Creating a High Performance System:
Aligning the Payment Model
April 4, 2014
Tom Simmer, MD
Senior Vice President & Chief Medical Officer
A High Performance Healthcare System Addresses the
root causes of low system performance
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Poorly aligned payment
Payment structure must strongly support a
pro-active, patient-centered care model
and the population management
infrastructure.
Lack of population focus
All-patient registries at the practice level,
integrated registries at the ACO/ OSC level.
Population performance measured and
rewarded through tiered fee structure.
Fragmented health care
delivery
Information sharing and process
management connect participants in the
care process.
Weak primary care
foundation
Patient Centered Medical Home;
Provider-Delivered Care Management
Lack of focus on process
excellence
Collaborative Quality Initiatives
Lean process redesign
It’s got to come out of course, but that
doesn’t address the deeper problem.
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BCBSM Strategy to Align Professional Payment with
Performance measured at the Population Level.
• Two separate components:
– Payments to Physician Organizations (PO’s)
– Tiering of professional fees
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BCBSM Strategy to Align Professional Payment
and Population Management.
• Five percent of RVU-based professional service payment are paid to
physician organizations (PO’s).
• The Physician Organization payment supports population management
infrastructure and facilitation of care transformation, with some money to
reward physicians. It is not the primary mechanism for rewarding
professional providers.
•
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2009, BCBSM began tiering some specialist fees, based on nomination by
physician organizations, population-based performance measurement, or
participation in specific improvement programs. Tiered fees is the primary
method for rewarding professional providers.
The BCBSM Physician Payment Process
• For most services, the BCBSM fee is determined by multiplying the
number of “Relative Value Units (RVU’s) times a conversion factor.
• The total BCBSM will pay for a service is called the “allowed amount.”
• BCBSM pays the lesser of the allowed amount or the “billed amount,”
which is the amount “charged” by the practice.
• The allowed amount for each RVU-based service is divided into two
components: the Physician Organization component (5%) and the
practitioner component (95%). Both components are paid in full; there is
no “withhold.”
• There is no expectation by BCBSM that PO’s should pay physicians from
their PO component revenue. There is an expectation the PO’s will create
the population management infrastructure and facilitate practice
transformation.
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The Physician Organization Component
• The Physician Organization component is expected to be “stable” at 5
percent, although small adjustments are likely.
• Physician Organizations will need to make progressively larger investments
to meet the information sharing challenges and to support productive
engagement by specialists in population management.
• BCBSM PO payments emphasize recognizing capabilities for information
sharing, integrated registries, measuring performance, facilitating Patient
Centered Medical Home (PCMH), Patient Centered Medical
Neighborhood, Provider Delivered Care Management (PDCM)
implementation, recruiting additional practitioners, and population
measures related to cost and HEDIS quality performance.
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Key Point
Physician Organizations will have more physicians and less money
available to distribute to physicians. The most important way a PO
delivers value to its practitioners is to promote better results at the
population level, resulting in higher fees to the physicians responsible for
the care delivered to that population.
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BCBSM Payment Tiers: 2014
• BCBSM is implementing two models for tiering professional fees
– Model One: tiers fees for evaluation and management (E & M) services only
– Model Two: ties all RVU-based fees
• Each “tier” is a fixed percentage higher than the TRUST fee.
• BCBSM currently uses the first model for PCMH-designated practices and
for selected specialties. BCBSM establishes fees for PCMH-designated
practices that are a fixed percentage higher than TRUST, based on BCBSM
criteria.
• The second model (as of February 2014) for specialties eligible for tiered
fees, generally 5 or 10 percent higher than TRUST.
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BCBSM Payment Tiers: 2015
• BCBSM expects to apply the second model for tiering fees to all
specialties (except anesthesia) by early 2015.
• Anesthesia fees are generally not RVU-based and BCBSM is not currently
planning to apply the tiered-fee model to Anesthesia services.
• In order to be eligible for higher payment tiers, specialists must be
nominated by the physician organization. Nomination occurs at the
practice unit level.
• Nominated specialists are selected for higher payment tiers based on
engagement with the PO’s with which they are affiliated and based on
population-based performance measures.
• Population measures are based on the performance of ALL caregivers
serving the population.
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Tiering Specialist Fees: Key Points
• Specialists must be represented through one of the PGIP groups, even
though specialists may participate in more than one PO.
