WIN-WIN-WIN APPROACHES TO ACCOUNTABLE CARE How Better Payment for Hospice and Palliative Care Can Benefit Providers, Patients, and Payers

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1 WIN-WIN-WIN APPROACHES TO ACCOUNTABLE CARE How Better Payment for Hospice and Palliative Care Can Benefit Providers, Patients, and Payers Harold D. Miller President and CEO Center for Healthcare Quality and Payment Reform

2 DISCLOSURE: I Have No Financial Relationships With Any Commercial Interests

3 Healthcare Spending Is the Biggest Driver of Federal Deficits Medicare, Medicaid & Insurance Subsidies Biggest Share of Spending Growth is Healthcare Social Security Source: CBO Budget Projections April 2014 Interest on Debt Other Mandatory Spending Discretionary Spending 3

4 Federal Cost Containment Policy Choices Cut Services to Seniors? Cut Pay for Providers? MEDICARE SPENDING SERVICES = TO SENIORS X PAYMENTS TO PROVIDERS 4

5 If The Choice is Rationing or Payment Cuts, Which is Likely? Cut Services to Seniors? Cut Pay for Providers? MEDICARE SPENDING SERVICES = TO SENIORS X PAYMENTS TO PROVIDERS Guess which one they ll try to reduce? 5

6 What Other Industry Tries to Cut Pay for Key Professionals by 20%? Physician Practice Costs 23% Effective Reduction Physician Payment Increases If SGR Cut Is Made 6

7 Repealing SGR Is Seen as Higher Payment That Increases Spending MEDICARE SPENDING SERVICES = TO SENIORS X PAYMENTS TO PROVIDERS Repealing SGR Increases Projected Spending Repealing SGR Increases Physician Payment 7

8 So to Pay for SGR Repeal, Congress Looks for Other Cuts Cut Pay for Providers MEDICARE SPENDING SERVICES = TO SENIORS X PAYMENTS TO PROVIDERS Repealing SGR Increases Physician Payment 8

9 Paying for New/Improved Services Is Seen as Increasing Spending MEDICARE SPENDING SERVICES = TO SENIORS X PAYMENTS TO PROVIDERS Expanded Services Increases Projected Spending Expanding Hospice or Palliative Care Benefits 9

10 So Paying for New Services Requires Cuts in Existing Services Cut Pay for Providers? MEDICARE SPENDING SERVICES = TO SENIORS X PAYMENTS TO PROVIDERS Expanded Services Increases Projected Spending Expanding Hospice or Palliative Care Benefits 10

11 What Care Providers Can Do That Congress & CMS Can t Cut Services to Seniors? Cut Pay for Providers? MEDICARE SPENDING Control or Reduce Medicare Spending SERVICES = TO SENIORS X Redesign CARE to Reduce Spending Without Harming Quality PAYMENTS TO PROVIDERS 11

12 What Providers Have to Do, Because Congress & CMS Won t Cut Services to Seniors? Cut Pay for Providers? MEDICARE SPENDING Control or Reduce Medicare Spending SERVICES = TO SENIORS X Redesign CARE to Reduce Spending Without Harming Quality PAYMENTS TO PROVIDERS Redesign PAYMENT to Make Good Care Financially Viable for Providers 12

13 How Do You Reduce Spending Without Harming Patients? 13

14 Reducing Costs Without Rationing: Prevention and Wellness Healthy Consumer Continued Health Health Condition 14

15 Reducing Costs Without Rationing: Avoiding Hospitalizations Healthy Consumer Continued Health Health Condition No Hospitalization Acute Care Episode 15

16 Reducing Costs Without Rationing: Efficient, Successful Healthy Consumer Continued Health Health Condition No Hospitalization Acute Care Episode Efficient Successful Outcome High-Cost Successful Outcome Complications, Infections, Readmissions 16

17 Healthy Consumer Reducing Costs Without Rationing: Is Also Quality Improvement! Continued Health Health Condition Better Outcomes/Higher Quality No Hospitalization Acute Care Episode Efficient Successful Outcome High-Cost Successful Outcome Complications, Infections, Readmissions 17

18 Instead of Starting With How to Limit Care for Patients Contributors to Healthcare Costs How Do We Limit: New Technologies Higher-Cost Drugs Potentially Life-Saving 18

19 We Should Focus First on How to Improve Patient Care How Do We Help: Patients Stay Well Avoid Preventable Emergencies and Hospitalizations Eliminate Errors and Safety Problems Reduce Costs of Reduce Complications and Readmissions Die in Their Own Homes Contributors to Healthcare Costs How Do We Limit: New Technologies Higher-Cost Drugs Potentially Life-Saving 19

20 Current Payment Systems Reward Bad Outcomes, Not Better Care Healthy Consumer Continued Health $ Health Condition No Hospitalization Acute Care Episode Efficient Successful Outcome High-Cost Successful Outcome Complications, Infections, Readmissions 20

21 We Don t Need New Incentives, We Need to Fix the Barriers in FFS Lack of Flexibility in FFS No payment for phone calls or s with patients No payment to coordinate care among providers No payment for nonphysician support services to help patients with self-management No flexibility to shift resources across silos (hospital <-> physician, post-acute <->hospital, SNF <-> home health, etc.) Penalty for Quality/Efficiency Lower revenues if patients don t make frequent office visits Lower revenues for performing fewer tests and procedures Lower revenues if complications are prevented instead of treated No revenue at all if patients stay healthy 21

22 Should We Really Pay for Healthcare Piece by Piece? Pay for Parts? 22

23 Pay for Parts Or Should We Pay for What We Really Want? Pay for High Quality, Coordinated Care with Good Outcomes at an Affordable Cost 23

24 Most Payment Reforms Don t Fix The Problems with FFS P4P PMPM Shared Savings Shared Savings FFS No payment for services that will benefit patients Lower revenues from reducing avoidable costs FFS FFS FFS 24

25 Medicare Payment Silos Pit Providers Against Each Other Physician Payment (Part B) Specialty Payment PCP Payment Specialty Payment PCP Payment 25

26 All Providers Could Benefit By Lowering Other Healthcare Costs Total Healthcare Costs (Parts A, B, and D) Physician Payment (Part B) Hospital & Post-Acute Care Costs (Part A) Drug Costs (Part D) Specialist Payment PCP Payment Hospital & Post-Acute Care Costs Drug Costs Specialist Payment PCP Payment 26

