Value Based Reimbursement: The New Reality (Webinar)

Value Based Reimbursement:
The New Reality

[Bobbi Brown]

Thanks very much and welcome to everyone. It’s still morning where I am, we’re in Salt Lake. And I’m very excited to go through all my slides with you today and talk to you. I just wish I could see you. And eventually we’re going to come up with something better than just the questions and the poll questions. But until then, we’ll just deal with what we have and keep going. I wish we had done this seminar yesterday. It was Yogi Berra’s 90th birthday, May 12. And I usually don’t read the sports section in USA today but I actually did and I’ll give you two great quotes from him. “When you come to a fork in the road, take it” and “it ain’t over until it’s over.” And it was said about Yogi that if he fell into the sewer, he’d come up with a gold watch.

So today I want you to find the gold watch in the next 69 slides that we’re going to go over.

Objectives [04:40]

So what we’re going to cover today is discuss the announcements that have come out about value-based care, value-based reimbursement, value-based program. I want to go over some in the status of the CMS programs with you, try to give you some definitions of what they’ve done. And really I have some results about what has happened with some of these programs and give you a little bit about MedPAC, what they are going to recommend. And then finally, how do we all get ready for this. There’s so much news on this everyday and so much is going on. So let’s just get started.

Poll Question #1

Which is your role in your organization? [05:17]

Which is your role in your organization?

And maybe there’s a poll question up on your screen and I just want to know who is out there.

[Tyler Morgan]

Alright. We’ve got that poll question up, Bobbi. So what’s your role in your organization? Are you administrator, Financial, Clinical, Technology, or Other? So we’ll leave that up for a few moments. We have had a few questions about links to the slides and we will provide the link to all of the slides and the recorded webinar after the webinar is over.

Alright. Let’s go ahead and close the poll and take a look at our results.

Poll Results [05: 49]

Okay. Bobbi, it looks like we’ve got 30% administrative, 10% Financial, 12% Clinical, 17% Technology, and 30% as other.

[Bobbi Brown]

Oh great. Oh great. A good mix of people. That’s wonderful.

Survey Results

From 2015 Health leaders media industry survey [06:05]

I should just say I’m a financial person by background. So I am going to have, there will be some things on the slide, we will have, you’ll say,” she’s a financial person.” But that’s why she thinks that way. So anyway, just talking about what’s going on. I have a couple results of surveys that I want to put up on the screen for you. The modern healthcare of May 4, 2015, the whole cover, is CEOs embrace value-based pay. So where are we? This is a survey that was taken earlier this year by the health leaders media industry survey. And where are we? 10% not pursuing, 33% pilot underway, 28% investigating.


Kaufman Hall Survey Update April 2015 [06:49]

So the modern healthcare story mentioned that 78% of those that were interviewed believe that the value-based model should play a dominant role in our healthcare, and 40% of those believe that this model will improve our quality (inaudible) and think that the financial benefit is going to be negative to them. Now, about 40% say they think there’s a potential benefit. So hurdles that they identified in this article were IT, overall policies, and physician engagement. So we’ll think about those as we go through these slides.

This is another survey that Kaufmann Hall did just in April and they had looked and asked hospitals, and this is hospital-based, “how many of you have greater than 10% of your current revenue in a value-based?” When they asked it in 2014, it was 22%. By February 2015, not a big time change there, 42% up there. So they asked them also what their expectation was – that was what the expectation was for the next 24 months and you can see again a big change. We’re starting to see this. I don’t know who are that wonderful tipping point like that book says but I think we’re getting pretty close.

Announcements [08:06]

And the announcements that came out, the secretary of Health and Human Services, Sylvia Burwell, came out in January announcement, 30 percent, they want to be tied by the end of 2016, 50 percent by the end of 2018. And then they’re going to try to put 85 percent of all the payments tied to quality or value and 90 percent by 2018. And they are going to do it through such programs as value-based purchasing and the readmissions program.

So they also set up a healthcare partner learning and action network and you can look that up on the CMS website at the collaboration. And that work, to me, is critical and all of this collaboration. It’s in alignment of the government, the payors, the employers, providers and consumers. And I saw a panel discussion where someone from Humana, the president of Humana was speaking, the president and CEO of Dignity Health, the governor of Delaware and many people participating and using it as a way to facilitate this change that we’re going to go through, get feedback and again that’s you need to be thinking about doing as you’re going through this, as well as going through this change together.

Another thing that happened in January was 75 percent of the business, Health Care Transitional Task Force got formed and a lot of the big hitters, Partners, Ascension, Trinity, Advocate Health. They also brought in some insurance, again, employers, specific business group on health. They are getting together and saying they want to have 75 percent of their business that’s operating under value-based purchasing by 2020.

CMS Current State [09:46]

Another thing to think about is where are we now, what is our current state. Yeah, we know here we want to be but where are we now? The CMS mentioned, they said that they are at 90 percent value-based spending, 20 percent is in bundled episodes or ACO, and they are doing that through the alternative payment method like ACOs and it’s growing. And they feel that the minority of the Medicare patients are now in a tradition-fee-for-service mode. So it’s interesting to see that we’re all ready at a point that’s pretty large there.

The Catalyst for payment reform stated that in 2013 they felt that 42 percent of the payments were value-based. So we’ve just got tremendous momentum in this right now.


