Achieving Changes in Care Delivery
through Incentive Payment Models
April 12, 2015
Ruth Levin
Managed Care Revenue Consulting Group
DISCLAIMER: The views and opinions expressed in this presentation are those of the author and do not necessarily represent official policy or position of HIMSS.
TRIPLE AIM
Like Motherhood and Apple Pie
Better
Health
Better
Care
Lower
Cost
Striving for….
• Value versus volume
• More “population management” through global
budgets versus fee for service
• Achieving metrics – financial, utilization and quality
• Reduction in variation in care delivery – getting to
“best practice”
But how??
Appropriate Financial Incentives and
Reimbursement Models
How To Achieve Better Health, Better Care
and Lower Cost?
• Appropriate and sufficient motivation to change care delivery
must be in place
• Providers and Payors must collaborate – data exchange,
performance tools, membership attribution, fair
reimbursement
• Understand where the need/opportunities are for reduction in
cost and improvement in quality care delivery
• Know how/what steps to take to achieve the goals
With the Proper Incentives…..
• You CAN Change Provider Behavior –
– Be more aware/involved in care management
– Be more selective in referrals
– Know and respond to costs of services and supplies
– Know the utilization and quality metrics and monitor
performance against them
– Understand the impact of appropriate and necessary
documentation
• You CAN Impact Cost and Quality
Cost DOWN and Quality UP?
• Where are the opportunities to reduce cost?
–
–
–
–
–
–
–
Inpatient hospital care (i.e. LOS, supply costs, ICU use)
Outpatient hospital and ancillary providers
Physician offices
Drugs
Implants
Out of network utilization
…….almost everywhere
• How do you prevent quality of care from diminishing as you reduce
costs?
– Condition incentive payments on reaching quality goals
Incentives through Enhanced
Reimbursement and Bonus Revenue
• Annual fee for service rate increases predicated on hitting certain quality metrics
• Pay for performance – bonuses for achieving benchmarks/quality metrics
• Administrative fees for enhancing practice management/services (PCMH or ACO)
• Gainsharing – reduce cost of care/service and share in the savings (between
hospital and physician)
• Shared Savings – reduction in utilization, or type of utilization and sharing
resulting savings with payors
• Full Risk – responsibility and reward – for upside and downside – for defined
population
• Combination of the above
Many Varied Pay for Performance Models
• Simple and Complex Structures
• Metrics (Utilization, Quality, Cost)
• Defined populations and/or defined procedures
• No risk, shared risk, full risk
• Gainsharing – upside only on specific areas of savings
opportunities
• Revenue enhancement (without cost savings) opportunities
shared with health plans
9
Pay for Performance Models – Vary by Payor
and Product
• Commercial, Medicare and Medicaid
• Legal restrictions on Government products/dollars
• State restrictions on capacity for taking on ‘risk’
• Payor obligations to share savings with consumers/government
below target Medical Loss Ratio
• Receipt of shared savings/enhanced revenues – Commercial more
timely than Medicare
1
Gainsharing vs Shared Savings
Gainsharing
Shared Savings
Impact on
Revenue?
No – Revenue per
service (inpatient
admission or bundled
payment) remains the
same
Yes – typically reduction
in utilization
(admissions, visits, out
of network use, etc.)
and associated
payments
Basis of Incentive
Improve performance,
toward ‘best practice’
More global - move
patients to lower cost,
higher value services or
avoid unnecessary care
Physician focus
Physician specific,
primary care and
specialists, with rewards
reflecting individual
performance
Primary care focused
with emphasis on
driving down utilization
and increasing
preventive services.
Patient Center Medical Home
Enhanced Payments that appropriately recognize added value
to patients
• Whole-person care – Comprehensive, preventative, self management
support, routine and urgent, mental health, health habits, etc.
• Systematic tracking of tests and follow up on test results
• Streamlined referral processes and care coordination
• Continuous quality improvement and performance reporting
• Enhanced access and communication
• Patient tracking and registry functions
• Electronic prescribing, communication, etc.