27 How Much Would Providers Have to Reduce Spending In Order to Repeal the SGR?

28 10 Year Federal Budget Projections for Medicare Physician Payments Only Represent 12% of Projected Medicare Spending 28

29 SGR Repeal & MEI Update Increases Total Spending by 2.6% SGR Repeal & MEI Update: $160 Billion 29

30 Mere 3% Savings in Non-Physician Spending Would Pay for Repeal $160 Billion= 3% of Non-Physician Spending 30

31 But Nobody in DC Believes That Providers Can/Will Do It CBO expects that physicians would generally choose to participate in the payment options that offer the largest payments for the services they provide CBO expects that most of the alternative payment models that would be adopted under this legislation would increase Medicare spending. CBO s review of numerous Medicare demonstration projects found that very few succeeded in reducing Medicare spending. CBO expects that the greater influence of providers within the design process specified in H.R would lead to smaller savings than would arise from the development and adoption of new approaches through the [current] CMMI process. Congressional Budget Office Cost Estimate for H.R (September 13, 2013) 31

32 What Does True Payment Reform Look Like?

33 Today: High Inpatient Spending, Underfunding of Community Care $ TODAY Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Primary/ Palliative Care 33

34 What Providers Typically Propose: More Money, No Accountability $ TODAY Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Primary/ Palliative Care Provider: Pay More, Trust Us About Savings Pay More Primary/ Palliative Care Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Pay More Primary/ Palliative Care Savings? Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Studies show this will save money No matter how many studies have been done saying that a service saved money in demonstration projects, that s no guarantee that savings will be achieved when the service is implemented by all providers for all patients 34

35 What Payers Typically Propose: More Accountability, No More $ $ TODAY Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Provider: Pay More, Trust Us About Savings Pay More Primary/ Palliative Care Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Pay More Primary/ Palliative Care Savings? Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Payer: Save Money & We ll Think About Higher Pay Primary/ Palliative Care Primary/ Palliative Care Savings Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Pay More? Primary/ Palliative Care Savings Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. 35

36 The Problems With Shared Savings No Upfront Money to Cover Costs and Losses: There are no changes in underlying fee for service payment to cover the costs of additional services or to cover losses of revenue from doing fewer billable services. Providers must find the money to cover additional costs and revenue losses while waiting to receive shared savings payments. The Payer Sets the Rules and Tells You Later: Shared savings payments are only made if savings are achieved according to rules defined by the payer, and the spending level where savings is achieved is generally only defined after the fact. You Have to Both Save Money and Improve Quality: If there is a shared savings payment, it is reduced if quality isn t improved, but payments aren t increased if quality is better. It s Just FFS With a One-Time Bonus: All of the savings goes back to the payer after the end of the shared savings contract, and the provider is left in the same fee for service structure, at the same payment rates, with lower revenues due to lower utilization, and new costs with no revenue source to cover them. 36

37 We Need Win-Win Approaches Benefiting Providers and Payers It is unrealistic to expect physicians, hospitals, hospice programs, and other healthcare providers, no matter how motivated they are to provide higher value care, to improve quality or reduce spending if the payment system does not provide adequate financial support for their efforts. It is also unrealistic to expect that patients or payers will be willing to pay more or differently to overcome the barriers in the current payment system without assurances that the quality of care will be improved, spending will be lower, or both. Payment systems must support the delivery of higher-quality care for patients at lower costs for payers in ways that are financially feasible for providers. 37

38 Instead of Win-Lose Choices $ TODAY Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Provider: Pay More, Trust Us About Savings Pay More Primary/ Palliative Care Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Pay More Primary/ Palliative Care Savings? Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Payer: Save Money & We ll Think About Higher Pay Primary/ Palliative Care Primary/ Palliative Care Savings Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Pay More? Primary/ Palliative Care Savings Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. 38

39 Win-Win Approaches Require Accountable Payment Models $ TODAY ACCOUNTABLE CARE Net Savings $ Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Avoidable ED Visits, Hospital Admissions, Readmits, SNF Stays, Tests, Drugs, Etc. Primary/ Palliative Care More $ Primary/ Palliative Care 39

40 The Four Key Elements of Accountable Payment Models 1. Flexibility in Care Delivery. The payment system should give providers freedom to deliver care in ways that will achieve high quality in the most efficient way and to adjust care delivery to the unique needs of individual patients. 2. Appropriate Accountability for Spending. The payment system should assure purchasers and payers that spending will decrease (or grow more slowly). The payment system should hold providers accountable for utilization and spending they can control, but not for services or costs they cannot control or influence. 3. Appropriate Accountability for Quality. The payment system should assure patients and payers that the quality of care will remain the same or improve. The payment system should hold providers accountable for quality they can control, but not for aspects of quality or outcomes they cannot control or influence. 4. Adequacy of Payment. The size of the payments should be adequate to cover the providers costs of delivering high quality care for the types of patients they see and at the levels of cost or efficiency that are feasible for them to achieve. 40

41 The Medicare Hospice Benefit is a Trust Us Program The hope is that the Medicare hospice benefit will improve care for patients and reduce spending on expensive hospital care and unnecessary treatment Studies show that the hospice benefit has saved money for Medicare However, there is no direct accountability by hospice providers to ensure use of hospice will control spending in the future. Medicare s controls on access to the program and provider payments are the only mechanisms for ensuring savings, so: Access to the program is kept undesirably restrictive, requiring that beneficiaries be formally declared to be within 6 months of death and to forego the right to treatment for their condition in order to receive services Providers have incentives to cherry-pick, lemon-drop, and cost-shift in order to control costs and improve margins Medicare tries to cut or freeze payment rates in the program to save money and offset perceived cost-shifting Just because it s a bundled payment doesn t mean it s better for payers, patients, and providers than fee for service. 41

42 Many Payer Concerns Today About (Partial) Bundles Can the provider shift costs from what s inside the bundle to what s not? 42

43 (Partial) Bundles in Hospital Care Can the provider shift costs from what s inside the bundle to what s not? Cost-Based Reimbursement With No Cap Hospital Cost Hospital Cost Hospital Cost Hospital Cost Hospital Cost Post-Acute Care Cost Partial Bundle With Cost-Shifting Potential DRG Payment (Hospital Bundle) Post-Acute Care Cost 43