Congress in April 2015

SGR (Sustainable Growth Rate), Repealed and Revamped with Value-Based Purchasing


The thing that recently happened, and we do these slides in advance. So I need to update as we’re speaking almost. The SGR got repealed and it was revamped with the alternative payment methodology that’s going to reinforce the value-based purchasing. So now from 2015 to 2019 physicians and providers can count up on a 0.5 percent increase, and then in 2019 we’re going to swing over to a value-based purchasing. So we have some time to get ready for that. And the CEO of the Mayo Clinic, he was pleased today with the action that it got repealed and that as everybody knows it’s gone on for 17 years and it’s moving towards payment for quality and efficiency, it’s important for all of us. But he also mentioned the value-based payment will be challenging for us and we need to make sure that we’re going the right way and measuring the right things, and we need to acknowledge that this is a definite difficult road that we’re going down but it’s something that we can do.

New Paradigm

Improve health and save money [11:48]

Another quote from the Humana president. He again feels very very positive about this value-based model. He says we’ve got Medicare Advantage members in there. He has seen improvement in the quality and outcomes and cost, they’ve seen fewer trips to the emergency group, and they’ve seen a 19 percent cost reduction. So we’re starting to see that not only people are embracing it but we’re starting to see the change as a result of this.

Poll Question #2

Which would be your preferred payment system for your organization? 352 respondents


Well let’s try another poll question.

[Tyler Morgan]

Okay. We’ve got our next poll question up, Bobbi. Which would be your preferred payment system for your organization? Fee for service, bundled payment, accountable care organization, or none of the above?

So we’ll leave this open for a few minutes. We’ve got a few questions coming in, which is great. We have a few questions about audio. We’ve got that audio situation from our end fixed.

Alright. Let’s go ahead and close this poll and take a look and show the results.

Poll Results [12:53]

[Tyler Morgan]

Okay. We’ve got – it shows 23% said fee for service, 43% accountable care.

[Bobbi Brown]

Wow! That is big. I didn’t expect. And we have 15% with none of the above. So I hope that 15%, you’re the ones who probably I need to research with and figure out what could we do even differently from where we were going that would make our system even better. But that ACO is great.

MedPAC [13:20]

Okay. MedPAC, I’m sure you’ve heard the MedPAC there, the advisers, the Congress, and they are saying we have a complex fragmented system, too many payments, too many different rules. They are saying we have to do payment reform, it has to be implemented more broadly. They are pushing coordination across multiple settings, so that the rate would be determined by the most efficient setting to deliver the care. Interesting concept. So just remember that and put that in the back of your mind and think about that as you see new regulations coming out.

Fun Facts [13:53]

Now, I have a fun fact for you actually. Earlier this year, I did fun facts about everything and I just pulled this over. But 11,000 baby boomers are aging into Medicare daily. That’s amazing. So in 2015, this would be the first year where our healthcare spending will reach $10,000 per person. But 11,000. And I am a baby boomer. So thinking about 11,000 that’s going into Medicare daily is mind-boggling to me.

Measure [14:25]

I would like to just spend a few minutes on measures because if you ever sat down, and I would advise everybody to do this, look at all the measures that your organization is reporting. Are they the right measures? And what can we do to change that? And this was in the Wall Street Journal. There’s different kind of measures and there is not one measure – you know, I’ve been asked, on finance, I can give you a measure. On quality, there’s not one measure that’s going to fix everything but we need to be tracking things, and over the years, as we’ve been tracking on the quality reporting, I understand that. We’ve been tracking a lot of things.

In the Hospital Compare website, it mentioned here there’s 123 metrics and 102 of those are process measures, which meaning we’re trying to get to an outcome but it’s not an outcome. And the feeling was, gee, from this professor that it’s very burdensome for the benefit it delivers.

So I would tend to agree with that.

Core Goals for NQF [15:35]

And the National Quality Forum, I was very pleased, I really like these criteria for measurements that they came up with. Can we align the measures among all the players, can we make it more actionable, can it be consistent, can we use all the technology we have instead of having to do so much obstruction, can we simplify and do our attribution better. And can we get applicants (inaudible) when I think about metrics. Now, I work in a company that does a lot of analytics and I go back to this and say, gee, can I come up with measures that would conform to these type of goals.

Models [16:18]

I sat down the other day and looked at all our different payments and it was Easter when I did this. You can probably tell from the Easter egg colors that I put on the slides. And I looked and I said, gee, what incentives do we have now? How do we get our quality up and how do we get our cost up? What’s the combination? And what do I like when I – you know, when I’m going in, and again I’m a finance person, so I like to know all my rules in advance. I don’t want to get to the end of the time period and find out, oh-oh, your severity score went down, so you’re not going to get the incentive payments that you thought. And I just wasn’t aware – I mean my fault, I’m the guilty one. I like to be able to move the needle. I know I’m going to have to do that with other people but I like to be able to move the needle, see that I move and get rewarded for that. I like rewards. So hopefully when I’m done with this webinar, somebody will give me a reward. But I do like things in alignment. So again, just my thought on all of our different payment systems. We’re adding quality metrics. We’re also getting into shared savings, how are we impacting our cost and quality. And like I said, this is where I wish you could argue with me and talk to me but I’ll just pretend that you are all nodding your heads.