• Adoption and implementation of evidence based guidelines for three
chronic or important conditions
Patient Center Medical Home Initiatives
• Patient-centered medical home initiatives are central to many efforts to reform the US
health care delivery system. To better understand the extent and nature of these
initiatives, in 2013 we performed a nationwide cross-sectional survey of initiatives that
included payment reform incentives in their models, and we compared the results to
those of a similar survey we conducted in 2009. We found that the number of initiatives
featuring payment reform incentives had increased from 26 in 2009 to 114 in 2013. The
number of patients covered by these initiatives had increased from nearly five million to
almost twenty-one million…
Recent Medical Home News
•
Patient-Centered Medical Home Initiatives Expanded In 2009-13: Providers, Patients, and Payment Incentives Increased
(HealthAffairs, 33, no.10 (2014): 1823-1831: Samuel T. Edwards, Asaf Bitton, Johan Hong and Bruce E. Landon)
PCMH Improve Care and Efficiency?
Several studies have demonstrated improved access and reduced
unnecessary costs:
Reduction in hospital admissions
Reduction in ER visits
Reduction in ambulatory sensitive care admissions
Improved Patient and Clinician satisfaction
Improved health
Cost savings
Other studies found PCMHs did little or no better in controlling costs or quality
than traditional practices
Total costs may actually increase as access increases, and more/better care is
provided to higher risk patients.
CMMI Bundled Payment for Care Improvement
Initiatives
Model 1
Inpatient Only
Model 2
Inpatient + Post
Discharge
Model 3
Post Discharge
Only
Model 4
Inpatient Only
Discounted Payment
Rate
Retrospective
comparison of target
price and payment
Retrospective
comparison of target
price and payment
Prospectively set
payment
All MS DRGs
Propose MS DRGs
Propose MS DRGs
Propose MS DRGs
Hospital Services
Hospital Services, Post
Acute, Related ReAdmissions
Post Acute, Related
Readmissions
Inpatient Hospital and
Physician Services,
Related Readmissions
Minimum Discount
To be proposed , but
includes minimums
To be proposed
To be proposed , but
includes minimums
No change in payment
Reconciliation
Reconciliation
Hospital distributes
bundled payments
All Hospital IQR +
other proposed
measures
To be proposed
To be proposed
To be proposed
Commercial Carrier Bundled Payments
Nationwide – Payors and Employer sponsored programs
•
•
•
•
•
Cardiovascular
Orthopedic
Spine
Obstetrics
Cancer
– Breast Cancer
– Kidney Cancer
– Prostate Cancer
Which Program is Right for You?
Factors contributing to success – do you have them?
• Level of engagement of providers – is the reward sizeable
enough to justify effort/investment in structure
• Complexity
• Management capabilities – do you have the tools to monitor
and control costs and revenue
• Timely and accurate data that providers understand and can
use in making decisions of how to change behavior and
processes
To Take Risk or Not to Take Risk?
• Shared savings/bonus only arrangements
–
Carrot often gets just as good response without threat of stick
–
Less complicated calculations, less reconciliation, fewer administrative tasks
–
But dollars limited, capped by legal restrictions and ‘shared’ nature
• Risk contract
–
–
–
–
Higher the risk, often the greater potential reward
More costly to administer/greater infrastructure needed
Reinsurance costs/protection necessary and Reserves may be required
Can limit risk – but limited rewards may accompany this
• Have confidence and trust in Payor to support you, provide you with timely data,
process claims correctly, be responsive?
• Do the costs/risk of this kind of relationship outweigh the potential benefits of a ‘risk’
contract
1
Whatever Program You Choose Keep it Simple
• Less complicated – easier path to acceptance in negotiations with
the payors and your providers
• Metrics should be easily measured (by both parties if possible) –
data readily available – use independent score keeper if necessary
• The fewer the metrics the better
• Focus on areas with greatest return – metrics with big variance from
targets and those with savings/revenue opportunity
• Metrics, review and reporting processes should be familiar and easy
to understand
1
Commonly Used Metrics
Utilization and Cost
• Utilization or Efficiency
– ED visits
– Admissions, including Ambulatory Sensitive
– Bed days/LOS
– Readmissions
– Formulary vs non-formulary
• Cost
– Medical Loss Ratio
– Inpatient – top 25th percentile for each APR DRG
– Out of network leakage
– Use of office for procedures vs ‘facility’
2
Metrics – Quality/Clinical Effectiveness
Understand what you can measure and track vs what you will rely on
Payor to track
• Screenings – Colorectal Cancer, Cervical Cancer, Breast Cancer, Depression
• Disease management – diabetes, hypertension, cholesterol, asthma
• Vaccinations
• Additional HEDIS measures
• Member satisfaction
• Medicare 5 Star Ratings (direct revenue opportunity)
• HCC coding (direct revenue opportunity)
• Try to pick those common to multiple measurement/rating programs (HEDIS, Star, etc.)
