FROM VOLUME TO VALUE: Better Ways to Pay for Healthcare

FROM VOLUME TO VALUE: Better Ways to Pay for Healthcare
Harold D. Miller Executive Director Center for Healthcare Quality and Payment Reform and President and CEO Network for Regional Healthcare Improvement

What’s the Biggest Issue Federal Health Reform Didn’t Solve?

How to Reduce Healthcare Costs Without Rationing
What’s the Biggest Issue Federal Health Reform Didn’t Solve? How to Reduce Healthcare Costs Without Rationing

Reducing Costs Without Rationing: Prevention
Healthy Consumer Continued Health Preventable Condition

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

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

Go Where the Money Is: Maternity Care & Chronic Disease
Medical Expenditure Panel Survey, 2006

Maternity Care Costs Can Be Reduced By Using Birth Centers...
75% Lower Cost Source: Carol Sakala and Maureen Corry, Evidence-Based Maternity Care: What It Is and What It Can Achieve, Milbank Memorial Fund 2008

...And By Avoiding Unnecessary Cesareans
50% Lower Cost 75% Lower Cost Source: Carol Sakala and Maureen Corry, Evidence-Based Maternity Care: What It Is and What It Can Achieve, Milbank Memorial Fund 2008

Nevada is Above Average in the Rate of Cesarean Births...

...and Has Had the 5th Highest Growth in Cesareans in the U.S.

It Takes Some Leadership and a Little Training
With training in Perfecting Patient CareSM from the Pittsburgh Regional Health Initiative, a team from Magee Womens Hospital in Pittsburgh: Reduced by 64% the rate of elective inductions of birth prior to full gestation (which reduces neonatal intensive care (NICU) usage and complications for both mother and child) Reduced by 60% the use of Cesarean sections for elective inductions of birth in first-time mothers

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

“Episode Payments” to Reward Value Within Episodes
Healthy Consumer Continued Health Preventable Condition No Hospitalization Acute Care Episode Efficient Successful Outcome $ High-Cost Successful Outcome Episode Payment Complications, Infections, Readmissions A Single Payment For All Care Needed From All Providers in the Episode, With a Warranty For Complications

The Weakness of Episode Payment
Healthy Consumer Continued Health Preventable Condition No Hospitalization Acute Care Episode Efficient Successful Outcome How do you prevent unnecessary episodes of care? (e.g., preventable hospitalizations for chronic disease, overuse of cardiac surgery, back surgery, etc.) High-Cost Successful Outcome Episode Payment Complications, Infections, Readmissions

Comprehensive Care Payments To Avoid Episodes
Healthy Consumer Continued Health Preventable Condition No Hospitalization Acute Care Episode Efficient Successful Outcome $ Comprehensive Care Payment or “Global” Payment High-Cost Successful Outcome Complications, Infections, Readmissions A Single Payment For All Care Needed For A Condition

Isn’t This Capitation? No – It’s Different
CAPITATION (WORST VERSIONS) COMPREHENSIVE CARE PAYMENT No Additional Revenue for Taking Sicker Patients Payment Levels Adjusted Based on Patient Conditions Providers Lose Money On Unusually Expensive Cases Limits on Total Risk Providers Accept for Unpredictable Events Providers Are Paid Regardless of the Quality of Care Bonuses/Penalties Based on Quality Measurement Provider Makes More Money If Patients Stay Well Provider Makes More Money If Patients Stay Well Flexibility to Deliver Highest-Value Services Flexibility to Deliver Highest-Value Services

Who Should Be Accountable For Achieving Higher Value Care?
Hospitals? Integrated Delivery Systems? Multi-Specialty Group Practices?

Keeping People Well? Primary Care
Healthy Consumer Continued Health Preventable Condition No Hospitalization Acute Care Episode Efficient Successful Outcome High-Cost Successful Outcome Complications, Infections, Readmissions PRIMARY CARE

Avoiding Hospitalizations? Primary + Specialty Care
Healthy Consumer Continued Health Preventable Condition No Hospitalization Acute Care Episode Efficient Successful Outcome High-Cost Successful Outcome Complications, Infections, Readmissions PRIMARY CARE PRIMARY + SPECIALTY

Better Acute Care? Hospitals and Specialists
Healthy Consumer Continued Health Preventable Condition No Hospitalization Acute Care Episode Efficient Successful Outcome High-Cost Successful Outcome Complications, Infections, Readmissions PRIMARY CARE PRIMARY + SPECIALTY HOSPITALS & SPECIALISTS

