Blueprint Virginia Healthcare Industry Council Payment Reform 1 Dr. Bill Hazel Secretary of Health and Human Resources

Per Capita Total Current Health Care Expenditures, U.S. and Selected Countries, 2010 ^ 2009 data Notes: Amounts in U.S.$ Purchasing Power Parity, see includes only countries over $2,500. OECD defines Total Current Expenditures on Health as the sum of expenditures on personal health care, preventive and public health services, and health administration and health insurance; it excludes investment. Source: Organisation for Economic Co-operation and Development. “OECD Health Data: Health Expenditures and Financing”, OECD Health Statistics Data from internet subscription database. data accessed on 03/04/13. 2

Source: Institute of Medicine: The Healthcare Imperative: lowering costs and improving outcomes 3

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Surely, We Can Do Better Today: Archaic Methods of Payment Pay for Volume Diagnosis Related Group (DRG) Resource Based Relative Value Scale (RBRVS) Physician Fee Schedule

Surely, We Can Do Better Today: Administrative Burdon with No Standard of Quality New Office Visit: 18 yr – Female Athlete Chief Complaint – Injured Knee Determine Patient Level: History of Present Illness (HOPI) Physical Exam (PE) Medical Decision Making (MDM) Data – order and review MRI Diagnosis – ACL Tear [ICD-9] Risk/Plan – Schedule Surgery and Follow-up Physical Therapy New Patient Level III – [CPT] Surgery: [CPT] 29888: Arthroscopically aided anterior cruciate ligament repair/augmentation or reconstruction While in surgery – determined Meniscal tear [CPT] 29881: Arthroscopy, knee, surgical; with meniscetomy (medial OR lateral, including any meniscal shaving)

Surely, We Can Do Better Future: Payment focused on Quality Pay for Volume Value Focus on health, not treatment Define and Measure Outcomes Dare to do something different Multidisciplinary Teams Medical Homes Accountable Care Organizations 8

Increase Value by Improving Quality Current System Designed around facilities, locations and physicians Organized by specialties or types of practitioners Diagnosis and treat diseases/incidents Measure volume of services (tests, procedures, treatments) Cost Shifting Future System Designed for patients Teams coordinating and integrating care delivery Create solutions for patients and families Measure value of services (health outcomes/costs) Partnerships linking payment and value 9 Copyright © 2010 Teisberg, Porter, Wallace