Fee for Service [17:41]

So fee for service, let’s talk about some of these models. The fee for service model, we’re in it now, we get a payment for a “necessary” service. Generally, Medicare has moved us to prospective in nature and rates are set for each case or grouping. On the inpatient, we use Medicare. The MSDRG system started in 1983. On the outpatient side, we use the Ambulatory Payment Classification. Then we have fee schedule. Again the good thing about this, I know in advance what I’m going to get, I know to control my cost, I can work on it within my institution.

Fee for Service
Incentive: Little for quality, ability to keep surplus if payment above cost [18:29]

There’s a lot of tools out there on analytic capabilities and I can get involved and I can try to make a change here. But there’s not a lot for quality and in particular ways, just fee for service by itself. So we have in other programs that we have added on to this but then impact the reimbursement that we’re going to get. We’ll talk about a few of those in a minute.

Medicare FFS payments by venue
2008 to 2012 [18:51]

Right now, in the Medicare fee for service world, this is how the dollars are split out. There is 75 percent that inclined to patient and we also have the SNF, the long-term care hospitals, home health, and hospice. That’s all our new one right now in Medicare.

Hospital Medicare Margins [19:11]

This is published by MedPAC every year. Overall, we’re at a negative 6 percent margin on Medicare in the hospital. It’s been fairly constant. The outpatient is at about a 12 percent loss on margin. And so that shows you where we are right now.

Performance of hospitals [19:34]

But however, there are about 13 percent of the hospital that do have a positive Medicare margin, a 2 percent positive margin, and overall, where are they and who are they and how can we mimic them. They also have better performance metrics on the quality side. So their mortality is lower, readmissions rates are lower, and their cost per case was lower. So it is able. It’s something that is able to be done and we have seen a lot of our clients trying to do Medicare break-even on different programs. If we can manage this piece within our hospital, then we can get in and manage larger pieces that could cover bundles and total population. So we need to look at this piece as well and see where we are.

High cost, high variability [20:25]

You need to look at what are your areas or high cost and high variability. Just some graphic ways of being able, as I mentioned, to severity adjust, being able to look at it right by provider, being able to take out the outliers.

High cost, high variability [20:46]

And then being able to really drill down and look at everything within DRG, APRDRG and find out where we are and what services are we providing. I’ll talk about a little more what are we doing that either other providers aren’t doing, and how can we get to evidence-based care and really work with our clinicians to develop the protocols and to really work on this jointly with clinicians.

Inpatient vs Outpatient [21:07]

The Medicare, what is going on though, even though I just talked a lot about inpatient, you can see the inpatient services that have been declining if we go back from 2006, our starting point, where it declined to 2013 by that 16% on the discharges per beneficiary. And our outpatient were growing, 32 percent. So again, something else to put in mind as you think about what you’re going to do in the future. A lot of emphasis there on the outpatient side because that’s where there’s some growth.

Physician Payment in 2013 [21:39]

Let’s talk a little bit about physician. In physicians to payment, there were 876,000 providers in 2013 and 573,000 of them were physicians. Again, MedPAC, I talked about their concerns on the hospital side. You knew their concerns on the physician payment side. They want to make sure that there’s access there. The repeal, the SGR that’s done. So I didn’t take it off the slide but it is done. They want to increase the shared savings opportunities. So again, they’re trying to, you know, how can we get more skin in the game here and they also feel that right now primary care is undervalued.

MedPAC Survey Results [22:18]

They also did a telephone survey of, you know, are Medicare people beneficiaries that are receiving Medicare, are they less satisfied in the private insurance. So what’s the satisfaction level. And if anything of very satisfied, they compared the Medicare over 65 with the private insurance and then age of 50 to 64, and these don’t add to a hundred because some people didn’t have any healthcare on the past 12 months, so they didn’t know. But it was just interesting to me the very satisfied number on the Medicare side. So, it is a program that has satisfaction.

SGR Dead, Value Base Plan [22:57]

We talked about the SGR being dead and the fact that they are going to go to a potential bonus, if people could participate in the innovative care delivery model. One way to participate in that and something to look at is the patient-centered medical home and accountable care organizations.

Patient Centered Medical Home [23:16]

The patient-centered medical home is, the resource on this is NCQA, and they have – you know, they’re very defined as to how you would qualify to be a patient-centered medical home and then they actually give you accreditation and there’s different levels of accreditation. But it’s a very structured way of looking at your practice and seeing is this something that we’re interested in doing and how would we do it and what are the resources to take to actually do this.

Affordable Care Act – 5 years old [23:51]

Happy birthday to the Affordable Care Act. It’s 5 years old. What has, again, I mentioned progressed in this. We have 15.9 million people that are newly insured over this program and you can see that obviously the government feels that the quality of healthcare is going up. We have fewer patient death and fewer preventable Medicare hospital readmissions. They also feel that the savings that came through on the shared savings on their ACOs have generated savings for Medicare. So they are feeling that they are going in the right direction.

Ascension Health, the Kaiser Family Foundation did a study on Ascension Health and they looked at well what happened to the financials in a system as big as Ascensions Health, which has been 80 to 90 hospitals spread across the United States. And they noticed in the states that has the Medicaid, they were expansion states, the Medicaid revenue went up about 8 percent. The self-pay dollars went down. Overall, their margins increased from about 2.1 percent to 3.4 percent in that time period. So the non-expansions states, the Medicaid actually decreased by that 9 percent and the self-pay went up about 3 percent and their financial, they did not see an uptick in the financial. So from a financial standpoint, a lot of it may depend on whether you’re in a Medicaid expansion state or not.