Implications Hospitals and physicians will need to work together to improve quality and lower costs for inpatient care to ensure they are the acute care provider of choice in the community Physicians, particularly primary care physicians, will need to improve skills in preventing hospitalizations and managing patient utilization to control total patient care costs Payment systems will need to provide the support that physicians and hospitals need to deliver higher-quality, lower-cost care

Hospitals & MDs Paid Separately For Hospital Care...
Costs and Payment Today MD Fees Physician Payment Hospital Payment DRG or Per Diem

...MDs and Hospitals Expected to Cover Their “Own” Costs
Costs and Payment Today Physician Payment Physician “Cost” Hospital Payment Drug/ Device Costs Hospital Staff/ Facility Costs

So Any Savings in Hospital Costs Go to Hospitals, Not Physicians
Initiative to Reduce Device Costs & Improve Efficiency Costs and Payment Today Physician Payment Physician “Cost” Physician “Cost” No Reward for Physician Hospital Payment Drug/ Device Costs Hospital Margin Improves Drug/ Device Costs Hospital Staff/ Facility Costs Hospital Staff/ Facility Costs

Bundled Payment Covers All Costs in a Single Payment...
Bundled Episode Payment Bundled Hospital + Physician Payment Physician “Cost” Drug/ Device Costs Hospital Staff/ Facility Costs

...So if MDs & Hospitals Cooperate to Generate Savings...
Bundled Episode Payment Initiative to Reduce Device Costs & Improve Efficiency Bundled Hospital + Physician Payment Physician “Cost” Physician “Cost” Drug/ Device Costs Drug/ Device Costs Hospital Staff/ Facility Costs Hospital Staff/ Facility Costs

...MDs, Hospitals, and Payers Can All Benefit
Bundled Episode Payment Initiative to Reduce Device Costs & Improve Efficiency Reallocation of Savings Bundled Hospital + Physician Payment Physician “Cost” Physician “Cost” Payer Savings Lower Price Physician “Cost” Higher Physician Payment Drug/ Device Costs MD Bonus Hosp. Margin Capital to Reinvest Drug/ Device Costs Drug/ Device Costs Hospital Staff/ Facility Costs Hospital Staff/ Facility Costs Hospital Staff/ Facility Costs Episode payment would give hospitals & MDs incentives to collaborate to reduce costs

A Mechanism to Allocate the Payments is Needed
Bundled Episode Payment Initiative to Reduce Device Costs & Improve Efficiency Reallocation of Savings Bundled Hospital + Physician Payment Physician “Cost” Physician “Cost” Payer Savings Physician “Cost” PHO or Other Hospital/MD Collaborative Drug/ Device Costs MD Bonus Hosp. Margin Drug/ Device Costs Drug/ Device Costs Plan initiatives Set targets Monitor progress Allocate payments Hospital Staff/ Facility Costs Hospital Staff/ Facility Costs Hospital Staff/ Facility Costs

Today: Separate Payments for Hospitals & Physicians
Treatment for Conditions Present on Admission Hospital Services Drugs & Devices DRG Non-MD Staff Facilities/Equipment Fee Physician Services Fee Physician Services

“Bundled Payment”: Aligning Hospital and MD Incentives
Treatment for Conditions Present on Admission Hospital Services Drugs & Devices Non-MD Staff Facilities/Equipment Physician Services Physician Services INPATIENT BUNDLE

Today: Higher Payment for Hospital-Acquired Conditions
Treatment for Conditions Present on Admission Treatment for Hospital-Acquired Conditions Hospital Services Drugs & Devices Non-MD Staff Facilities/Equipment Physician Services Physician Services INPATIENT BUNDLE

“Inpatient Warranty:” No Additional Payment for Adverse Events
Treatment for Conditions Present on Admission Treatment for Hospital-Acquired Conditions Hospital Services Drugs & Devices Non-MD Staff Facilities/Equipment Physician Services Physician Services INPATIENT BUNDLE INPATIENT WARRANTY

Today: Separate Payments for Inpatient and Post-Acute Care
Treatment for Conditions Present on Admission Treatment for Hospital-Acquired Conditions Post- Hospital Care Rehab Home Health Long-Term Care MD Services INPATIENT BUNDLE INPATIENT WARRANTY

“Inpatient + Post-Acute Bundle” Pays for Both Jointly
Treatment for Conditions Present on Admission Treatment for Hospital-Acquired Conditions Post- Hospital Care Rehab Home Health Long-Term Care MD Services INPATIENT BUNDLE INPATIENT WARRANTY INPATIENT+POST-ACUTE BUNDLE

