The Future of
Health Care
Financing
Dec 5, 2014
WPA Meeting
Kohler, WI
Tim Bartholow, MD
1
Key Questions
• How will WI citizens who make $25K to $50K
per year secure their health care into the near
future?
• What is the obligation of organizations which
purchase health care to enhance health care
delivery?
• What is our duty to our entire population of
members as compared to our duty to each
individual member?
Provider Economic Model
+
Commercial Ins
Medicare
Medicaid
Uninsured (Charity)
“Revenue”
Cost to
Provider
Revenue
to Provider
+
+
+
+
+++
+
+
0
Like Others, WI Population Grows
Older…and Will Need Intense Resources
4
5
International Comparison of Spending on Health, 1980–2008
Average spending on health
per capita ($US PPP)
8000
United States
Norway
Switzerland
Canada
Netherlands
Germany
France
Denmark
Australia
Sweden
United Kingdom
New Zealand
7000
6000
5000
4000
3000
2000
1000
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
0
Source: OECD Health Data 2010 (June 2010).
Paul Fischbeck: US-Europe Comparisons of Health Risk for Gender Specific Groups
7
Trustees: Medicare Will Go Broke in 2016, If
You Exclude Obamacare's Double-Counting
Avik Roy, Forbes, 4/23/12
• The Trustees of the Medicare program have
released their annual report on the solvency of
the program. They calculate that the program is
“expected to remain solvent until 2024, the same
as last year’s estimate.” But what that headline
obfuscates is that Obamacare’s tax increases and
spending cuts are counted towards the program’s
alleged “deficit-neutrality,” Medicare is to go
bankrupt in 2016. And if you listen to Medicare’s
own actuary, Richard Foster, the program’s
bankruptcy could come even sooner than that.
Medicare Trustees Report, 2013
Part A (Hospital) Trust Fund
Fund at Year End
$350.00
$300.00
Billions
$250.00
$200.00
$150.00
$100.00
$50.00
$0.00
1970
2005
2006
2007
2008
2009
2010
2011
2012
Medicare Trustees Report, 2014
Part A (Hospital) Trust Fund
2007
2015
Patrick Conway, MD: Chief Medical Officer for CMS, in
the CMS Blog from November 14, 2013
The Affordable Care Act gave CMS many new tools to convert
Medicare from a program that paid for decades on automatic pilot
into one that deliberately pays to promote better health.
In FY 2014, 1.25 percent of a hospital’s Medicare base-operating
DRG payments go into a value-based purchasing pool. Depending
on how well hospitals measured up to their peers on important
health-care quality indicators during a prior performance period,
they will either break even, get a bonus, or—if their performance is
lower than average—get back less than what they contributed to the
FY 2014 pool.
(Patrick Conway, Nov 14, 2013, cont’d)
FY 2014 payments began October 1
About half of the hospitals participating in the program —
over 1300 hospitals—will essentially break even (payment
change of -0.2 % and +0.2 %)
630 hospitals—just under a quarter—will receive a bonus
(+0.2% or more)
778 will receive an overall decrease in Medicare payment
(-0.2 % or more)
Bonuses And Penalties For U.S. Hospitals, Partial List
(Oct. 2012-Sept. 2014)
Hospital Name
Mile Bluff Medical Center, Inc
City
Mauston
Total VBP &
Readmission
Bonus/Penalty 2014
-0.81%
St Joseph's Community Hospital Of West Bend, Inc
St Mary's Janesville Hospital
Fort Healthcare
St Nicholas Hospital
Wheaton Franciscan Healthcare- All Saints
Theda Clark Med Ctr
St Vincent Hospital
St Marys Hospital Med Ctr
Bay Area Med Ctr
Columbia St Mary's Hospital Ozaukee, Inc
Columbia St Mary's Hospital Milwaukee
Ministry Saint Joseph's Hospital
West Bend
Janesville
Fort Atkinson
Sheboygan
Racine
Neenah
Green Bay
Green Bay
Marinette
Mequon
Milwaukee
Marshfield
-0.61%
-0.42%
-0.38%
-0.36%
-0.34%
-0.32%
-0.32%
-0.26%
-0.24%
-0.23%
-0.21%
-0.20%
Community Memorial Hospital
University Of Wi Hospitals & Clinics Authority
Sacred Heart Hospital
Holy Family Memorial Inc
Others truncated from this list…..
Menomonee Falls
Madison
Eau Claire
Manitowoc
-0.20%
-0.19%
-0.18%
-0.16%
A [1] means that Medicare did not calculate a payment adjustment for the hospital this year. A [2] means KHN could not calculate the
annual change because one or both years lacked data. For details about the data, read the KHN methodology:
http://www.kaiserhealthnews.org/Stories/2013/November/14/value-based-purchasing-medicaremethodology.aspx
Hospitals
Quality
Cost
Physicians
HHS, May 2014
Shared Savings Program: Dec 1, 2014
330 ACOs in 47 states, 4.9 million
beneficiaries. First year Shared Savings
Program (SSP) results:
• 58 SSP ACOs held spending below their
benchmarks by a total of $705 million and
earned shared savings payments of more
than $315 million.