Hospital Programs – Readmission [25:20]

Let’s talk about some of those programs that they’re generally new to category value based and Medicare or CMS just issued new regulations and I stuck a few of them in here. Proposed, we’re under their proposed regulation state for what’s going to happen for 2016, 2017, 2018. And so I have the 2015, what happened in 2015. So we had about 2,100 hospitals that got a penalty between 0.01% and 0.99%. And so, hospitals are getting dinged for that. So we’re in the third year of this program, it’s a 3% maximum penalty. It originally started out with heart failure, AMI and pneumonia and now we have expanded to have the need of COPD and it’s been an expanded CABG in 2017.

The new thing that I just saw in this proposed regulation is expanding the definition of what’s considered to be pneumonia. So again, that will expand it, what it did in a particular year, is it adding 650,000 additional cases into the definition of pneumonia out of a million sick cases. So it’s going to increase that, meaning, okay, we’re going to have to look and see. Whatever protocols we had in place, we’re also going to have to put them in place for the additional definition of pneumonia. They also agreed to look at the socio-economic issue and they are taking Medicare, they are taking CMS, they are taking comments from the public until June and then the final rate will come out in August.

Results [27:03]

At readmission program, CMS feels that the safety of it is attributed to 2% decline in admissions and emergency room visits.

Reduced Heart Failure Readmissions 027:13]

Our own clients that we work with have put in place a lot of interventions, a lot of cycles, of keep trying, keep reinventing, keep seeing what works and then do that and be able to track it and then follow up on it. So we have seen reductions in readmission.

Value Based Purchasing
Budget Neutral Program [27:31]

Another program is the value-based program. This one has a lot of sections to it – what happened in 2015. And this is the budget neutral program, so some hospitals will get a bonus and some will get a penalty. Overall, it will be budget neutral though.

So we had 1500 hospitals that got from 0.1% to 0.99% and then 1300 that got dinged. So again you can see this.

VBP Clinical Measures [28:00]

I put these measures up here because you can see there’s a lot that are proposed to go away in 2017. So just to keep you thinking about what’s going to go away.

VBP – continued [28:15]

They are adding in the patient experience and care measure. They’re adding a care coordination measure in 2017. So we’ll be starting to measure that soon.

Value Based Purchasing [28:26]

And like I said, it’s kind of a complicated program, weighting and you do achievement and an improvement and it always is giving a little bit of a headache but you just have to sit down, figure out where you are. They are going to be changing some of the weighting, propose to change some of the weighting for 2016. Safety 20%, efficiency 25%, the clinical process 30% and the patient experience 25%. So you can see from their weighting, probably because of the weighting, some think where is Medicare trying to go with this program.

Hospital Acquired Conditions [28:58]

The hospital acquired conditions program started – the final rule was in 2014 – started with the 1% penalty this year and this year there were 720. This is either 1% or nothing penalty. So 723 hospitals in 2015 got a penalty. The same, there will be a 1% next year but those weightings that you see over there for, there’s a domain one and a domain two, the weightings are going to change over the next two years, and again they are going to be expanding some of the definitions of the unit where we’re going to capture some of this data instead of just from the ICU.

Study at Adventist Health, FL [29:44]

Again, on this one, there was a study done at Adventist Health in Florida. It was published in the Journal of Patient Safety on March 23, 2015, and they found that working on safety, it actually was a financial benefit to them because they found that temporary harm during hospital stay costs a little over $2,000. And if there’s a greater harm, we’re getting closer to $5,000. And they followed patients from the year 2009 to 2012 and they were able to increase patient safety and reduce the harm. How were they able to do that? Well it took a combination of leadership, a lot of enhanced identification, finding, prevention, finding the issue earlier in the patient stay and a lot of quality improvement programs. So again, we have an example and a study that we can use to see is there any of these that apply to me.

Growing Dollars at Risk-Hospital [30:49]

So I’ve talked about the three programs, the readmit, the value-based, the hospital-acquired condition, and again, all of these, if anyone were to get the maximum penalty, and then there’s also a penalty if you’re not going to – there’s a penalty if you don’t provide quality data but most hospitals provide that, 99% of the hospitals provide that, and there’s also a potential meaningful use penalty, which is going to be emplaced over the next couple of years. Again, most of the hospitals provide that data, so they’re not subject to that penalty. But we are growing and for this value-based area, it’s important to act now.

PQRS [31:30]

Let’s talk a little bit about the physicians. In 2015, there was a start to get to actually say if you don’t use our reporting system, you are going to now start getting a penalty adjustment of 1.5% against your fee schedule. That’s going to go up to 2% in 2015. So what were some of the results of that? The results of this were just published in the end of April 2015 and the Medicare came out and said they paid $380 million in incentives, they had 51% of the physicians covered but there were 470 physicians that are going to take a pay cut at the 1.5% because they did not participate. The groups, I thought this was interesting, the groups that did not participate the most were the psychiatrists and the general practice physicians. I don’t know if we can read anything into that.

The providers, the bonus for e-prescribing went from 345,000 physicians to 377. So we are seeing physicians’ reports but there were a number of physicians that opted not to do all the reporting, and I talked to one of them and he said to me the bonus just isn’t large enough for all the reporting requirements. We’ve looked at the benefit compared to the cost. The average incentive was $445 that Medicare paid out for a physician, and he said, “For us to put together the metrics, we figured out it would be about $300 for physicians. So they opted not to do it. Now, whether that will continue or just they need time to get all their systems in a row.