Today: Extra Payment for Preventable Readmissions
Treatment for Conditions Present on Admission Treatment for Hospital-Acquired Conditions Post- Hospital Care Hospital Readmission No Readmit; Planned or Unpreventable Readmission Readmission Preventable By Post-Acute Care Readmission Preventable During Initial Admission INPATIENT BUNDLE INPATIENT WARRANTY INPATIENT+POST-ACUTE BUNDLE

Full Episode Payment With A Limited Warranty
Treatment for Conditions Present on Admission Treatment for Hospital-Acquired Conditions Post- Hospital Care Hospital Readmission Unpreventable Readmission Readmission Preventable By Post-Acute Care Readmission Preventable During Initial Admission INPATIENT BUNDLE INPATIENT WARRANTY INPATIENT+POST-ACUTE BUNDLE FULL EPISODE WITH WARRANTY

Different Episode/Bundling Concepts for Different Problems
PROBLEM/GOAL PAYMENT METHOD Encourage physicians to work with hospitals to eliminate inpatient inefficiencies INPATIENT BUNDLED PAYMENT Encourage reduction in adverse events during inpatient care INPATIENT WARRANTY Encourage more efficient combinations of inpatient & post-acute care BUNDLED INPATIENT & POST- ACUTE CARE PAYMENT Encourage efficiency and quality across the full episode of care FULL EPISODE PAYMENT WITH LIMITED WARRANTY

It’s Not A New Concept; Results Documented Over 20 Years Ago
In 1987, an orthopedic surgeon in Lansing, MI and the local hospital, Ingham Medical Center, offered: a fixed total price for surgical services for shoulder and knee problems a warranty for any subsequent services needed for a two-year period, including repeat visits, imaging, rehospitalization and additional surgery. Results: Health insurer paid 40% less than otherwise Surgeon received over 80% more in payment than otherwise Hospital received 13% more than otherwise, despite fewer rehospitalizations Method: Reducing unnecessary auxiliary services such as radiography and physical therapy Reducing the length of stay in the hospital Reducing complications and readmissions.

Yes, a Health Care Provider Can Offer a Warranty
Geisinger Health System ProvenCareSM A single payment for an ENTIRE 90 day period including: ALL related pre-admission care ALL inpatient physician and hospital services ALL related post-acute care ALL care for any related complications or readmissions Types of conditions/treatments currently offered: Cardiac Bypass Surgery Cardiac Stents Cataract Surgery Total Hip Replacement Bariatric Surgery Perinatal Care Low Back Pain Treatment of Chronic Kidney Disease

Payment + Process Improvement = Better Outcomes, Lower Costs

Geisinger Perinatal ProvenCare: 26% Reduction in Cesareans
Implementation of electronic process

A Single Case Rate for All or Different Rates by Severity?
Severity adjustment is essential to episode payment FFS implicitly adjusts for patient severity/risk/complexity by paying more for patients who have more complex problems FFS doesn’t distinguish which patients have higher needs from those the provider overtreats Episode payment needs to make the distinction Are there severity adjustment systems? DRGs, MS-DRGs, APR-DRGs for hospital episodes, HHRGs for home care, CMS-HCC for Medicare Advantage, etc. Clinical category systems: e.g., 3M® Potentially Preventable Readmissions, Clinical Risk Groups Regression-based category systems: e.g, CMS Readmission measures being used for Hospital Compare e.g., PROMETHEUSTM system for Potentially Avoidable Complications

Better Payment for Episodes Doesn’t Prevent Episodes
Episode Payment Readmission Patient w/ Chronic Disease(s) Hospitalization Episode No Hospitalization

Significant Reduction in Rate of Hospitalizations Possible
Examples: 40% reduction in hospital admissions, 41% reduction in ER visits for exacerbations of COPD using in-home & phone patient education by nurses or respiratory therapists (2003) J. Bourbeau, M. Julien, et al, “Reduction of Hospital Utilization in Patients with Chronic Obstructive Pulmonary Disease: A Disease-Specific Self-Management Intervention,” Archives of Internal Medicine 163(5), 2003 66% reduction in hospitalizations for CHF patients using home-based telemonitoring (1999) M.E. Cordisco, A. Benjaminovitz, et al, “Use of Telemonitoring to Decrease the Rate of Hospitalization in Patients With Severe Congestive Heart Failure,” American Journal of Cardiology 84(7), 1999 27% reduction in hospital admissions, 21% reduction in ER visits through self-management education (2005) M.A. Gadoury, K. Schwartzman, et al, “Self-Management Reduces Both Short- and Long-Term Hospitalisation in COPD,” European Respiratory Journal 26(5), 2005

