Agenda
• Market Forces Driving Providers to Evaluate Clinical
Integration & Bundled Payments
• Overview of Clinical Integration
• Key Elements of a Clinical Integration Strategy
• Bundled Payments Overview
• Customized Bundled Payment Report Review
TRANSFORMATIONAL
Change Readiness Curve – Strategic Readiness
STRATEGIC
Major Change is Essential
TACTICAL
Focused Change is Necessary
Been Here Before
LOW
Urgency
(Opportunity or Burning Platform)
HIGH
3
Leading Change – Right of Passage
TRANSFORMATIONAL
Multi-Hospital System With Very Large
Employed Physician Base
Major Change is Essential
TACTICAL
STRATEGIC
Multi-State, Multi-Hospital
Investor Owned
Focused Change is Necessary
Hospital Launching IPA+HEP
Hospital With Multiple CoManagement Relationships
Been Here Before
LOW
Urgency
(Opportunity or Burning Platform)
4
HIGH
4
Payment Models Supported by CIN Strategy
Source: HFMA 2010 The Advisory Board 2010
Reshape the Value
Curve Optimizing value by focusing on quality, service and costs
Value (V) =
Quality (Q) * Service (S)
Cost (C)
NEW PARADIGM
PAST THINKING
QUALITY & SERVICE
B
Effectiveness: Improved
quality/ service at the same
or lower cost
High
X
A
Cutting costs at the expense
of quality/service
C
Low
Innovation:
Improvement in all
dimensions
Y
QUALITY & SERVICE
High
Adding costs to improve
quality/service
A
Z
Efficiency:
Cutting
costs without
impacting
quality/
service
Low
High
COST
Low
High
COST
Source: *Lean Hospitals, Graban, CRS Press, p10
Low
6
Clinically Integrated Network
PAYORS &
EMPLOYERS
Clinically Integrated Network
Community
Hospital(s)
PHYSICIANS
Community
Physicians
AMBULATORY
Community
Facilities
Community
Facilities
7
Clinical Integration Network Objectives
1.
Develop a network that includes independent physicians in
the market
2.
Provide a mechanism to align the clinical practices of
physicians across service lines
3.
Identify areas of opportunity within the system for quality and
efficiency improvements
4.
Provide compensation for achieved results
5.
Improve the value equation (cost and quality) for healthcare
delivered within the network
8
Clinically Integrated Network Defined
A Clinically Integrated Network (CIN) is a selective partnership of physicians collaborating
with hospitals to deliver evidence-based care, improve quality, efficiency, and coordination
of care, and demonstrate value to the market.
Clinically Integrated Network
Payors and
Employers
Contracts
Participation
Agreement
$
Participation
Agreement
CI Entity
BENEFIT TO STAKEHOLDERS
Physicians
• Preserving private practice model through alignment
• Enhanced reimbursement through contracting for
demonstrated network quality
Markets and Hospitals
• Align independent, employed, and specialist
physicians in one organization
• Enhanced reimbursement under FTC guidelines for
demonstrated quality
WHAT IT’S NOT
Private Practice
Physicians
$
Distribution
of Funds
$
Health System
and Employed
Physicians
• Physician employment
• Hospital-led initiative
• Mechanism to gain
negotiating leverage
over payors
9
Network Considerations – Local Market Pace
Financial Performance
Risk-based Payment
FFS
Declining FFS market will
require network model to
meet Reform Era
Imperatives
Time
Local Market Conditions will Impact Timing of Network Development
10
Critical Market Pacers to Consider
HOSPITAL PROFILE
Location, access, inpatient volume and market share,
EBITDA, profit margin, quality scores, asset
distribution, IT infrastructure, etc.
MARKET CHARACTERISTICS
Supply and demand of beds & access, demographics,
population growth, CON requirements, uninsured, HIX
COMPETITIVE LANDSCAPE
Competitive intensity, history of irrationality, pursuit of
new strategies and/or payment models
PHYSICIAN PROFILE
Mix of independent, employed, multispecialty or
super groups, historical hospital-physician and
physician-physician relationships
PAYOR PROFILE
Payor mix, rate parity and willingness to offer P4P or
risk-based contracts
EMPLOYER PROFILE
Large employers (>1,000 employees) pursuing
contracts with providers; small employers likely to
abandon plans for Exchanges
11
Components of a Clinically Integrated Network
Structure &
Governance
Infrastructure &
Funding
Contracting
Distribution
of Funds
Information
Technology
Clinically
Integrated
Network
Participation
Criteria
Performance
Objectives
Physician Leadership
12
Structure & Governance
Overview: Other than an employment-only model, a CIN usually is
structured as a joint venture or subsidiary Physician Hospital Organization,
or an Independent Practice Association (IPA).