Value-Based Modifier [33:23]

There’s also a program, the value-based modifier program and this is one, I’m not an expert in this but I like the matrix. Again, I think about these things in terms of the setup, you know, what’s my incentive. I am incentivized there for a low cost and high quality. If I have high cost and low quality, I’m going to get a penalty. Now this is a program that – and how do they measure quality, how do they measure cost. Yeah, so they’re very good questions. First, you have to participate in PQRS and they’ve set up a number of physicians. In 2015, you have to be in a group with a hundred physicians to participate in this. That number is going to be decreasing in 2016. I will just say, I’m not an expert on this and the regulations are changing. They change fairly often on this and they get refined. But to me the thought is good. Now, what do we mean by quality, what do we mean by cost? They are looking at composite measures, a lot having to do with hospital admissions. They are looking at the acute and the chronic, really focusing on diabetes, COPD, heart failure, which is again where we should be focusing, they are looking at per capita cost for attributed beneficiaries and then they’re looking at per capita cost from specific conditions that we talked about.

California Program for Physicians [34:45]

There’s been a lot of – there were pay for performance programs in California that they began a long time ago. The good thing about this was the common measures and they, themselves, also in 2013 they began to transition to value based – because what they thought, if they focus on measurement and quality, that the cost continued to rise. So there has to be a little more “amph” in the game to get over to a value-based world for controlling both their cost and their quality.

Metrics for Physician Practices [35:14]

Just some ideas on how you track this, you know, how do we track our screening by physician, how do we know what’s going on, how do we know when we’re in trouble, particularly looking at the chronic condition.

American Academy of Orthopaedic Surgeons (AAOS) [35:28]

And it’s just interesting, again, a quote from a meeting that happened this year. Orthopaedic surgeons realized that they know they need to demonstrate value in orthopedics. So the professional society is just saying, we know we need to do this.

Bundled Payment [35:45]

Talking down another payment mechanism, bundled payment. It’s been around. A lot of demonstration projects on this. I participated in one where I worked, a couple of them. They were a lot of work to do from an administrative standpoint, a lot of education, a lot of working with physicians, a lot of group dynamics that had to go on. CMS has quantified and set up the – we’ll talk about the episodes that they have. But again, someone is taking accountability for the entire episode that goes from pre-hospitalization to post-hospitalization, usually there’s a limit on it. And as I mentioned, there have been demonstration projects, where there have been some savings on this. We have been done with employers, flat fees for care packages. So there’s a lot out there on this.

Bundled Payment [36:44]

The quality, with our incentive for quality, it’s almost like, one hospital I saw is actually considering it like a warranty. You’re going to give me one payment, I’m going to totally take care of you for that condition. If you need to be readmitted, we’re going to take care of you. That’s all covered within the bundle.

There was a study that was just released in February that talks about the CMS model and the conclusion with the result on this is inconclusive. The sample size is too small in a short time frame. So from a CMS perspective, we don’t know where it is. We’ll keep watching that and keep you updated as we find out more. This is a model I personally like, as I said, just trying to develop, trying to get the numbers. I needed to know my cost. I really need to work with, I had to work very closely with clinical team. So I knew what is the condition, how long is the condition going on, so we can price it appropriately or put a bid in for it, and making sure that everyone that we work together and there was a lot of education and the providers could see – I felt the big picture here is not just their piece but the total piece and trying to get buy-in from everyone. And you know, it could be a very good starting point.

Bundled Payment [38:07]

Just some information here. Medicare has 48 bundled groupings. They have different models. The four models are up there. The acute and the post-acute is the one that we have worked with some of our clients on, and it covers the part A and part B services. So that working together, deciding who I need to work with on the post-acute care. Some people were surprised with the post-acute care numbers. They were larger than they thought and they realized that that was an area again where we can get some standards together and focus on that.

Bundled Payment [38:37]

It’s also been popular on the commercial side. It’s also been popular from physicians, specialists. They may decide to take control and create a bundle that’s covering everything. Again, some results in one group the readmissions were down, and the inpatient rehab services went down. So good results on that.

New programs and payment [38:58]

The good thing about this the term of financial standpoint is Medicare continues to pay the old way and then you do a reconciliation at the end. So they trend forward a benchmark or a target and then you see, and if you come under, then you get to share in the savings.

Tracking for bundled payments [39:19]

Again, you need data to do this. You need to be able to track the bundles, where are the dollars, how much is going to the post-acute area, how much is going to outpatient, how much is in the emergency room. And so, that’s a bundled payment.

Capitation [39:34]

Capitation. I was lucky enough to work at Kaiser and it is a wonderful system. And I also worked in the late 1990’s in some areas out in California, where we established some of these organizations, and they weren’t overly successful. A lot of consumer backlash. We think right now that in the United States, and they’re growing all the time, there’s about 600 ACOs. ACO is one of the methods to get into a capitation model.

And right now, Medicare started in 2012. There’s CMS models. They had a pioneer model, which there were 32, 19 participants remain, the MSSP model, and then they’re starting a track 3 or a next generation model where you can apply for that as well. These are something where you apply to Medicare.