44 Medicare Is Trying to Move to Full Bundles/Episodes Cost-Based Reimbursement With No Cap Partial Bundle With Cost-Shifting Potential Full Bundle Including All Costs Hospital Cost Hospital Cost Hospital Cost Hospital Cost Hospital Cost Post-Acute Care Cost DRG Payment (Hospital Bundle) Post-Acute Care Cost Episode Payment (Hospital + Post-Acute Care Bundle) 44

45 Surgical Global Fee is a Partial Bundle with Cost-Shift Potential Service-Based Payment Partial Bundle With Cost-Shifting Potential Procedure CPT Surgeon E&M Surgeon E&M Surgeon E&M Surgeon E&M Surgical Global Fee Surgeon E&M Surgeon E&M Hospitalist E&M Hospitalist E&M 45

46 Unbundle Surgery Fee or Bundle Even More? CMS Views the Middle As Worse Than FFS Service-Based Payment?? Partial Bundle With Cost-Shifting Potential Full Bundle Including All Costs Procedure CPT Surgeon E&M Surgeon E&M Surgeon E&M Surgeon E&M Surgical Global Fee Surgeon E&M Surgeon E&M Hospitalist E&M Hospitalist E&M Full Global Payment (Surgeon + All Physicians) 46

47 Hospice Payment is a Partial Bundle With Cost-Shift Potential FFS Payment Partial Bundle With Cost-Shifting Potential Hospital Payment for Preventable Admissions Palliative E&M ED E&M Other E&M Tests Hospice Bundled Payment Live Discharges High-Cost Patient 47

48 Cut Hospice Payments or More Accountability for Hospices? Cuts in Payment? Partial Bundle With Cost-Shifting Potential? Full Bundle Cuts in Payment Lower Hospice Payments and Poorer Service Live Discharges High-Cost Patient Hospice Bundled Payment Live Discharges High-Cost Patient Risk- Adjusted Condition- Based Payment for Palliative & End of Life Care 48

49 What an Accountable Payment Model for Palliative Care Might Look Like

50 Hospice Today: High Spending on Patients With Advanced Chronic Disease $ TODAY Time Death 50

51 Hospice Lower Spending Possible Through Use of Palliative Care $ TODAY Time Death $ FUTURE? Palliative Care Time Palliative Care Palliative Care Palliative Care/ Hospice Death 51

52 What Medicare Offers Isn t What Patients Want $ WHAT MEDICARE OFFERS Pall. E&M Pall. E&M (No Support) (No Support) Hospice Time 6 Months Death $ WHAT THE PATIENT WANTS and Support Services and Support Services and Support Services and Support Services Time 52

53 Why Is It So Hard To Get Paid For Expanded Palliative Care? $ WHAT PROVIDERS REQUEST Palliative Care Time Palliative Care Palliative Care Palliative Care/ Hospice Death 53

54 Hospice $ What Medicare/Payers Fear Will Happen If Services Are Expanded WHAT PROVIDERS REQUEST $ Palliative Care Time WHAT MEDICARE FEARS Palliative Care Time Palliative Care Palliative Care Palliative Care Palliative Care Palliative Care/ Hospice Palliative Care Death Death 54

55 The Solution: A Condition-Based Payment for All the Patient s Care $ WHAT PROVIDERS REQUEST Palliative Care Time Palliative Care Palliative Care Palliative Care/ Hospice Death $ WHAT PALLIATIVE CARE PROVIDERS MUST OFFER + Palliative Care Time + Palliative Care + Palliative Care Palliative Care/ Hospice Death 55

56 Example: Little Home Support for Chronic Disease, Many Admissions CURRENT $/Patient # Pts Total $ Outpatient Care PCP $ $40,000 Palliative Care MD $0 Pall. Care Team $0 Total $40,000 Hospitalizations $10, $800,000 SNF $15, $900,000 Total Spending $17, $1,740, Advanced/Multiple Chronic Disease Patients PCP paid for infrequent office visits No support for in-home support or palliative care 80% of patients are hospitalized each year for exacerbations 75% of hospitalized patients go to a SNF after hospital discharge 56

57 What If We Paid for Better Primary and Palliative Care Support? CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg Outpatient Care PCP $ $40,000 $600 Palliative Care MD $0 $600 Pall. Care Team $0 $4,200 Total $40, Hospitalizations $10, $800,000 SNF $15, $900,000 Total Spending $17, $1,740,000 Better Payment for Better In-Home Support Services Monthly Payment to PCP ($50 PMPM) Monthly Payment to Palliative Care Team ($400 PMPM) 57

58 Can We Afford to Spend 13 Times As Much on These Patients? CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg Outpatient Care PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations $10, $800,000 SNF $15, $900,000 Total Spending $17, $1,740,000 Better Payment for Better In-Home Support Services Monthly Payment to PCP ($50 PMPM) Monthly Payment to Palliative Care Team ($400 PMPM) 58

59 We Can Afford Better Home Care If We Reduce Use of Inpatient Care Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations $10, $800,000 $10, $480,000-40% SNF $15, $900,000 $15, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% Better Payment for Better In-Home Support Services + Significant Reductions in Hospital & Post-Acute Care 59

60 The Payer s Fear: Inpatient Care Spending Won t Decrease Enough Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations $10, $800,000 $10, $640,000-20% SNF $15, $900,000 $15, $720,000-20% Total Spending $17, $1,740,000 $15, $1,900,000 +9% 60

61 The Payer s Solution: Pay Less for Home Services CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg Outpatient Care PCP $ $40,000 $400 $40,000 Palliative Care MD $0 $300 $30,000 Pall. Care Team $0 $2,100 $210,000 Total $40, $280, % Hospitalizations $10, $800,000 $10, $640,000-20% SNF $15, $900,000 $15, $720,000-20% Total Spending $17, $1,740,000 $16, $1,640,000-6% Lower Payment for In-Home Support Services No Change in Payment to PCP Lower Payment to Palliative Care Team ($200 PMPM) 61