• Another 60 ACOs had expenditures below
their benchmark, but not by a sufficient
amount to earn shared savings.
CMS Seeking Comment, Dec 2014
•
Providing more flexibility for ACOs Experienced ACOs that are ready to share in
financial losses in return for the opportunity for a higher share of savings may elect to enter
a two-sided model.
•
Encouraging ACOs to take on greater performance-based risk and reward. create a
new two-sided risk model, called “track 3,” which integrates some elements from the
Pioneer ACO model, such as higher rates of shared savings and prospective attribution of
beneficiaries
•
Expanded use of telehealth, beneficiary attestation, and more flexibility around post-acute
care referrals to help ACOs better coordinate care for beneficiaries
•
Emphasis on primary care. refine assignment to an ACO to place greater emphasis on
primary care services delivered by nurse practitioners, physician assistants and clinical
nurse specialists and to allow certain specialists not associated with primary care to
participate in multiple ACOs.
•
Alternative methodologies for benchmarks: determining shared savings and losses to
be gradually more independent of the ACO’s past performance and more dependent on the
ACO’s success in being more cost efficient relative to its local market.
•
Streamlining data sharing and reducing administrative burden.
Specialty Drug Challenge
• Expenditures expected to quadruple by 2020
– From $87 Billion to $400 Billion
Yervoy: Billed at $250K,
Contract $168K, 340b Acquisition ~$69K
UC Berkeley: James P. Allison and Matthew F. Krummel as part of
Krummel’s PhD thesis work in Allison's lab, published in the journal
Science.[38]
University of Chicago: Jeff Bluestone published studies, with Krummel
and Allison in collaboration with
University of Minnesota: Mark Jenkin
Peter Linsley’s group at Oncogen and then Bristol-Meyer Squib in
Seattle. Bristol-Meyer Squib ultimately came to license the
Allison/Leach/Krummel patent though their acquisition of Medarex and the
fully humanized antibody MDX010 (which later became Ipilimumab, tradename Yervoy).
Wikipedia, Accessed July 7, 2014
All Payer Claims Data Base, WI Health Information Organization
(WHIO): $40B, 3.7 Million WI Residents
by Major Practice Category (MPC)
Over 50% Of Expense Is Contained
Within Few Illness Categories
21
Docs Control Most Of The Spending
ISCHEMIC HEART DISEASE WITH ANGIOPLASTY
STANDARD COST DISTRIBUTION
BY TYPE OF SERVICE
WHIO DMV4
ALL SEVERITY LEVELS; EXCLUDES PARTIAL CLAIMS EPISODES
ANCILLARY
8%
PHARMACY
4%
PROFESSIONAL
13%
• Specialty
• Primary Care
• “Therapists”
OUTPATIENT
FACILITY
19%
INPATIENT
FACILITY
56%
22
“The Specialist” is 5 to 10% of
Resource Use for These Expensive
Areas. Can Physicians Judiciously
Authorize the Other 90%?
Episode Treatment Group:
Ischemic Heart
Disease with
Angioplasty
Total Episode Standard Cost, DMV4
$243 M
$195 M
$287 M
$499 M
Cardiology
$23 M
9.5%
Gastroenterology
$10 M
5.1%
Orthopedic Surgery
$28 M
9.8%
Psychiatry
$23 M
4.6%
Total $
% of Episode
$187 M
77%
$76 M
39%
$229 M
80%
$149 M
30%
Total $
% of Episode
$3 M
1%
$13 M
7%
$2 M
1%
$22 M
5%
Total $
% of Episode
$5 M
2%
$63 M
32%
$2 M
1%
$174 M
35%
Specialist
Total $
% of Episode $
Inflammation of
Joint Degeneration,
Mood Disorder,
the Esophagus,
localized - Knee and
Depressed
without Surgery Lower Leg, with Surgery
Facility, IP & OP
Primary Care
Prescription Drugs
23
Facilities
Primary Care
Specialists
24
Today We Too Often
Pay One Item At A Time, eg Knee Replacement
Soap
Gauze
Orthopedic Surgeon
Knee Implant
Hospital Day
Physical
Therapy
Soap
Knee Bundle
(One price for
all services
necessary)
Gauze
Orthopedic Surgeon
Knee Implant
Hospital Day
Physical
Therapy
=
Warrantee
against
infection for 90
days
Perhaps other
outcomes
Shifting Risk to Providers
Degree of Complexity
High
Insurance product
Zone
of Risk
Sharing
Global capitation
Partial Capitation
Shared Savings / Losses
Bundled episodes (pre- and post-care included)
Bundled episodes (inpatient only)
P4P programs
Inpatient case rates (DRGs)
Fee for service
Low
Scope of Risk
High
17
Source: HFMA Presentation “Managing the Transition from Volume to Value”, August 22, 2013
Angioplasty, By County
29
Angioplasty, By Physician
30
Cardiology Practice Ownership
Wisconsin
100%
3%
3%
1%
90%
80%
25%
1%
25%
Hospital
Employment of
Cardiologists:
49%
2007
2012
70%
5%
0%
60%
50%
40%
62%
30%
20%
11%
10%
11%
0%
2007
Physicians
Other
Hospital
2012
Med School/Univ.