Joint Venture PHO
IPA
Participating
Physicians
Health
System
Participating
Agreement
IPA
100%
Payors /
Employers
Participating
Physicians
Health
System
XX%
PHO
Health System
Subsidiary PHO
Health
System
Participating
Physicians
Subsidiary
XX%
Payors /
Employers
100%
Participating
Agreement
Payors /
Employers
13
Infrastructure & Funding
Overview: The CIN is a separate business entity with a distinct identity,
mission, and vision, dedicated leadership and staff, sustainable sources of
revenue, and participating provider agreements with physicians that create
potential value for both physicians and payors.
Sources of Revenue
The CIN will need to offset costs of building the network (Infrastructure) and eventually provide returns
through various revenue sources depending on the maturity of the network.
Reporting Incentives
and Membership Fees
Self Funded
Health Plan
Payor
Contracts
MATURITY OF CIN
LOW
HIGH
Hospital Efficiency
Program
Pay-for-Performance
Employer
Contracts
14
Participation Criteria
Overview: Member physicians or groups that satisfy certain
guidelines and criteria must sign an agreement outlining the
expectations and requirements for participation in the CI program.
Sample Participation Criteria
Participating Physicians Clinical
Integration Legal Agreement
(Independent & Employed)
Information Technology
Adoption
Physician Leadership
•
•
•
•
Active member of
“Hospital” Medical Staff
Participate in
educational programs
Complete orientation
program
Provide leadership and
oversight over defined
operations
•
•
•
•
Utilize professional and
office email
Access to high-speed
internet
Implement the preferred
health information
technology
Share clinical
information / data
Contracting
Requirements
Quality Improvement
•
•
•
Develop, implement,
and monitor clinical
protocols
Review member
physician performance
Develop / implement
corrective action plans
and process
improvement initiatives
•
Participate in jointly
negotiated contracts
15
Performance Objectives
Overview: CINs identify metrics and targets designed to meaningfully
impact the clinical practice of all network physicians, and to align their
conduct with hospital initiatives, so as to improve quality and demonstrate
value across the entire continuum of care.
Examples of Performance Improvement
Element
Description
Examples
Variance & Cost
Reduction
Minimize variable physician
performance not related to patient
characteristics
Unnecessary Care
Reduction
Reduce avoidable, unproductive and
duplicative services
Clinical
Restructuring
Ensure treatment in most optimal
setting with most appropriate level of
provider
•
•
Early step down from an IP to SNF bed
Partnerships with a local retail clinic to
offer non-urgent care
System
Optimization
Shift focus to upstream, preventative
care with emphasis on CI and
population health
•
•
Disease-based medical homes
Patient engagement strategies using
telehealth
•
•
Minimize orthopedics supply chain cost
Staffing and productivity opportunities
•
Prostate cancer screenings for elderly
patients
Reduce Readmissions
•
Source: Sg2 Analysis
16
Physician Leadership
Overview: Health systems must empower physicians to have an influence
on the future direction of the network. This will help integrate physicians’
clinical expertise into hospital operations and increase cooperation and
credibility of the CI network.
CIN
IT
QUALITY
CARE REDESIGN
Share In Network Governance
MEMBERSHIP
FINANCE
Medicine
Primary Care
Neurosciences
Heart and Vascular
Lead and participate on sub-committees
supported by CIN or Health System
personnel
Surgery
Women & Children
17
Information Technology
Overview: CINs use an IT-dependent performance improvement architecture
with data-based mechanisms and processes to monitor and track utilization, quality,
and efficiency of resource use to demonstrate value.
View
health-related
data via a
customizable
user interface
within an
enterprise
Digitize critical
information on
an individual
within each
care site
Exchange
health-related
data within
and between
enterprises
Derive
value and
intelligence to
improve care
quality and
outcomes and
to curb costs
Deliver
clinical and patient
information to
enhance patient
care experiences
and practitioner
effectiveness
CLINICAL
CARE
VALUE
Advanced Clinical Decision Support
Process/
behavioral
change
Health Analytics
Health Information Exchange (Private)
Healthcare Portals or Registries (Clinicians and Patients)
Intermediate Electronic Medical Records
IT Optimization
MATURITY OVER TIME
Source: IBM Center for Applied Insights
18
Distribution of Funds
Overview: The CIN establishes an organized plan to link performance on defined
gradients to eligibility for incentive payments.