• Specialists must be nominated by the PO that represents them in PGIP
and, if applicable, their “principal partner” PO, determined by source of
their patients.
• PO’s nominate physicians based on written criteria available on the PO
website and founded upon Patient Centered Medical Home Neighbor
principles.
• The preponderance of measures used to select which specialist PUs
receive higher fees are population-based and serve to reward specialists
who serve patient populations with higher overall cost performance.
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Specialties Eligible for Fee Uplifts
2011
2012
2013
2014
2015
Oncology
Oncology
Cardiology
Oncology
Cardiology
Emergency Medicine
Gastroenterology
Nephrology
Obstetrics/Gynecology
Orthopedics
Oncology
Cardiology
Emergency Medicine
Gastroenterology
Nephrology
Obstetrics/Gynecology
Orthopedics
Allergy
Chiropractic
Critical Care
Endocrinology
Infectious Disease
Neonatal Care
Neurology
Otolaryngology
Pain Management
Podiatry
Psychiatry
Psychology
Pulmonology
Physical Medicine
Sports Medicine
Rheumatology
Urology
Oncology
Cardiology
Emergency Medicine
Gastroenterology
Nephrology
Obstetrics/Gynecology
Orthopedics
Allergy
Chiropractic
Critical Care
Endocrinology
Infectious Disease
Neonatal Care
Neurology
Otolaryngology
Pain Management
Podiatry
Psychiatry
Psychology
Pulmonology
Physical Medicine
Sports Medicine
Rheumatology
Urology
PLUS:
Most remaining specialties
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How can specialists receive higher BCBSM fees?
• Join a PO and become an active participant.
• Learn and meet the PO’s criteria for nomination
• Actively work to support the PO in its work of creating a high performance
system of care. Work with other clinicians to improve communication,
share information, and improve the process of care. Examples:
– ED use of imaging services
– Improve performance on “Choosing Wisely” recommendations
– Complex care patient whose doctors “aren’t talking to each other.”
• Understand areas of population management strengths and weaknesses
and help the PO carry out its role more effectively.
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Oncology Fee Uplift Metrics
(Performance)
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Metric
Description
Level
Type
Weight
PMPM
Overall per member per month (PMPM)
medical/surgical cost of care + pharmacy - actual
cost for cancer population
Population
level
Utilization
50%
Cancer
sensitive
severe events
Cancer sensitive severe events related inpatient
admissions or emergency department visits per
100 members per year
Population
level
Utilization
50%
Metrics for Emergency Medicine 2013 Uplift
Metric
CAVE
PMPM
GDR
LBP
Description
Weighted average episode
cost relative to peer group
Overall PMPM Med/Surg
Cost of Care + Rx Cost
Proportion of Rx scripts
written for a generic drug
Proportion of ED visits with
a primary Diagnosis of Low
Back Pain receiving an
imaging study
Level
Type
Sub-PO
Efficiency
Sub-PO
Utilization
Practice Unit
Efficiency
Practice Unit
Quality
Population Management Strategy:
Align Facility and Professional Providers
• BCBSM ValuePartneship Strategy is to partner with Physician
Organizations and Hospitals to create a High Performance Healthcare
System in Michigan. BCBSM’s payment models for professional and facility
providers are aligned to promote the development of “organized systems
of care” and better clinical outcomes measured at the population level.
• BCBSM is creating commercial products that “steer” members to
professional and facility providers though lower member cost-share.
BCBSM typically contracts with a “health system” and their affiliated
professional providers.
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Medicare: Considering Tiered Fees
• CMS is encouraging accountability for population-level performance
through Accountable Care Organizations (ACO’s)
• CMS is evaluating replacing the SGR (Sustainable Growth Rate) formula for
physicians actively involved in an Accountable Care Organizations. This is
likely to evolve into tiered fee structure---one for physicians not practicing
within an ACO and a hier one for physicians participating in an ACO.
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Summary
• BCBSM partners with Physician Organizations to achieve a high
performance health care system in Michigan.
• The BCBSM payment model with two separate components: payments to
Physician Organizations and tiering of fees to physicians based on
population level performance.
• Physician fees will be tiered based on performance measured at the
population level, encouraging physicians to partner with their Physician
Organizations to improve population-level performance.
• BCBSM is aligning its hospital payment model to reward effective
population management, encouraging physician-hospital partnership
improve performance.
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