62 Lower Payments May Be Inadequate to Achieve Results CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg Outpatient Care PCP $ $40,000 $400 $40,000 Palliative Care MD $0 $300 $30,000 Pall. Care Team $0 $2,100 $210,000 Total $40, $280, % Hospitalizations $10, $800,000 $10, $720,000-10% SNF $15, $900,000 $15, $810,000-10% Total Spending $17, $1,740,000 $16, $1,810,000 +4% Lower Payment for In-Home Support Services No Change in Payment to PCP Lower Payment to Palliative Care Team ($200 PMPM) 62

63 Downward Spiral of Ineffectiveness Provider asks for significant resources, promises good results Payer fears poor results and pays less than requested Provider can t achieve good results with lower payment Payer makes further cuts or discontinues program Is There A Better Way? 63

64 Don t Ask for Fees for Services, Get Paid for Managing Conditions Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 Palliative Care MD $0 $600 Pall. Care Team $0 $4,200 Total $40,000 Hospitalizations $10, $800,000 SNF $15, $900,000 Total Spending $17, $1,740,000 Current Spending for the Patients = $17,400/person, $1450 PMPM 64

65 Agree to Manage Care at Lower Cost Than Today Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 Palliative Care MD $0 Pall. Care Team $0 Total $40,000 Hospitalizations $10, $800,000 SNF $15, $900,000 Total Spending $17, $1,740,000 $15, % Current Spending for the Patients = $17,400/person, $1450 PMPM Agree to manage the patients for less ($1300 PMPM) 65

66 Use the Condition-Based Payment to Deliver a Better Mix of Services Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 Palliative Care MD $0 Pall. Care Team $0 Total $40, $540, % Hospitalizations $10, $800, $480,000-40% SNF $15, $900, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% Current Spending for the Patients = $17,400/person, $1450 PMPM Agree to manage the patients for less ($1300 PMPM) Use the money as budget to pay for a better mix of services 66

67 Compensate Individual Providers In Whatever Way Makes Sense Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 Palliative Care MD $0 $600 Pall. Care Team $0 $4,200 Total $40, $540, % Hospitalizations $10, $800, $480,000-40% SNF $15, $900, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% Current Spending for the Patients = $17,400/person, $1450 PMPM Agree to manage the patients for less ($1300 PMPM) Use the money as budget to pay for a better mix of services Retain flexibility as to how to pay providers 67

68 Win for Palliative Care & Payer, But a Loss for the Hospital? Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations $10, $800,000 $10, $480,000-40% SNF $15, $900,000 $15, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% Palliative Care Provider Wins Hospital Loses? Payer Wins 68

69 What Matters is Not Just the Hospital s Payment, But Its Costs Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations $10, $800,000 $10, $480,000-40% SNF $15, $900,000 $15, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% 69

70 The Hospital May Well Be Losing Money on These Cases Today Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations Hospital Cost $15,000 $1,200,000 Hospital Margin ($5,000) ($400,000) Hospital Payment $10, $800,000 $10, $480,000-40% SNF $15, $900,000 $15, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% 70

71 Reducing Losses Improves Hospital Margins Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations Hospital Cost $15,000 $1,200,000 $15,000 $720,000-40% Hospital Margin ($5,000) ($400,000) ($5,000) ($240,000) -40% Hospital Payment $10, $800,000 $10, $480,000-40% SNF $15, $900,000 $15, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% 71

72 If Palliative Care Can Reduce Spending During Inpatient Stays.. Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations Hospital Cost $15,000 $1,200,000 $10,000 $480,000-60% Hospital Margin ($5,000) ($400,000) Hospital Payment $10, $800,000 $10, $480,000-40% SNF $15, $900,000 $15, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% 72

73 Hospital Margins Would Also Improve Outpatient Care CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations Hospital Cost $15,000 $1,200,000 $10,000 $480,000-60% Hospital Margin ($5,000) ($400,000) ($0) $0-100% Hospital Payment $10, $800,000 $10, $480,000-40% SNF $15, $900,000 $15, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% 73

74 Win-Win-Win-Win for Patients, Payers, Providers, and Hospital CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg Outpatient Care PCP $ $40,000 $600 $60,000 Palliative Care MD $0 $600 $60,000 Pall. Care Team $0 $4,200 $420,000 Total $40, $540, % Hospitalizations Palliative Care Provider Wins Hospital Wins Patient Wins Payer Wins Hospital Cost $15,000 $1,200,000 $10,000 $480,000-60% Hospital Margin ($5,000) ($400,000) ($0) $0-100% Hospital Payment $10, $800,000 $10, $480,000-40% SNF $15, $900,000 $15, $540,000-40% Total Spending $17, $1,740,000 $15, $1,560,000-10% 74

75 A Critical Element is Shared, Trusted Data Providers need to know the current utilization and costs for their patients to determine whether a bundled or conditionbased payment amount will cover the costs of delivering effective care to the patients Payers need to know the current utilization and costs for their beneficiaries/members to determine whether the bundled or condition-based payment is a better deal than they have today Both sets of data have to match in order for providers and payers to agree on the new approach! 75

76 Wouldn t Condition-Based Payment Involve Too Much Risk for Palliative Care Providers?

77 Fee for Service Looks Increasingly Risky % % -8% -11% -12%+ -13%+ FFS + MU + PQRS + VBM FFS + MU + PQRS + VBM FFS + MU + PQRS + VBM FFS + MU + PQRS + VBM FFS + MU + PQRS + VBM FFS + MU + PQRS + VBM 77

78 Condition-Based Payments Need to Have Limits on Risk Risk Adjustment/Stratification: The payment rate would be adjusted based on objective characteristics of the patient that would be expected to result in the need for more services or increase the risk of problems. Outlier Payment: The payment to the palliative care provider would be increased if spending on an individual patient exceeds a pre-defined threshold. Risk Corridors or Aggregate Stop Loss Insurance: The payment to the provider would be increased if spending on all patients exceeds a pre-defined percentage above the payments. Adjustment for External Price Changes: The payment to the provider would be adjusted for changes in the prices of drugs, hospital services, etc. that are beyond the control of the provider. Excluded Services: Services the provider cannot control would not be included in the accountability for costs. 78

