer
Education/
Engagement
Quality/Cost
Measure
Design
Quality
Reporting
Cost/Price
Reporting
Regional
Health
Improvement
Collaborative
Engagement
of
Purchasers
Alignment of
Multiple
Payers
Benefit
Design
Payment
System
Design
Technical
Assistance
to Providers
Design &
Delivery of
Care
Provider
Organization/
Coordination
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
43
~50 Regional Health Improvement
Collaboratives in U.S. Today
Learn more about
Regional Collaboratives
at
www.NRHI.org
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
44
For More Information on
Alternative Payment Systems
www.PaymentReform.org
© 2009 Network for Regional Healthcare Improvement, Center for Healthcare Quality and Payment Reform
45
For More Information:
Harold D. Miller
President & CEO, Network for Regional Healthcare Improvement
and
Executive Director, Center for Healthcare Quality and Payment Reform
Miller.Harold@GMail.com
(412) 803-3650
www.NRHI.org
www.CHQPR.org
www.PaymentReform.org