2
Submarket
Rollup Type
Rollup Value
PO
Measure
Description
Physicians
Num
Physician Performance Scorecard
Current
through Dec 2012
Den Score Submarket Trend*
The linked image can
History
Jun 2012
Dec 2011
Score
Submarket Score
Submarket
Clinical Effectiveness
Cholesterol Management for Members with Cardiovascular Conditions
62
75
82.7%
70.8%
688
785
87.6%
87.9%
23
26
88.5%
87.4%
IVD: COMPLETE LIPID SCREENING
229
282
81.2%
83.9%
Breast Cancer Screening
180
219
82.2%
78.7%
Cervical Cancer Screening
373
400
93.3%
92.4%
Colorectal Cancer Screening
146
204
71.6%
66.7%
FOLLOW UP COLONOSCOPY
5
6
83.3%
75.1%
Diabetes Annual HbA1c Level Testing
248
266
93.2%
89.9%
Diabetes Annual Lipid Level Testing
235
259
90.7%
88.2%
Diabetes Annual Retinal Exam
160
240
66.7%
59.8%
HYPERTENSION - SERUM CREATININE
DRUG ELUTING STENT WITH CLOPIDOGREL
DIABETIC: HEMOGLOBIN A1C TEST FOR PEDIATRIC PATIENTS
Medical Attention for Diabetes Nephropathy
8
8 100.0%
95.5%
179
200
89.5%
89.1%
14
17
82.4%
66.3%
9
83
10.8%
12.6%
Diabetes Annual Lipid Control <100
49
68
72.1%
59.7%
Diabetes:Hemoglobin A1C Control (<8.0%)
63
83
75.9%
76.1%
DIABETES WITH LDL > = 100 - USE OF LIPID LOWERING AGENT
DIABETES ANNUAL HBA1C MANAGEMENT
2
Submarket
Rollup Type
Rollup Value
PO
Measure
Description
Physicians
Num
Physician Performance Scorecard
Current
through Dec 2012
Den Score Submarket Trend*
The linked image can
History
Jun 2012
Dec 2011
Score
Submarket Score
Submarket
Clinical Effectiveness
Cholesterol Management for Members with Cardiovascular Conditions
62
75
82.7%
70.8%
688
785
87.6%
87.9%
30 DAY READMISSION RATE
27
377
7.2%
6.7%
IVDHEART/STROKE RECOGNITION (PREVIOUSLY NCC)
15
134
11.2%
0.2%
HYPERTENSION RECOGNITION
0
135
0.0%
0.0%
PATIENT CENTERED MEDICAL HOME RECOGNITION
2
132
1.5%
6.1%
PHYSICIAN OFFICE CENTERED RECOGNITION - (PREVIOUSLY NDC)
0
145
0.0%
0.6%
$13,644,024
$13,940,336
0.98
0.89
Formulary Compliance Rate
9,159
9,902
92.5%
91.6%
Generic Substitution Rate
6,886
7,127
96.6%
97.3%
Bed Days per 1,000 Members
98
11,694
100.6
231.7
Ambulatory Sensitive 1-2 Day Hospital Stay Ratio
11
52
21.2%
18.6%
129
11,716
132.1
125.5
55
243
22.6%
36.6%
HYPERTENSION - SERUM CREATININE
Efficiency
Episodes of Care Efficiency Index
Ambulatory Sensitive ER Visits per 1,000 Members
ADOPTION OF MEDICATION E-PRESCRIBING
Trend Indicator Column:
Green arrow indicates Current Group Score is an improvement from most recent Historical Group Score. Red arrow indicates a deterioration.