Gov't
HMO/Insurance
31
5%
45%
Cardiology Practice Ownership
Wisconsin
National
100%
100%
1%
90%
6%
1%
6%
80%
15%
16%
70%
11%
70%
60%
4%
60%
90%
35%
50%
3%
3%
1%
80%
25%
25%
5%
0%
50%
40%
49%
40%
4%
30%
59%
62%
30%
20%
1%
36%
10%
20%
11%
10%
0%
11%
0%
2007
Physicians
Other
Hospital
2012
Med Sch/Univ.
Gov't
HMO/Insurance
2007
Physicians
Other
Hospital
2012
Med School/Univ.
32
Gov't
HMO/Insurance
“Appropriate Use” In Legislative Language For Sustainable
Growth Rate In Each Of The 3 Committees Of Jurisdiction
“Public Reporting” Delayed until January 2015
35
Basic Tenets of Enhancing Value:
The Value Agenda
1. Keep people well, members have a duty to
maintain health
2. If not well be sure the patient receives what
is “Appropriate,” and
3. Provide this care with as little variation as
possible
4. Shared Decision Making with health
challenges or intervention,
• including Advance Care Planning
5. Anticipate Care Needs
36
The Value Agenda
1. Assist members to achieve the best health
we can, members have a duty to maintain
health
2. If not well be sure the patient receives what
is “Appropriate,” and
3. Provide this care with as little variation
between physicians as possible
4. Shared Decision Making with health
challenges or intervention,
• including Advance Care Planning
5. Anticipate Care Needs
37
Aggregate HTDI Utilization Rate per 1,000 Members, 1Q03-4Q09
Aggregate Data Include: BCBS, HealthPartners, Medica, UCare and
DHS
Claims and Membership Data (Hospital Inpatient and ER Claims
Excluded)
For CT, MRI,
PET, the Use of
Appropriate
Use Criteria at
the point of
service
(Radport) in
Minnesota in
2006 appears
to have
changed
utilization
HTDI Utilization Rate per 1,000 Members
55
*Membership profile differs across health plans.
Projected Utilization
(yellow line) at
53.24
52.24
Projected Utilization
51.26
(red line) at 1Q0350.30
49.35
48.43
47.52
46.63
45.75
44.89
44.05
43.94
42.54 42.39
43.22
42.76 42.72
Actual
42.41
42.13
42.02
utilization
41.62
40.63 40.84
40.87
39.19
40.21 40.3040.52
39.77
38.09
37.83
38.51 38.85
36.83
38.07
36.12
35.27
35.92
33.71
50
45
40
35
33.02
33.39
32.03
30
ICSI DS
25
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
38
3Q07
1Q08
www.bhcag.com/.../%7B18F569D4-A334-4CBC-B4CB-649DF181FA03%7D.PPT
3Q08
1Q09
3Q09
http://go.bloomberg.com/multimedia/mapping-coronary-stent-hot-spots/
39
IHD with Angioplasty,
2 Groups 2 Hours From One Another,
Doctors with at Least 10 Episodes, DMV2
$40,000
3
$36,009
$33,911 $33,508
$30,865
2.5
$29,853
Std Cost per Episode
$30,000
$26,728
$25,221 $24,897 $24,890 $24,772
2
$25,000
$21,863
$20,000
1.5
$15,000
1
$10,000
0.5
$5,000
$-
0
A
A
A
A
A
A
A
Doctor in Clinic A or B
B
A
B
B
41
Health Risk, Retrospective
$35,000
Std Cost per Episode
Health Risk
IHD with Angioplasty, Clinic A & B, DMV 2,
Profile Service Category: Category 1
Drop Page Fields Here
$30,000
Sum of Std Cost per Episode
$25,000
$20,000
Clinic
$15,000
A
B
$10,000
$5,000
$ER
Hospital
Services
Laboratory
Pharmacy
Primary Care
Core
Radiology
Specialty Care
PSC Category 1
42
Unknown
County Health Rankings: Interactive Maps
http://www.countyhealthrankings.org/app/wisconsin/2013/rankings/outcomes/overall/by-rank
43
UW PHINIX: Uncontrolled A1c and Diabetes
Prevalence 2007-9
LP Hanrahan (Larry.Hanrahan@fammed.wisc.edu) and B Arndt,
http://videos.med.wisc.edu/videos/42741 11/5/2012 and
https://www.wisconsinmedicalsociety.org/_WMS/publications/wmj/pdf/111/3/124.pdf
High Poverty
High Economic Hardship
High Social Vulnerability
Low FF&V Consumption
High T2DM Prevalence
Lower Good A1c Control
Higher Uncontrolled A1c
$3121 PMPM
$2004 PMPM
44
Conclusions
• Physicians must be aware of their
economic impact to the system
• Models of payment that have the physician
more responsible for the total cost of
patient care are opportunities
• Medicare is demonstrating real savings
with a carrots and stick approach
• Middle income patients have no additional
disposable income for health care
Questions?