20-40% Reduction in Surgery Through Shared Decision-Making

PCPs Can’t Get Paid for Many Tools To Avoid Hospitalization
Episode Payment Readmission Patient w/ Chronic Disease(s) Hospitalization Episode Primary Care MD No Hospitalization MD Office Visits MD Phone Calls Nurse Care Mgt Remote Monitoring Specialist Consults

How It Works Today $ $ $ CURRENT PAYMENT SYSTEMS Health Insurance Plan
Office Visits Specialty Consults Hospital Stay Physician Practice Avoidable Avoidable Phone Calls Lab Work/ Imaging Payment for preventable and unnecessary utilization of expensive care Nurse Care Mgr Avoidable No payment for services that can prevent utilization

Option 1: Add New Fee Codes for Unreimbursed PCP Services
MEDICAL HOME PROGRAM Health Insurance Plan $ $ $ Office Visits Specialty Consults Hospital Stay Physician Practice Avoidable Avoidable Phone Calls Lab Work/ Imaging Nurse Care Mgr Avoidable $ Higher payment for primary care

Option 2: Pay for Monthly “Care Mgt” to Cover Missing Services
MEDICAL HOME PROGRAM Health Insurance Plan $ $ $ Office Visits Specialty Consults Hospital Stay Physician Practice Monthly Care Mgt Payment Avoidable Avoidable Lab Work/ Imaging Phone Calls Avoidable RN Care Mgr $ Higher payment for primary care

Weakness: More $ for PCPs, But Any Savings Elsewhere?
MEDICAL HOME PROGRAM Health Insurance Plan $ $ $ Office Visits Specialty Consults Hospital Stay Physician Practice Monthly Care Mgt Payment Avoidable Avoidable Lab Work/ Imaging ...But no commitment to reduce utilization elsewhere Phone Calls Avoidable RN Care Mgr $ Higher payment for primary care

Option 3: No New Money for PCPs, but More Flexibility
PRACTICE CAPITATION Health Insurance Plan $ Condition- Adjusted Per Person Payment $ $ $ Office Visits Specialty Consults Hospital Stay Physician Practice Avoidable Avoidable $ Phone Calls Lab Work/ Imaging Nurse Care Mgr Avoidable Ability to Allocate $ to Most Effective Services

Option 4: “Shared Savings” (More $ Only If Total Costs Decrease)
SHARED SAVINGS MODEL Health Insurance Plan $ $ $ Office Visits Specialty Consults Hospital Stay Physician Practice Avoidable Avoidable Phone Calls Lab Work/ Imaging Portion of savings from reduced spending in other areas... Nurse Care Mgr $ ...Returned to physician practice after savings determined... Avoidable ...but no upfront $ for better care

Weaknesses of “Shared Savings”
No upfront money to enable primary care practices to hire nurse care managers, install information technology, etc. It rewards those who are currently poor performers more than those who are good performers It’s not sustainable – once costs are reduced, there is less to be saved and so shared savings payments go down

Option 5: The Beginnings of “Accountable Care” Payment
CARE MGT PAYMENT + UTILIZATION P4P Health Insurance Plan $ $ $ $ $ Targets for Reduction In Utilization Office Visits Specialty Consults Hospital Stay Physician Practice $ Avoidable Avoidable $ RN Care Mgr Phone Calls Monthly Care Mgt Payment More $ for PCP P4P Bonus/Penalty Based on Utilization Lab Work/ Imaging $ Avoidable

Option 6: More ACO-ness: Partial Global Payment
PARTIAL GLOBAL PMT (Professional Svcs) Health Insurance Plan $ $ Condition- Adjusted Per Person Payment $ $ Office Visits Specialty Consults Hospital Stay Physician Practice Avoidable Avoidable $ Phone Calls Lab Work/ Imaging P4P Bonus/Penalty Based on Utilization $ $ Nurse Care Mgr Avoidable Flexibility and accountability for a condition-adjusted budget covering all professional services

Option 7: True ACO: Flexibility & Accountability w/o Insurance Risk
FULL COMP. CARE/GLOBAL PAYMENT Health Insurance Plan Condition- Adjusted Per Person Payment $ Office Visits Specialty Consults Hospital Stay Physician Practice/ ACO Avoidable Avoidable $ Phone Calls Lab Work/ Imaging Nurse Care Mgr Avoidable Flexibility and accountability for a condition-adjusted budget covering all services

Option 7a: Ensuring Incentives Exist for Quality as Well as Cost
FULL COMP. CARE/GLOBAL PMT + QUALITY P4P Health Insurance Plan Condition- Adjusted Per Person Payment $ Office Visits Specialty Consults Hospital Stay Physician Practice/ ACO Avoidable Avoidable $ Phone Calls Lab Work/ Imaging $ $ Nurse Care Mgr Avoidable P4P Bonus/Penalty Based on Quality