2
Services Provided to Hosptal x members by PCP office
Dates of Service: January 1, 20011 - Dec 31, 2011, Paid through April 18, 2012
Med/Surg and Maternity cases only
Sorted by descending Allowed Amt
2011 Hospital X Product X Members
Med/Surg
Servicing Provider
Hospital x
Hospital Y
Hospital 1
Hospital 2
Hospital 3
Hospital 4
Hospital 5
Hospital 6
Hospital 7
Hospital 8
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
Hospital Y
TOTAL
# of
Discharges
Allow ed Amt
Maternity
Avg LOS
57
26
26
44
30
22
8
5
6
1
5
5
9
2
3
3
5
3
2
1
1
3
1
1
1
2
1
$374,081
$421,555
$280,504
$261,863
$148,900
$141,455
$101,532
$71,068
$54,800
$41,710
$29,544
$33,822
$29,305
$16,073
$19,316
$6,081
$16,242
$12,341
$10,832
$10,247
$10,176
$10,161
$8,751
$8,599
$6,159
$3,457
$4,854
2.7
3.7
7.2
3.5
4.1
2.5
10.8
1.6
5.5
9.0
2.2
1.2
2.3
2.0
2.3
2.0
1.8
3.3
4.0
1.0
2.0
1.0
18.0
11.0
2.0
1.5
2.0
1
1
$4,283
$3,929
1.0
2.0
1
$2,613
1
$1,936
1
$124
278 $2,146,314
1.0
2.0
0.0
3.7
# of
Discharges
Allow ed Amt
Total
Avg LOS
34
7
12
10
12
3
1
1
1
$142,917
$32,568
$65,184
$31,049
$29,602
$12,342
$4,906
$4,997
$3,558
2.9
3.0
3.1
2.4
2.3
1.7
4.0
2.0
2.0
2
1
1
1
$9,232
$3,873
$2,357
$8,019
4.0
2.0
3.0
15.0
3
$11,660
3.3
1
$2,496
2.0
1
$4,321
2.0
1
1
1
1
$3,793
$3,696
$3,230
$3,058
4.0
2.0
3.0
2.0
95
$382,857
2.9
# of
Discharges
91
33
38
54
42
25
9
6
7
1
7
6
10
3
3
6
5
3
2
1
1
3
1
1
1
3
1
1
1
1
1
1
1
1
1
1
1
373
Allow ed Amt
$516,998
$454,123
$345,688
$292,912
$178,502
$153,796
$106,437
$76,065
$58,358
$41,710
$38,776
$37,695
$31,662
$24,091
$19,316
$17,741
$16,242
$12,341
$10,832
$10,247
$10,176
$10,161
$8,751
$8,599
$6,159
$5,953
$4,854
$4,321
$4,283
$3,929
$3,793
$3,696
$3,230
$3,058
$2,613
$1,936
$124
$2,529,171
Avg LOS
2.8
3.5
5.9
3.3
3.6
2.4
10.0
1.7
5.0
9.0
2.7
1.3
2.4
6.3
2.3
2.7
1.8
3.3
4.0
1.0
2.0
1.0
18.0
11.0
2.0
1.7
2.0
2.0
1.0
2.0
4.0
2.0
3.0
2.0
1.0
2.0
0.0
3.5
2
Sample Physician Shared Savings From Efficiencies
Based on 12 months of claims through
6/30/13
Attributable to Provider
Metrics
Target
Percentage
Reduction
Savings PMPM Save
Attributed Member
1,500
IP Reduction
25%
$200,000.00
$12.50
Attributed Member Months
16,000
Readmit
Reduction
0%
$0.00
$0.00
Avoidable ER
Reduction
20%
$80,000.00
$5.00
Outpatient
Procedure
Steerage
25%
$25,000.00
$1.56
Radiology
Steerage
20%
$60,000.00
$3.75
50%
Provider Gain Share %
PMPM
Dollars
Provider Care Coordination Fee (PCCF)
$
1.50
Gross Savings
Provider Gain Share
Provider Care Coordination
$
$
$
26.98
13.48
1.50
$431,665
$215,680
$24,000
Lab Steerage
20%
$8,861.52
$0.59
Rx Steerage
20%
$57,803.49
$3.85
$
14.98
$239,680
Total
$431,665.01
$26.98
Total Provider Payout (including PCCF)