And what are we thinking about the results on this. Again, on May 5th, there was some articles coming out at JAMA, New England Journal of Medicine, where they say the pioneer, focusing on the pioneer ACO, now we’ve been able to have two years and they may be able to save about $300 per year per Medicare beneficiary. But then there was 600,000 Medicare beneficiaries covered in that. They have seen fewer admissions, they have seen better follow-up visits within 7 days based on the quality metrics (inaudible) meaning fewer admissions for COPD and lower spending overall on the hospital. So they are seeing a readiness to coordinate care.

What is also interesting is the savings were greater in the first year. So it is an incentive model that’s been set up where you can make savings in the first year but each year it’s going to be progressively harder to make a saving. It kind of looks that way, so that’s why they are trying to adjust what they call the track 3 or the next generation on trying to get better patient engagement there, trying to add a way for inclusion, trying to change the payment mechanism so that you have more control over what’s going on, change the way the benchmark is calculated, so that may solve that problem where you’re only getting savings in the first year but the second year it’s harder and harder to continue to push through the saving. Interesting to me.

Capitation [42:23]

What can we do? Is the capitation a good model for quality? And in Medicare there are 33 metrics – patient experience, care coordination, preventative metrics, and this year a lot of metrics for diabetes, for the at-risk population, again trying to hone in. So again, you need to know your cost, you need to be able to document severity. Now, you’re working with providers across the continuum and you have to have some good data for your analysis.

This is also capitation spreading in the commercial world but I think providers are saying, gee, we need more experience but we are seeing BlueCross, BlueShield, Massachusetts, they have developed an alternative quality program starting in 2009. It’s their back wall and they’re trying to reward quality and efficient care. So we are seeing the move in there. The commercial payer is definitely standing in this area, not the barrier to entry in trying to make it smaller, trying to help out with the technology that’s needed to implement an ACO.

CMS ACO Results [43:32]

Analysis in ACO [43:45]

And just again, you have to have data and this is demo data but it’s not real. Where are my high cost areas overall. Again, where am I, how am I compared to what payment I’m going to receive, being able to drill down, looking at it by physician, looking at it by type of care. All those types of things.

Framework [44:07]

Considerations [44:08]

One thing to think about as we start into the framework of how we’re going to deal with all of this is what strategies are you putting in place based on what payment system is out there. And the green on this, I recommend green. You’re always going to have a positive impact if you make a change on workflow. On some of these, if we’re doing less cases, then we may not be having ourself on the bundled case. If we’re doing less work within the case, then that definitely helps us.

Poll Question #3
Which payment system best aligns quality and cost? [44:44]

So let’s take another poll question here and see what payment system best aligns quality and cost. So which one do you think?

[Tyler Morgan]

We have that poll question up, Bobbi. Which payment system best aligns quality and cost? Fee for service, bundled payment, accountable care organization or none of the above?

I would like to remind everyone, while you’re taking this poll, if you have any questions, please type those questions in to the questions pane on your control panel.

Alright. We’ve got quite a few folks voting in here. We’ll go ahead and close the poll right now and let’s take a look at the results.

Poll Results [45:23]

[Bobbi Brown]

The ACO is the winner.

[Tyler Morgan]

By quite a large margin.

[Bobbi Brown]

By quite a large…

[Tyler Morgan]

65% for Accountable Care Organization.

[Bobbi Brown]

Wow. Okay. So we are thinking that, yes, we are going to be able to align quality and cost. It’s also one of the more risky models. So that’s interesting.

Framework for Value Capture [45:44]

I was reading something in Harvard Business Review and the article is here, and it really has to do with innovation. When you innovate, when you create a new product, you create new value, but how do you capture the value? And they have some very good examples. And the reason the straw is up there because there’s a company that the way they can remove bacteria from contaminated water is to have the people use these straws and it will do that for you. So as you can imagine, after a disaster, they are very useful products but again probably who is going to pay for it at that time when you’re going through a disaster? So they came up with the system of using carbon emission credit to pay for this for the various countries – because if you don’t have to boil your water, you’ll be using less wood. And so to me it’s very innovative.

Another thought, and I think we’re in the process of doing some of these right now – another example was Blockbuster compared to Netflix and obviously Blockbuster, we don’t see it anymore and I didn’t realize that most of the Blockbuster’s money came from late fees. Whereas the Netflix went over to a pricing model that was the subscription model. So what can we do – and I always like to look to the world outside of healthcare of what can we do, what strategies can we come up with that may change our model. And as I said, I think I’m seeing some of them now, we’re changing the payor in some of these, we’re moving, we’re building alliances, we’re setting up our own insurance companies. So that’s totally changing the market there. And just something to think about as you’re going through.

And I will mention, there’s one book, Michael Leavitt wrote, ‘Finding Allies, Building Alliances.’ Unfortunately, I didn’t put it on my slide.

Preparation/Assessment [47:48]

But a great way of what I think is key to all this is being able to build alliances and really think about where we are now, where do we want to be, how do we get there, what does success mean. And one thing that I thought about later is what is not in alignment. I sat down and thought, what do we do right now in the healthcare organization, what doesn’t line up with the future. So what can I get rid of, and obviously you can’t get rid of this stuff all at once, but what can I stop doing and what do I need to learn for my new environment.

Starting Point [48:22]

And again, this is just where am I by clinical program, am I making or losing money, looking at inpatient and outpatient side.