79 Developing a Risk-Adjusted Payment Structure 79

80 High Need Patients: High Current Spending CURRENT $/Patient # Pts Total $ High Need Patients Palliative Care $0 50 $0 Hospital and SNF $21, $1,700,000 Total $34, $1,700, Hospitalizations/Patient/Year 80

81 Lower-Need Patients: Lower Current Spending CURRENT $/Patient # Pts Total $ High Need Patients Palliative Care $0 50 $0 Hospital and SNF $21, $1,700,000 Total $34, $1,700,000 Medium Need Pts Palliative Care $0 100 $0 Hospital and SNF $21, $1,700,000 Total $17, $1,700, Hospitalizations/Patient/Year 0.8 Hospitalizations/Patient/Year 81

82 Lowest-Need Patients: Lowest Current Spending CURRENT $/Patient # Pts Total $ High Need Patients Palliative Care $0 50 $0 Hospital and SNF $21, $1,700,000 Total $34, $1,700,000 Medium Need Pts Palliative Care $0 100 $0 Hospital and SNF $21, $1,700,000 Total $17, $1,700,000 Low Need Patients Palliative Care $0 200 $0 Hospital and SNF $21, $425,000 Total $2, $425, Hospitalizations/Patient/Year 0.8 Hospitalizations/Patient/Year 0.1 Hospitalizations/Patient/Year 82

83 Today: No Palliative Care, High Overall Spending CURRENT $/Patient # Pts Total $ High Need Patients Palliative Care $0 50 $0 Hospital and SNF $21, $1,700,000 Total $34, $1,700,000 Medium Need Pts Palliative Care $0 100 $0 Hospital and SNF $21, $1,700,000 Total $17, $1,700,000 Low Need Patients Palliative Care $0 200 $0 Hospital and SNF $21, $425,000 Total $2, $425,000 Palliative Care $0 350 $0 Payer Spending $10, $3,825,000 83

84 High Level of Palliative Care for Highest-Need Patients CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg High Need Patients Palliative Care $0 50 $0 $9, $480,000 Hospital and SNF $21, $1,700,000 $21, $1,020,000 Total $34, $1,700,000 $30, $1,500,000-12% Medium Need Pts Palliative Care $0 100 $0 Hospital and SNF $21, $1,700,000 Total $17, $1,700,000 Low Need Patients Palliative Care $0 200 $0 Hospital and SNF $21, $425,000 Total $2, $425,000 Palliative Care $0 350 $0 Payer Spending $10, $3,825,000 84

85 Lower Levels of Palliative Care for Lower-Need Patients CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg High Need Patients Palliative Care $0 50 $0 $9, $480,000 Hospital and SNF $21, $1,700,000 $21, $1,020,000 Total $34, $1,700,000 $30, $1,500,000-12% Medium Need Pts Palliative Care $0 100 $0 $4, $480,000 Hospital and SNF $21, $1,700,000 $21, $1,020,000 Total $17, $1,700,000 $15, $1,500,000-12% Low Need Patients Palliative Care $0 200 $0 Hospital and SNF $21, $425,000 Total $2, $425,000 Palliative Care $0 350 $0 Payer Spending $10, $3,825,000 85

86 Lowest Levels of Palliative Care for Lowest-Need Patients CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg High Need Patients Palliative Care $0 50 $0 $9, $480,000 Hospital and SNF $21, $1,700,000 $21, $1,020,000 Total $34, $1,700,000 $30, $1,500,000-12% Medium Need Pts Palliative Care $0 100 $0 $4, $480,000 Hospital and SNF $21, $1,700,000 $21, $1,020,000 Total $17, $1,700,000 $15, $1,500,000-12% Low Need Patients Palliative Care $0 200 $0 $ $120,000 Hospital and SNF $21, $425,000 $21, $255,000 Total $2, $425,000 $1, $375,000-12% Palliative Care $0 350 $0 Payer Spending $10, $3,825,000 86

87 New Resources for Palliative Care, Significant Savings for Payer CURRENT FUTURE $/Patient # Pts Total $ $/Patient # Pts Total $ Chg High Need Patients Palliative Care $0 50 $0 $9, $480,000 Hospital and SNF $21, $1,700,000 $21, $1,020,000 Total $34, $1,700,000 $30, $1,500,000-12% Medium Need Pts Palliative Care $0 100 $0 $4, $480,000 Hospital and SNF $21, $1,700,000 $21, $1,020,000 Total $17, $1,700,000 $15, $1,500,000-12% Low Need Patients Palliative Care $0 200 $0 $ $120,000 Hospital and SNF $21, $425,000 $21, $255,000 Total $2, $425,000 $1, $375,000-12% Palliative Care $0 350 $0 $3, $1,080,000 Payer Spending $10, $3,825,000 $9, $3,375,000-12% 87

88 Severity Levels Based on Appropriate Use Criteria Defining payment levels and amounts based on patient need: Categorize differences in patient need based on objective criteria Measure current levels of spending in each category Estimate costs of new services and savings from existing services Design the payment levels to create a win-win approach 88

89 Quality Measures Also Based on Appropriate Use Criteria Defining payment levels and amounts based on patient need: Categorize differences in patient need based on objective criteria Measure current levels of spending in each category Estimate costs of new services and savings from existing services Design the payment levels to create a win-win approach Determination of differences in patient need can also form the basis for quality measures to protect against underuse 89

90 Data from Both Providers and Payers is Needed Defining payment levels and amounts based on patient need: Categorize differences in patient need based on objective criteria Measure current levels of spending in each category Estimate costs of new services and savings from existing services Design the payment levels to create a win-win approach Determination of differences in patient need can also form the basis for quality measures to protect against underuse Clinical and claims data are both needed to develop appropriate use criteria, risk stratification, & quality measures 90

91 Stratified Payment Would Allow Earlier Transition to Palliative Care $ WHAT MEDICARE OFFERS E&M E&M Age Hospice 6 Months Death $ WHAT PATIENTS NEED Level 1 Palliation Age Level 2 Palliation Level 3 Palliation Level 4 Palliation/ Hospice Death 91

92 Current Flat Hospice Payment Doesn t Match Patient Needs $ HOW MEDICARE PAYS FOR HOSPICE Cost of Hospice Services Hospice Payment Cost of Hospice Services Hospice Payment Cost of Hospice Services Hospice Payment Days 1-7 Final Week of Life 92