Provider Gain Share 50%
Attributable to Provider
25%
IP Reduction %
Impactable IP Admits
45
Avg Allowed Amt (based on medical DRGs)
Impactable IP Admits per thousand
35
Impactable IP Admits per thousand (risk adj)
26
Target IP Admit Reduction
11
Savings
$24,983
PMPM Save
$1.56
IP Reduction %
Savings from reducing a percentage of "Impactable" Inpatient Admit. Excludes Trauma,
Pregnancy & Delivery, and Mental Health
Top 10 Impactable DRG's
M/S
Total Admits
Total Allowed
Average Per Admit
Comb ant/post spinal fusion wC
S
1
$150,000
$150,000
Septicemia w/o MV 96+ hrs wMCC
M
3
$90,000
$30,000
PTCA w drug-eluding stentw/oMC
S
2
$70,000
$35,000
Heart failure & shock w MCC
M
1
$70,000
$70,000
Spinal fusion ex cervical wMCC
S
1
$70,000
$70,000
Spinal fusion ex cervical w/oM
S
2
$60,000
$30,000
Poison/toxic effect drugs wMCC
M
1
$50,000
$50,000
Circ dis ex AMI w cath w MCC
M
1
$40,000
$40,000
Septicemia w/o MV 96+ hrs w/oM
M
3
$50,000
$16,667
Cellulitis w/o MCC
M
5
$40,000
$8,000
20
$690,000
$499,667
Total
Payor - Provider Gain Share - 50%
Attrib to Provider
20%
Avoidable ER Reduction %
Avoidable ER Admits
90
Avoidable ER Facility Total Allowed Amt
145,000
Avg Avoidable ER Allowed Amt
$1,611
ER visits per thousand
130
ER visits per thousand (risk adj)
104
Target Avoidable ER Reduction
35
Savings
$57,033.33
PMPM Save
$3.56
Avoidable ER Reduction %
Savings from reducing a percentage of "Avoidable" ER visits.
Reference list of ICD9 Groups flagged as Avoidable
Example of Top 10 ICD 9 Group Number
Total Avoidable ER Visits
Total Allowed
Average Per Visit
Angina/Chest Pain
17
$10,000
$588
Abdominal Pain
26
$30,000
$1,154
Sprains/Strains
19
$20,000
$1,053
Muscle/Ligament/Fascia Disorders
4
$20,000
$5,000
Neurologic Disorders - Other
7
$15,000
$2,143
Mechanical Joint Disorders
3
$10,000
$3,333
Diverticulitis/Diverticulosis
4
$10,000
$2,500
Migraine/Other Headaches
6
$10,000
$1,667
Syncope/Hypotension
1
$10,000
$10,000
Gastritis/Dyspepsia
3
$10,000
$3,333
Provider Gain Share 50%
Attributable to Provider
25%
Outpatient Procedure Steerage %
Preferred OP Cases
109
Preferred OP Total Allowed
$212,357
Preferred OP Avg Allowed
$1,948
% Cases in Preferred Setting
41%
NonPreferred OP Cases
159
NonPreferred OP Total Allowed
$618,407
NonPreferred OP Avg Allowed
$3,889
% Cases in NonPreferred Setting
59%
Price Difference
$1,941
Target NonPreferred Cases Steered
40
Savings
$77,160
PMPM Save
$5.14
Outpatient Procedure Steerage %
Savings from steeing a percentage of Outpatient procedures for major and minor
surgeries from Outpatient Hosptals and Non Participating Ambulatory Surgical
Centers to Participating Ambulatory Surgical Centers.