HOSPITAL /
SYSTEM
$
CLINICAL
INTEGRATION
NETWORK
$
PAYORS &
EMPLOYERS
• Cost Savings
• Efficiency Gains
LOCAL NETWORK
PERFORMANCE
%
• Hospital
• Specialty
• Location
• P4P Contracts
• Shared Savings
• Increased Rates
GLOBAL NETWORK
PERFORMANCE
%
• Equal distribution
INDIVIDUAL ACTIVITY/
OUTCOMES
%
•
•
•
•
Performance targets
Educational event attendance
Submission of Data
Adoption of IT platform
19
Keys to Developing a High-Performing CIN
Determining the right structure for your organization that
supports your vision and aligns all stakeholders
Generating sufficient funding to support network development
and incent physician members through initial contracting efforts
Developing a distribution methodology that appropriately
incents physician members
Crafting a communication plan that effectively communicates the
business case for CI for physicians and the health system
Bundled Payments Represent Key Opportunity for CINs
Source: HFMA 2010 The Advisory Board 2010
BUNDLED PAYMENTS
What are Bundled Payments?
• One all-inclusive price, focusing on a patient’s
total episode of care
• Includes payment for all of a patient’s services for
a certain procedure or diagnosis over a set
number of days (usually from 30-120)
• Mega-DRGs
23
How do Bundled Payments Relate to Population Health?
• Creates incentives for providers to work together
to coordinate care
• Focus on the whole patient, not the visit
• A targeted version of population health
24
Provider Services - Today
Part B
Service
Part B
Service
Part B
Service
Part B
Service
Dr. Office Visit
Dr. Office Visit
Initial
Inpatient
Stay
Dr. Office Visit
Dr. Office Visit
Readmission
Dr. Office Visit
Dr. Office Visit
Dr. Office Visit
Inpatient
Post-Acute Stay
(Rehab, Psych,
LTC, SNF, HH)
Other Part B
Services (Hospital
Outpatient, Labs,
Durable Medical
Equipment, Part B
Drugs)
25
Bundled Services
Part B
Service
Part B
Service
Part B
Service
Part B
Service
Dr. Office Visit
Dr. Office Visit
Initial
Inpatient
Stay
Dr. Office Visit
Dr. Office Visit
Readmission
Dr. Office Visit
Dr. Office Visit
Dr. Office Visit
Inpatient
Post-Acute Stay
(Rehab, Psych,
LTC, SNF, HH)
Other Part B
Services (Hospital
Outpatient, Labs,
Durable Medical
Equipment, Part B
Drugs)
26
Shared Savings
• Creates incentives for providers to work together to
coordinate efficient, cost-effective care
• Bundled payment is set based on review of past
performance and future expectations
• Savings “delta” between the set payment and actual is
shared
27
Data Analytics
• Identify components of the bundle
• Discern patterns, variances and opportunities for
efficiency
• Compare performance to benchmarks
• Determine potential for shared savings
• Monitor performance progress
28
REPORT REVIEW
ANALYTICS AVAILABLE
Bundled Payment
Bundled Payment
Preview Analysis
Preview Analysis
-Tier 1-
-Tier 2-
(major joints/heart failure)
• All 175 BPCI Demo-eligible
DRGs
•90-day episode review with
benchmark comparisons
• 90-day episode review with
benchmark comparisons
•10-page .pdf report
• Interactive Excel workbook
•Member service
• Set fee with discount for
multi-hospital systems
•2 high-volume DRGs
•Available through
Association/System Affiliation
focus of today’s session
• Available through DataGen
Custom
Analytics
• BPCI Awardees - data analytic
and monthly monitoring
services
• Other Risk-Sharing
Arrangements
•Commercial or public payer
•Varying episode definitions and/or lengths
•Custom benchmark comparisons
Episode Cost Variation
Anchor Admission
Acute Transfer
Readmission
Inpatient Rehabilitation
Home Health
SNF
LTCH
Inpatient Psychiatric
Physician Office
Outpatient
Regional Average
Regional 95th Percentile
31
Episode Components Benchmark Comparisons
$0
$2,000 $4,000 $6,000 $8,000 $10,000$12,000$14,000$16,000
Anchor Admission
Acute Transfer
Readmission
Inpatient Rehabilitation
Home Health
SNF
Long-Term Care Hospital
Inpatient Psychiatric
Physician Office
Outpatient
Hospital
Region
U.S.
32
Episode Components Benchmark Comparisons
Percent of Total Episode Dollars by Category
Hospital
53%
Region
50%
U.S.