93 Patient Stratification Could Also Improve Hospice Payment $ HOW MEDICARE PAYS FOR HOSPICE Cost of Hospice Services Hospice Payment Cost of Hospice Services Hospice Payment Cost of Hospice Services Hospice Payment Days 1-7 Final Week of Life $ WHAT HOSPICE PROVIDERS NEED Cost of Hospice Services Level 4 Palliative Care/ Hospice Payment Cost of Hospice Services Level 3 Palliative Care/ Hospice Payment Cost of Hospice Services Level 4 Palliative Care/ Hospice Payment Days 1-7 Final Week of Life 93

94 What Medicare Is Testing Doesn t Fix All the Problems Eligibility Criteria Benefits Provider Control of Patient Services Provider Payment MEDICARE HOSPICE BENEFIT Determination of 6 months to live Flexible home-based care Forgoes payment for curative treatment No cost-sharing for most services Controls all services covered by benefit $159/day No differentiation based on need CMMI CARE CHOICES DEMONSTRATION Determination of 6 months to live Flexible home-based care Can continue coverage for curative treatment Cost-sharing for drugs, PT, DME Only controls services directly provided $400/month or $200/mo <15 days No differentiation based on need 94

95 Condition-Based Pmt Would Be Better for Patients, Providers, CMS MEDICARE HOSPICE BENEFIT CMMI CARE CHOICES DEMONSTRATION WHAT IS NEEDED Eligibility Criteria Determination of 6 months to live Determination of 6 months to live Determination of advanced illness Benefits Flexible home-based care Forgoes payment for curative treatment No cost-sharing for most services Flexible home-based care Can continue coverage for curative treatment Cost-sharing for drugs, PT, DME Flexible home-based care Can continue coverage for curative treatment No cost-sharing for most services Provider Control of Patient Services Controls all services covered by benefit Only controls services directly provided Controls all services covered by benefit Provider Payment $159/day No differentiation based on need $400/month or $200/mo <15 days No differentiation based on need Severity-adjusted payment based on patient needs and expected costs 95

96 Palliative Care Is Not the Only Specialty That Needs a Better Payment System to Deliver Better Care to Patients

97 Opportunities for Reducing Spending Exist in Every Specialty Cardiology Orthopedic Surgery Psychiatry OB/GYN Opportunities to Improve Care and Reduce Cost Use less invasive and expensive procedures when appropriate Reduce infections and complications Use less expensive post-acute care following surgery Reduce ER visits and admissions for patients with depression and chronic disease Reduce use of elective C-sections Reduce early deliveries and use of NICU 97

98 Fee-for-Service Creates Barriers to Redesigning Care Cardiology Orthopedic Surgery Psychiatry OB/GYN Opportunities to Improve Care and Reduce Cost Use less invasive and expensive procedures when appropriate Reduce infections and complications Use less expensive post-acute care following surgery Reduce ER visits and admissions for patients with depression and chronic disease Reduce use of elective C-sections Reduce early deliveries and use of NICU Barriers in Current Payment System Payment is based on which procedure is used, not the outcome for the patient No flexibility to increase inpatient services to reduce complications & post-acute care No payment for phone consults with PCPs No payment for RN care managers Similar/lower payment for vaginal deliveries 98

99 There Are Win-Win-Win Solutions Through Better Payment Systems Cardiology Orthopedic Surgery Psychiatry Opportunities to Improve Care and Reduce Cost Use less invasive and expensive procedures when appropriate Reduce infections and complications Use less expensive post-acute care following surgery Reduce ER visits and admissions for patients with depression and chronic disease Barriers in Current Payment System Payment is based on which procedure is used, not the outcome for the patient No flexibility to increase inpatient services to reduce complications & post-acute care No payment for phone consults with PCPs No payment for RN care managers Solutions via Accountable Payment Models Condition-based payment covering CABG, PCI, or medication management Episode payment for hospital and post-acute care costs with warranty Joint conditionbased payment to PCP and psychiatrist OB/GYN Reduce use of elective C-sections Reduce early deliveries and use of NICU Similar/lower payment for vaginal deliveries Condition-based payment for total cost of delivery in low-risk pregnancy 99

100 Examples from Other Specialties Neurology Gastroenterology Oncology Radiology Opportunities to Improve Care and Reduce Cost Avoid unnecessary hospitalizations for epilepsy patients Reduce strokes and heart attacks after TIA Reduce unnecessary colonoscopies and colon cancer Reduce ER/admits for inflammatory bowel d. Reduce ER visits and admissions for dehydration Reduce anti-emetic drug costs Reduce use of high-cost imaging Improve diagnostic speed & accuracy Barriers in Current Payment System No flexibility to spend more on preventive care No payment to coordinate w/ cardio No flexibility to focus extra resources on highest-risk patients No flexibility to spend more on care mgt No flexibility to spend more on preventive care Payment based on office visits, not outcomes Low payment for reading images & penalty for 2x Inability to change inapprop. orders Solutions via Accountable Payment Models Condition-based payment for epilepsy Episode or conditionbased payment for TIA Population-based payment for colon cancer screening Condition-based pmt for IBD Condition-based payment including non-oncolytic Rx and ED/hospital utilization Global payment for imaging costs Partnership in condition-based payments 100

101 The Payment Reforms Needed by Palliative Care Are Similar to Those in Other Specialties

102 A Multi-Stakeholder Approach to Primary Care Payment Reform Alliance for Health Michigan Institute for Clinical Systems Improvement Employers Unions West Michigan Payment Design Workgroup Primary Care Physicians Specialists Health Plans 102

103 Current Payment for Primary Care CURRENT PAYMENT PRIMARY CARE Tests & Procedures for Preventive Services Office Visits for Preventive Services Payer Payer Payer Office Visits for Chronic Disease Issues Tests & Procedures for Chronic Disease Mgt Office Visits for Acute Issues Tests & Procedures for Acute Issues 103

104 Current Non-Payment for Primary Care CURRENT PAYMENT PRIMARY CARE Tests & Procedures for Preventive Services Office Visits for Preventive Services Payer Payer Payer NO PAYMENT NO PAYMENT Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease Office Visits for Chronic Disease Issues Tests & Procedures for Chronic Disease Mgt Office Visits for Acute Issues Tests & Procedures for Acute Issues 104