At risk-Develop Plan [48:25]

Trying to develop a plan. You know, where do I want to be, what do I want to do with my at-risk model, and how do I want to do that – again, starting with your own employees, starting to decide, am I going to be a Medicare-Shared Savings Model. I didn’t like the old model. The new model, something good for me as it’s too much risk.

At-risk tools
Contracting Strategy [48:51]

Talking about contracting, how much do I currently get, how much more could they send to me, and how exclusive is that contract and how big is my network, where is my network. All those kind of things that you can sit down and think about.

Transformation Accelerators [49:06]

We always look at three areas. You need knowledge, you need technology, and you need to be able to execute. So you need to be able to do all of those things in this world and bring it altogether and work with partners that will help you do that.

Final Questions [49:25]

I have some final questions here. Some of you have been on – this is for Dale Sanders. I’ve worked with him in the past and he told me, “What would you be focusing on?” And he said, “Well can we even measure the value equation? Can we measure cost? Can we measure quality? As our organization is focused on the outcomes, how do we create value for the patient? Have we eliminated all the waste that we can eliminate? Do we have a cost accounting system?” And he would agree with MedPAC, can we triage to the least extensive treatment with best outcomes and always always focus on the patient.

Choosing Wisely [50:04]

And one more thing, there’s an article this week in the New Yorker, the May 11th issue by Dr. Gawande and it’s called Overkill and it’s about the dilemma for the patient and the physician. And he is saying that in one year, greater than 25% of the Medicare patients received at least 1 of 26 useless tests and treatments. So over-testing creates over-diagnosis. He blames a lot of this on our piecemeal payment system, and he gives an example in McAllen, Texas where they worked through this and they’re able to come to where we are putting the consumer at the center and able to get rid of waste and build a good system that will give incentives to everyone to get the care that we needed, the cost that we needed. So it gives you hope.

And Wisely Campaign, it’s an initiative of the ABIM and it’s to put all conversations between patients and clinicians. Again, a good way to start. Intermountain has some great information out there on their website about this. And it’s test, you know, Wise imaging, what are the best things to use, what’s underused, what do I need for preventative care, and they have this both, an adult and a children version.

Thank You [51:26]

So, I really want to thank you for your time listening to me today and I’ll turn it over.

Upcoming Webinars [51:32]

[Tyler Morgan]

Well, before we jump into questions, we do have a couple of upcoming webinars in the next few weeks, but our next one is sort of relevant to the topic today, Principles and Priorities of Accountable Care Transformation. And Marie Dunn, who is our Director of Analytics, will be leading that particular discussion.

[Bobbi Brown]

And again, really digging deeper into the accountable care payment methodology and what you need to do, really focusing on one specific area.

[Tyler Morgan]

And we also have another on the 27th, Introducing our Health Catalyst University.

Healthcare Analytics Summit 15 [52:06]

Well in particular, as I’ve mentioned in the introduction, we do have coming up this year, we have our Healthcare Analytics Summit 2015. It’s going to be on September 8th through the 10th in Salt Lake City this year. You can see at the sneak preview we’ve got Ed Catmull from Pixar, Jim Collins, Amir Rubin, we’ve got several individuals who will be our keynote speakers. We’ve got some really – it’s a 3-day agenda.

And just like last year, we’re going to go ahead and we have some registrations to give away to this summit. So the first is going to be a single registration and the second will be a registration for a team of three. So before doing this, I do want to note that because of high demand and limited space, these registrations must be redeemed by registering for the summit by June 30th, when they will expire. So if you are interested in attending, I’m going to go and launch the poll now.

Are you interested in attending the Healthcare Analytics Summit in Salt Lake City? [53:04]

This first poll is for the single registration. Please respond if you feel confident that you will be able to attend our summit in September. I will leave this poll open for a few moments to allow everyone an opportunity to respond. And while you’re responding to this poll, I would like to say thank you. Scott Wallace he has the title of that book. You mentioned by Mike Leavitt, which is ‘Finding Allies, Building Alliances,’ eight elements that bring and keep people together. We’ve got a couple of people ask questions, “Oh what’s the name of that book.” So actually we’ll take this. Thanks Scott. We will add that to the email we send out to everybody to let them know that’s the name of the book, so they can look that up as well.

I’m going to go ahead and close that poll. And I think everyone. It looks like there’s quite a few individuals who are – hopefully secured up in their schedules and would like to be able to attend.

And we’re going to do the same thing for the team of three giveaway. So I’m going to go ahead and get that up and launch if you’re interested in attending as a team.

Are you interested in attending the Healthcare Analytics Summit in Salt Lake City as a team? (team of three registration) [53:59]

[Bobbi Brown]

I think he’s changing my value proposition on this, maybe you could extend the webinar. Unfortunately, you didn’t know in advance this was one of my criteria. So it’s the end. So you get to pick at the end.

[Tyler Morgan]

That’s why we put it at the very end.

[Bobbi Brown]

Yes. Yes. I guess you could say as well.

[Tyler Morgan]

Absolutely. Okay, we’ll go ahead and close that. Thank you for responding.

And we do also have one final, this is our final poll question to ask before we jump into questions.

How interested are you in someone from Health Catalyst contacting you about a demonstration of our solutions? [54:34]

Our webinars are meant to be educational. But every so often we do get a lot of questions about Health Catalyst, who we are, what we do. And so, if you are interested in someone from Health Catalyst contacting you about the demonstration, go ahead and fill out this poll. And while you’re filling out this poll, let’s go ahead and start into the first couple of questions, while we leave this up and give folks a chance to respond.