Top 5 NonPreferred
Top 5 Outpatient Procedure Group Code
NonPreferred Count
Total NonPreferred Dollars
Average
Preferred
Total Preferred Dollars
Average
Drug Administration - outpt chemo/dialysis
51
$150,000
$2,941
1
$865
$865
LOWER GI ENDOSCOPY
27
77
Knee Arthrotomy
8
8
Hand/Wrist Procedures
8
1
Upper GI Endoscopy
10
8
Top 5 Preferred
Preferred
Total Preferred Dollars
Average
NonPreferred
Count
Total NonPreferred Dollars
Average
LOWER GI ENDOSCOPY
80
$250,000
$3,125
27
$100,000
$3,703
Knee Arthrotomy
8
Top 5 Outpatient Procedure Group Code
8
Cataract/Lens Procedures
5
0
Upper GI Endoscopy
8
10
Foot/Ankle Procedures
5
4
Gainsharing – Aligns Incentives
•
Engages physicians by recognizing their role in contributing to efficient
inpatient hospital operations.
•
Financially rewards achieved level of physician performance
– Improvement - performance compared to own performance over
time - prior year to current year
– Performance - performance compared to peers - Best Practice
Norm
•
Protects, maintains/improve quality of care
•
Provides physicians with meaningful data that helps them determine
where/how to change behaviors to effect lower cost and higher quality
Quick, Simple Method to Achieve Physician
and Hospital Goals - Gainsharing
• Not complicated – achieve the goal, get rewarded
• Quick start-up, payments to doctors within the year,
collaboration/improvements begin immediately
• Data is readily available & more easily accepted as valid
• Flexible - adaptable to special needs of each hospital
• Perfect tool in Accountable Care, Shared Savings and Risk
Contracting Initiatives
• Payments do not have to be predicated on receiving savings from
Payors – can begin earlier, engaging physicians sooner
3
Gainsharing
• No downside – only upside potential, and only paid when cost
reductions achieved. No penalty for high cost cases
• Direct payment by hospitals to physicians, based upon individual
performance
• No impact on revenue or payments to providers (compensates for
loss of income on medical cases impacted by lowering length of stay)
• Focus is on driving down the cost of care on a particular episode or
course of treatment through ‘best practice’
• Implemented quickly using standard billing data, with payments
usually within 6-9 months
• Incentive payments conditioned upon hitting specific quality
measures
Basic Framework of A
Gainsharing Program
• Physicians rewarded for reaching benchmarks and/or making
significant improvement in performance and quality.
• All cases severity adjusted to 4 levels using APR DRGs to account
for ‘sicker’ patients.
• Benchmarks established using physicians’ actual experience in
their region - the top 25th percentile (lowest cost) performers (by
APR DRG).
• Monies to pay bonus come from hospital savings generated by
improvements in efficiency. If hospital achieves no savings - no
bonuses paid out.
• Payments withheld from physicians who do not meet quality
standards.
3
Sample Practice Changes that Improved
Efficiency and Quality of Care
• Earlier consultation with Discharge Planners, writing discharge
orders earlier, and increased discharges on weekends
• Increase understanding and interest in implant costs and
implementation of demand matching
• Decrease in time between request for specialty consultation and
occurrence of consultation
• Earlier transition from ICU to standard acute floor and cost effective
use of telemetry units
• Increase awareness and selectivity of supplies based upon value
• Fewer marginal but costly diagnostic tests
• Reduction in pharmacy expense (generics, formulary, etc.)
• Avoidance of duplicative services
• Increased detail/accuracy and timeliness of documentation
3
3
Movement Toward Reduced Variation in
Practice and Higher Quality
• Shrink variation in cost between bottom 75th and the top 25th percentile
• Physicians begin to ask – ‘What is the top 25th percentile doctor doing that
I’m not doing?’
• Greater acceptance/easier transition to clinical guidelines/care maps
• Greater collaboration, improved communication and documentation alignment achieved
• Halo effect on other ‘payor’ populations, including those that hospital will not be
able to share savings, if they occur (i.e. Medicare fee for service – without a
waiver)
• Side benefit of enhanced revenue from improved coding
3
And Let’s Not Forget the Patient…
Financial incentives effect how they
access/receive care.
Contact Information
Ruth Levin – [email protected]
Managed Care Revenue Consulting Group, LLC
352 Seventh Avenue, Suite 1602
New York, NY 10001
212-430-6619