52%
0%
10%
20%
Anchor Admission
Inpatient Rehabilitation
Long-Term Care Hospital
Outpatient
3%
1%5%
3% 8%
30%
4% 6%
40%
50%
60%
Acute Transfer
Home Health
Inpatient Psychiatric
30%
6% 2%
7%
23%
6% 2%
8%
21%
6% 3%
70%
80%
90%
100%
Readmission
SNF
Physician Office
33
Episode Components Benchmark Comparisons
Hospital
Region
U.S.
206
1,129
206,185
$24,950
$26,068
$25,510
# of Episodes
MS - DRG Description
Average Total Payment
Episode Component/Service Type
470 - Major Joint
Replacement Or
Reattachment Of Lower
Extremity W/O Mcc
Average Number Average
of Claims per Payment Per
Episode
Claim
Average
% of Average
Payment per
Episode
Episode
Payment
Average
Number of
Claims per
Episode
Average
Payment Per
Claim
Average
Payment per
Episode
% of Average
Episode
Payment
Average
Number of
Claims per
Episode
Average
Average
% of Average
Payment Per Payment per
Episode
Claim
Episode
Payment
Anchor Admission
1.0
$13,225
$13,225
53%
1.0
$13,024
$13,024
50%
1.0
$13,375
$13,375
52%
Acute Transfer
0.0
$0
$0
0%
0.0
$11,686
$10
0%
0.0
$8,501
$6
0%
Readmission
0.1
$7,671
$745
3%
0.1
$7,273
$902
3%
0.1
$7,375
$913
4%
Inpatient Rehabilitation
0.0
$11,978
$233
1%
0.2
$12,988
$2,174
8%
0.1
$12,347
$1,501
6%
Home Health
0.5
$2,690
$1,215
5%
0.7
$2,713
$1,862
7%
0.7
$2,979
$2,049
8%
SNF
1.3
$5,886
$7,515
30%
1.0
$5,881
$6,021
23%
0.8
$6,844
$5,357
21%
Long-Term Care Hospital
0.0
$0
$0
0%
0.0
$0
$0
0%
0.0
$30,751
$86
0%
Inpatient Psychiatric
0.0
$0
$0
0%
0.0
$8,124
$7
0%
0.0
$8,553
$20
0%
Physician Office
1.8
$791
$1,463
6%
2.2
$663
$1,476
6%
2.3
$645
$1,480
6%
Outpatient
3.3
$167
$556
2%
3.3
$178
$591
2%
2.6
$274
$722
3%
34
Average Episode Payment Benchmark Comparisons
Average Payments per Episode
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Region Hospital With Less Than 10 Episodes
Region Hospital With 10 To 50 Episodes
Region Hospital With 50 Or More Episodes
Hospital
Regional Average
Regional 95th Percentile
35
Timing of Readmissions Benchmark Comparisons
100%
90%
80%
40.0%
47.1%
45.9%
70%
30-90 Days
60%
15-29 Days
50%
40%
30.0%
24.3%
30%
20%
10%
21.1%
8-14 Days
13.6%
1-7 Days
15.0%
12.1%
15.0%
16.4%
19.4%
Hospital
Region
U.S.
0%
36
Cost of Readmissions Benchmark Comparisons
Readmissions to
Average Dollars
Total Claims for
Average Episode
Total Episodes
Episode
for Episodes
Readmissions
Price
Provider
w/Readmission
Average Dollars
for Episodes
Percent
w/out
Difference
Readmission
Hospital
206
20
12
$24,950
$44,039
$23,343
88.7%
Region
1,129
140
104
$26,068
$42,538
$24,200
75.8%
206,185
25,536
17,683
$25,510
$41,722
$23,700
76.0%
U.S.