105 What Is Not Paid For Is Exactly What s Needed to Improve Quality CURRENT PAYMENT PRIMARY CARE Tests & Procedures for Preventive Services Payer Payer Payer NO PAYMENT NO PAYMENT Office Visits for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease Office Visits for Chronic Disease Issues Tests & Procedures for Chronic Disease Mgt Office Visits for Acute Issues Tests & Procedures for Acute Issues Preventive Care Quality Chronic Disease Mgt Quality 105

106 A Better Approach: Flexible Payment Instead of E&M Payment PRIMARY CARE Tests & Procedures for Preventive Services PROPOSED PAYMENT Office Visits for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease Office Visits for Chronic Disease Issues Tests & Procedures for Chronic Disease Mgt Office Visits for Acute Issues Tests & Procedures for Acute Issues Monthly Core Primary Care Services Payment Payer Payer Payer 106

107 SIZE OF MONTHLY PER-PATIENT PAYMENT High Payment for Small # of Patients Size of Monthly Payment Should Differ Based on Patient Health Small Payment for Large # of Patients No Chronic Disease and No Major Risk Factors Larger Payment for Subset of Patients Needing More Proactive Care One Chronic Disease or Major Risk Factors Still Larger Payment for Subset of Patients Needing Even More Proactive Care Two Chronic Diseases or One Chronic Dis. and Major Risk Factors PATIENT HEALTH ISSUES Complex and High-Risk Patients 107

108 A Better Benefit Design For Patients BENEFIT DESIGN Patient enrolls as a member of the primary care practice, but has no restrictions on other care Patient has no copays for visits related to either preventive care or chronic disease care from this practice Patient only pays cost-sharing for acute issues PRIMARY CARE Tests & Procedures for Preventive Services Office Visits for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease Office Visits for Chronic Disease Issues Tests & Procedures for Chronic Disease Mgt Office Visits for Acute Issues Tests & Procedures for Acute Issues Monthly Core Primary Care Services Payment PROPOSED PAYMENT Payer Payer Payer 108

109 Better Payment for the Medical Neighborhood (Specialists) SPECIALIST PMT Payments for telephone calls & s for PCP consults with specialists they work with Sharing of the monthly core payment if the specialist is co-managing the patient with the PCP Transfer of monthly payment to specialist for some patients PRIMARY CARE Tests & Procedures for Preventive Services Office Visits for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease Office Visits for Chronic Disease Issues Tests & Procedures for Chronic Disease Mgt Office Visits for Acute Issues Tests & Procedures for Acute Issues Monthly Core Primary Care Services Payment PROPOSED PAYMENT Payer Payer Payer 109

110 Accountability for Spending and Quality That PCPs Can Control ACCOUNTABILITY Monthly payment would be adjusted up or down based on quality and avoidable utilization Quality of preventive care Quality of chronic disease care Avoidable ER utilization High-tech imaging Specialty referrals PRIMARY CARE Tests & Procedures for Preventive Services Office Visits for Preventive Services Outreach Calls for Preventive Services Proactive Care Mgt for Chronic Disease Office Visits for Chronic Disease Issues Tests & Procedures for Chronic Disease Mgt Office Visits for Acute Issues Tests & Procedures for Acute Issues Monthly Core Primary Care Services Payment PROPOSED PAYMENT Payer Payer Payer 110

111 Oncology and Palliative Care Both Need Better Payment Systems

112 What Takes the Time/Expertise of an Oncology Practice? New Patient 6 Months of Post-Tx Follow-Up 112

113 What Generates Revenues for an Oncology Practice? New Patient 6 Months of Post-Tx Follow-Up 113

114 Mismatch Between Revenues and Patient Care in Oncology New Patient 6 Months of Post-Tx Follow-Up 114

115 Condition-Based Payment Being Developed for Oncology by ASCO New Patient Payment Tx Month Pmt Tx Month Pmt Tx Month Pmt Tx Month Pmt Tx Month Pmt Tx Month Pmt Higher Payments For More Complex Pts Non-Tx Mo. $ Non-Tx Mo. $ Non-Tx Mo. $ New Patient 6 Months of Post-Tx Follow-Up 115

116 Instead of Specialties Competing for an Artificial Share of Spending.. Physician Payment (Part B) Palliative Care Pmt Specialist Payment PCP Payment Palliative Care Pmt Specialist Payment PCP Payment 116

117 ..Primary, Specialty, Palliative Care Could Benefit by Working Together Total Healthcare Costs (Parts A, B, and D) Physician Payment (Part B) Hospital & Post-Acute Care Costs (Part A) Drug Costs (Part D) Palliative Care Pmt Specialist Payment PCP Payment Hospital & Post-Acute Care Costs Drug Costs Palliative Care Pmt Specialist Payment PCP Payment 117

118 Condition-Based Payment Allows Flexibility in Multi-Specialty Care $ PAYMENT BASED ON PATIENT NEED, NOT SERVICES DELIVERED Level 1 Condition- Based Care Level 2 Condition- Based Care Level 3 Condition- Based Care Level 3 Condition- Based Care Level 3 Condition- Based Care Time Death 118

119 Condition-Based Payment Allows Flexibility in Multi-Specialty Care $ PAYMENT BASED ON PATIENT NEED, NOT SERVICES DELIVERED Level 1 Condition- Based Care Level 2 Condition- Based Care Level 3 Condition- Based Care Level 3 Condition- Based Care Level 3 Condition- Based Care Time Death $ Palliative Care Palliative Care Specialty Care Specialty Care Specialty Care Specialty Care Palliative Care/ Hospice Primary Care Primary Care Primary Care Primary Care Time Death 119

120 How Does All This Fit With ACOs?

121 Start With a Population of Patients PATIENTS Heart Disease COPD Back Pain 121

122 Each Patient Should Choose & Use a Primary Care Practice PATIENTS Heart Disease COPD Primary Care Practice Back Pain 122

123 Which Takes Accountability for What PCPs Can Control/Influence MEDICARE/HEALTH PLAN Accountable Payment Models PATIENTS Heart Disease COPD Back Pain Accountable Medical Home Payment Primary Care Practice Accountability for: Avoidable ER Visits Avoidable Hospitalizations Unnecessary Tests Unnecessary Referrals 123