The CMS programs, do they apply to RHCs and CAHs? Generally no. CAH is Critical Access Hospital, I think. Generally no but there is some talk that they’re going to expand them to that. Again, they want to – you know, on the meaningful use, there are some questions that are specific to a program specific to the Critical Access Hospital.   The meaningful use does have in the areas that most of these other areas (inaudible) your hospitals are not.And also, a lot of this data is out on Hospital Compare. If you want to see the penalties. Their penalties are public but you have to know what files to go to and be able to download those files. But they are on the CMS website.
In an ACO payment model, how is the quality being captured and related back to payments? Yeah, in the CMS model, there are three metrics. So the financial, the first gate, and then the second gate that you need to go through is how are you doing on those metrics and they’re weighted and there are some of them on patient satisfaction, a lot of them on preventative care, on screening. So again, how are you doing on those 33 metrics and you could be tracking those.   Again, like I said, I don’t like surprises. So you could be tracking those all year. You won’t know them exactly because some of them are coming out of comparison with international averages but you should still know where you are.   And when CMS, if you are a CMS ACO, they will give you files every month and you could extract them, put them somewhere and create a visualization to see how you’re doing on those.
What kind of value do you see being provided by technology in the ambulatory environment to help health systems transition to value-based reimbursement? On the ambulatory side, again I think it’s the tracking. There’s so much to track down. I just think, wow, it’s just overwhelming, how do you do this and how do you prioritize and how do you get your providers, how do you move everybody in the same direction. So being able to have applications where I can see, gee, on my patients, 30 of them need the screening this year. Mrs. Jones is coming in for an appointment. So when she comes in, the front office is going to remind her that this needs to happen, or just tracking, starting to track metrics of your various things in the diabetes field, the hemoglobin A1c, what are the results, what are some of the test results, are we tracking those. I really think we’re going to get into more mobile, more technology. Technology is going to become key to this. Those of us that wear our FitBit, we’re going to – I think for some populations. As much as I am a privacy person, I think there are some populations that are going to be able to build a mobile and rely on that to interface directly and help out the physician office to get results, so you can stay healthy.
If a hospital is penalized for HAC, is there a review of the systems by data government or some other independent body? No, it’s just the penalty at this point. It’s a good question. As I mentioned, there were 723 hospitals and I was in the hospital a fair amount last year. I have seen one of the hospitals with a high penalty. I didn’t see anything unusual about it. So I wasn’t afraid to be there or anything like that, but it was just interesting to me. And no, there is nothing like that right now.
What issues have you found with the distribution of reimbursements to stakeholders from the various payment models, the ACO-bundled payment and shared savings? Yeah, if you’re talking about stakeholders, when you get into a savings, then how do I distribute it back to the physicians and everyone that was involved, I have seen, I’ve worked with programs where we’ve tried to do an incentive, some sort of a game sharing through an insurance plan back to physicians, and it just has to be very clear upfront and it would be good if you can do a pilot because there are always things in this and you always have things happen that you do not think, you think your data is so clean and is not as you’re doing the physician attribution. So I think the biggest problem was attribution. And if you were upfront on this is how we are going to share the savings, people may say to you, this wasn’t enough savings for me to do this.   And again, you have to work through and that’s where you have to know your data and work with it and say, gee, where do we have opportunity. And if (inaudible) larger savings.
What is the process behind data collection or what are your thoughts on that? On data collection, some of them – now, more and more of these are coming of the CMS ACO metric, seven of them are coming directly from claims. So you don’t do anything, which can be dangerous. You have to know. So they almost always give you an opportunity to review data and again that takes time. Data collection in the world of collecting data for quality reporting and actually defining what is pneumonia, what is CLABSI, those take a lot of time, that takes a lot of work with your clinicians, what’s going to be included – because when we make our interventions and make our changes, we want to make it to the broad – I’ve worked with clinicians who don’t want to use the Medicare definition. And again, I’m a finance person, so that drives me nuts. But from a clinical standpoint, I clearly understand what they’re saying, but I still want to track – so you know, to be able to had all tracked what the CMS measure is and also be able to look at the clinicians to really include or exclude what ACO clinically is relevant to them.
What is then your experience of commercial payors participating in value-based payments? I have seen a lot of models.   I’ve read more about this and we keep asking a lot of our clients, where BlueCross, where they have a predominant payor in the marketplace. I have seen it happening more where they’ve gone more to a value-based or some kind of a shared arrangement, where we’re going to do this together, again we’re going to partner on this, these are the rules of the game. And again if you are a big payor in the market, you often can move the market the way you want to move it.So, generally they are simpler than the CMS program and generally it’s a lot of work around readmission, patient satisfaction. Oftentimes, working with the payor, they don’t have all the clinical data that the provider does. So often cases you can work together and decide to work on specific areas. I have the pregnancy, making sure that we’re meeting the 39 weeks criteria and those type of things, working with the payors and coming to common consensus.

[Tyler Morgan]

Shortly after this webinar, you will receive an email with links to the recording of this webinar, the presentation slides, the poll question summary results, and the winners of the summit registration giveaways. The transcription notification, we will send you once it is also ready.

On behalf of Bobbi Brown, as well as the rest of us here at Health Catalyst, thank you so much for joining us today. This webinar is now concluded.