37
Analysis of Readmissions
Days from
Anchor
Discharge (1)
Regional 95th Percentile
Readmission
Readmission
Dollars % of
Dollars
Total Episode
Price
$51,030
Total
Episode
Price (2)
Episode ID
Readmission
DRG
Description
1
394
Other Digestive System Diagnoses
W Cc
Hospital A
9
$5,133
20.0%
$25,667
2
872
Septicemia Or Severe Sepsis W/O
Mv 96+ Hours W/O Mcc
Hospital A
43
$5,962
19.7%
$30,193
3
638
Diabetes W Cc
Hospital A
24
$4,289
10.3%
$41,648
4
311
Angina Pectoris
Hospital B
32
$2,618
3.9%
$66,764
4
234
Coronary Bypass W Cardiac Cath
W/O Mcc
Hospital B
33
$24,933
37.3%
$66,764
5
903
Wound Debridements For Injuries
W/O Cc/Mcc
Hospital A
29
$5,486
19.0%
$28,904
6
467
Revision Of Hip Or Knee
Replacement W Cc
Hospital A
45
$16,691
20.3%
$82,210
7
885
Psychoses
Hospital A
8
$4,669
7.6%
$61,184
7
65
Intracranial Hemorrhage Or
Cerebral Infarction W Cc
Hospital B
38
$6,025
9.8%
$61,184
8
253
Other Vascular Procedures W Cc
Hospital A
37
$12,401
16.5%
$75,061
9
908
Other O.R. Procedures For Injuries
W Cc
Hospital A
26
$9,941
16.6%
$59,844
10
683
Renal Failure W Cc
Hospital A
18
$5,290
17.7%
$29,825
Readmission Provider
38
First Post-Acute Setting Benchmark Comparisons
Average Inpatient LOS
Average Post-Acute Payment
39
First Post-Acute Setting Benchmark Comparisons
U.S.
Region
Hospital
Total
Episodes
206
1,129
206,185
First Post-Anchor Setting
Episode
Count
Acute Transfer
Readmission
Inpatient Rehabilitation
Home Health
Long-Term Care Hospital
SNF
Inpatient Psychiatric
No Institutional Care
Acute Transfer
Readmission
Inpatient Rehabilitation
Home Health
Long-Term Care Hospital
SNF
Inpatient Psychiatric
No Institutional Care
Acute Transfer
Readmission
Inpatient Rehabilitation
Home Health
Long-Term Care Hospital
SNF
Inpatient Psychiatric
No Institutional Care
0
0
2
14
0
179
0
11
1
6
177
269
0
637
0
39
155
2,499
23,074
69,707
108
81,641
39
28,962
% Distribution
Anchor
Admission
ALOS
Anchor
Admission
Average
Payment
Post Anchor
Average
Payment
Total Average
Payment
Post Anchor %
of Payments
1%
7%
4.0
3.7
$13,281
$12,821
$18,756
$4,231
$32,037
$17,052
58.5%
24.8%
87%
3.7
$13,252
$12,856
$26,108
49.2%
5%
0%
1%
16%
24%
2.9
1.0
4.0
3.4
3.1
$13,281
$8,814
$13,519
$12,577
$12,630
$1,592
$13,180
$9,240
$20,920
$5,232
$14,873
$21,995
$22,760
$33,497
$17,861
10.7%
59.9%
40.6%
62.5%
29.3%
56%
3.7
$13,303
$14,860
$28,163
52.8%
3%
0%
1%
11%
34%
0%
40%
0%
14%
3.3
3.2
3.3
3.8
3.1
7.1
3.9
5.6
2.8
$13,253
$12,459
$13,494
$13,330
$13,180
$14,194
$13,527
$13,459
$13,439
$2,091
$28,323
$16,071
$21,380
$5,985
$51,423
$18,034
$22,783
$2,357
$15,345
$40,782
$29,565
$34,710
$19,165
$65,617
$31,561
$36,242
$15,796
13.6%
69.5%
54.4%
61.6%
31.2%
78.4%
57.1%
62.9%
14.9%
40
First Post-Acute Setting Benchmark Comparisons
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Hospital
Acute Transfer
Inpatient Rehabilitation
SNF
Inpatient Psychiatric
Region
U.S.
Readmission
Home Health
Long-Term Care Hospital
No Institutional Care
41
ANALYTICS AVAILABLE
Bundled Payment
Bundled Payment
Preview Analysis
Preview Analysis
-Tier 1-
-Tier 2-
(major joints/heart failure)
• All 175 BPCI Demo-eligible
DRGs
•90-day episode review with
benchmark comparisons
• 90-day episode review with
benchmark comparisons
•10-page .pdf report
• Interactive Excel workbook
•Member service
• Set fee with discount for
multi-hospital systems
•2 high-volume DRGs
•Available through
Association/System Affiliation
• Available through DataGen
Custom
Analytics
• BPCI Awardees - data analytic
and monthly monitoring
services
• Other Risk-Sharing
Arrangements
•Commercial or public payer
•Varying episode definitions and/or lengths
•Custom benchmark comparisons
Questions?
Gloria Kupferman
Vice President, National Information Products
DataGen, a HANYS Solutions Company
gkupferm@hanys.org
518-431-7968
www.datagen.info
Brian Esser
Manager, Healthcare Consulting
Dixon Hughes Goodman LLP
brian.esser@dhgllp.com
330-650-1752
www.dhgllp.com
43