124 With a Medical Neighborhood to Consult With on Complex Cases MEDICARE/HEALTH PLAN Accountable Payment Models PATIENTS Heart Disease COPD Back Pain Accountable Medical Home Payment Primary Care Practice Cardiology, Pulmonology, Neurosurgery, Palliative Care Accountable Medical Neighborhood Payment Accountability for: Unnecessary Tests Unnecessary Referrals Co-Managed Outcomes 124

125 With Specialists Accountable for the Conditions They Manage MEDICARE/HEALTH PLAN Accountable Payment Models PATIENTS Heart Disease COPD Back Pain Accountable Medical Home Payment Primary Care Practice Cardiology, Pulmonology, Neurosurgery, Palliative Care Accountable Medical Neighborhood Payment Cardiology Group Neurosurg. Group Pulmonary Group Heart Episode/ Condition Pmt Back Episode/ Condition Pmt COPD Condition Pmt Accountability for: Unnecessary Tests Unnecessary Procedures Infections, Complications 125

126 And High Quality Palliative Care for Advanced Illness MEDICARE/HEALTH PLAN Accountable Payment Models PATIENTS Heart Disease COPD Back Pain Accountable Medical Home Payment Primary Care Practice Cardiology, Pulmonology, Neurosurgery, Palliative Care Accountable Medical Neighborhood Payment Accountability for: Avoidable Admissions Avoidance of Pain Cardiology Group Neurosurg. Group Pulmonary Group Palliative Care Team Heart Episode/ Condition Pmt Back Episode/ Condition Pmt COPD Condition Pmt Condition-Based Palliative Care Pmt 126

127 That s Building the ACO from the Bottom Up PATIENTS Heart Disease COPD Back Pain ACO Accountable Medical Home Payment MEDICARE/HEALTH PLAN Primary Care Practice Cardiology, Pulmonology, Neurosurgery, Palliative Care Accountable Medical Neighborhood Payment Accountable Payment Models Cardiology Group Neurosurg. Group Pulmonary Group Palliative Care Team Heart Episode/ Condition Pmt Back Episode/ Condition Pmt COPD Condition Pmt Condition-Based Palliative Care Pmt 127

128 Most ACOs Today Aren t Truly Reinventing Care MEDICARE/HEALTH PLAN PATIENTS Heart Disease COPD Back Pain Fee-for-Service Payment Expensive IT Systems ACO Shared Savings Payment? Nurse Care Managers Shared Savings Payment? Primary Care Pulmonology Cardiology Neurosurgery Palliative Care 128

129 A True ACO Can Take a Global Payment And Make It Work MEDICARE/HEALTH PLAN PATIENTS Heart Disease COPD Back Pain ACO Accountable Medical Home Payment Risk-Adjusted Global Payment Primary Care Practice Cardiology, Pulmonology, Neurosurgery, Palliative Care Accountable Medical Neighborhood Payment Cardiology Group Neurosurg. Group Pulmonary Group Palliative Care Team Heart Episode/ Condition Pmt Back Episode/ Condition Pmt COPD Condition Pmt Condition-Based Palliative Care Pmt 129

130 This All Sounds Really Hard

131 This All Sounds Really Hard Can t We Just Keep Doing What We re Doing Today Until We Retire?

132 The Opportunities to Reduce Costs Without Rationing Are Widely Known Reducing Hospital Readmissions Helping Patients with Chronic Disease Stay Out of Hospital Reducing Overutilization of Outpatient Services Shifting Preference-Sensitive Care to Lower-Cost Options Reducing the Cost of Expensive Inpatient Care 132

133 The Question is: How Will Purchasers Get The Savings? PURCHASER? Reducing Hospital Readmissions Helping Patients with Chronic Disease Stay Out of Hospital Reducing Overutilization of Outpatient Services Shifting Preference-Sensitive Care to Lower-Cost Options Reducing the Cost of Expensive Inpatient Care 133

134 The Payer-Driven Approach to Achieving Savings Managed Fee-for-Service PURCHASER Readmission Penalty Physician P4P High Deductibles Prior Authorization Narrow Networks Tiering on Cost Reducing Hospital Readmissions Helping Patients with Chronic Disease Stay Out of Hospital Reducing Overutilization of Outpatient Services Shifting Preference-Sensitive Care to Lower-Cost Options Reducing the Cost of Expensive Inpatient Care 134

135 The Provider-Driven Approach to Achieving Savings PURCHASER Global Pmt/Budget Reducing Hospital Readmissions Helping Patients with Chronic Disease Stay Out of Hospital Reducing Overutilization of Outpatient Services Shifting Preference-Sensitive Care to Lower-Cost Options Reducing the Cost of Expensive Inpatient Care Coordinated Care/ Accountable Care Organization 135

136 Very Different Models Managed Fee-for-Service PURCHASER Global Pmt/Budget Readmission Penalty Physician P4P High Deductibles Prior Authorization Narrow Networks Tiering on Cost Reducing Hospital Readmissions Helping Patients with Chronic Disease Stay Out of Hospital Reducing Overutilization of Outpatient Services Shifting Preference-Sensitive Care to Lower-Cost Options Reducing the Cost of Expensive Inpatient Care Coordinated Care/ Accountable Care Organization 136

137 And Very Different Impacts on Providers Managed Fee-for-Service PURCHASER Global Pmt/Budget 1. Payer defines how care should be redesigned 2. Payer obtains all savings from lower utilization 3. Payer decides how much savings to share with provider 1. Provider determines how care should be redesigned 2. Provider and Purchaser or Payer agree on adequate price for provider care and amount of savings for payer 3. Providers get to keep any additional savings and to determine how to divide it 137

138 A Different Triple Aim Better Care for Patients Providers having the flexibility to design care that matches patient needs Lower Spending for Payers Providers able to use the best combination of services for patients without worrying about which service generates more profits Financially Viable Healthcare Providers Physicians, hospitals, hospice agencies, and other providers paid adequately to deliver high-quality care 138

139 Learn More About Win-Win-Win Payment and Delivery Reform Center for Healthcare Quality and Payment Reform 139