Example: BCBS Massachusetts Alternative Quality Contract
A single payment amount is established to cover all costs of care for a population of patients The initial payment is set based on past expenditures; the amount increases each year at an inflation rate based on CPI, not on medical inflation, so savings come from controlling increases over time The payment amount functions as a budget; the budget is adjusted up or down based on the types and severity of conditions the patients have, so providers aren’t taking insurance risk, only performance risk The provider doesn’t need to pay claims; BCBS still pays individual providers fee-for-service, but fees are adjusted up or down to keep total costs within the payment budget Payments are increased by annual bonuses based on the quality of care delivered

Episode Payments for Acute Care Help the ACO Manage Costs
FULL COMP. CARE/GLOBAL PMT + QUALITY P4P Health Insurance Plan Condition- Adjusted Per Person Payment Episode Payment to Hospital $ Office Visits Specialty Consults Hospital Stay Physician Practice/ ACO Avoidable Avoidable $ Phone Calls Lab Work/ Imaging $ $ Nurse Care Mgr Avoidable P4P Bonus/Penalty Based on Quality

Primary Care Must Be the Core of an ACO
Accountable Care Requires Coordinated Relationships, Not Necessarily Corporate Integration Hospital Specialist Primary Care Practice Primary Care Practice Specialist Primary Care Practice Primary Care Practice Specialist Specialist Hospital Primary Care Practice Primary Care Practice Specialist

Transitioning to Accountable Care Payment

One Payer Changing Isn’t Enough
Current Payment System Better Payment System Current Payment System Provider Patient Patient Patient Provider is only compensated for changed practices for the subset of patients covered by participating payers

Payers Need to Align to Enable Providers to Transform
Better Payment System Better Payment System Better Payment System Provider Patient Patient Patient

Payer Coordination Is Beginning to Occur Around the Country
Examples of Multi-Payer Payment Reforms: Minnesota: Multi-payer change in payments for primary care practices and psychiatrists to help manage patients with depression Pennsylvania: Multi-payer initiative to support medical home/chronic care services in primary care practices Rhode Island: Multi-payer chronic care/medical home project in primary care practices Vermont: Multi-payer medical home project A Facilitator of Coordination is Needed PA, RI, VT: State Government Minnesota: Institute for Clinical Systems Improvement Medicare Needs to Participate in Local Projects

How Do You Set the Price? If price is too high, inefficiencies will exist, regardless of what incentives may exist in the payment method If price is too low, providers will be unable to deliver high-quality care So how does the “right” price get determined?

Our Standard Methods of Controlling Prices Don’t Work
Price Negotiations as Part of Contracting Even large insurers can’t demand price concessions from large/monopoly providers

Price Negotiations as Part of Contracting Even large insurers can’t demand price concessions from large/monopoly providers Narrow Networks In theory, could steer patients to lower-cost providers and give providers greater volume to reduce prices In practice, prohibits patients from using the providers they prefer and creates consumer backlash Networks are based on providers, not services, so providers with some good services are either in or out for all services

Price Negotiations as Part of Contracting Even large insurers can’t demand price concessions from large/monopoly providers Narrow Networks In theory, could steer patients to lower-cost providers and give providers greater volume to reduce prices In practice, prohibits patients from using the providers they prefer and creates consumer backlash Networks are based on providers, not services, so providers with some good services are either in or out for all services Copays, Co-insurance and High-Deductible Health Plans Create little incentive for consumers to choose lower-cost providers on the expensive items that make a difference Create significant disincentive to pursue preventive care that may prevent the expensive items in the first place

Your Choices With Auto Purchase Insurance
HYUNDAI SONATA LEXUS LS 460 5 yr/60,000m warranty 5 star crash rating 4 yr/50,000m warranty No crash rating MSRP: $22,450 MSRP: $63,825

 Copayment: Lexus Wins HYUNDAI SONATA LEXUS LS 460 MSRP: $22,450
5 yr/60,000m warranty 5 star crash rating 4 yr/50,000m warranty No crash rating MSRP: $22,450 MSRP: $63,825  $1,000 Copay: $1,000 $1,000

Coinsurance: Lexus Wins for Most People
HYUNDAI SONATA LEXUS LS 460 5 yr/60,000m warranty 5 star crash rating 4 yr/50,000m warranty No crash rating MSRP: $22,450 MSRP: $63,825  $1,000 Copay: $1,000 $1,000  10% Coinsurance: $2,245 $6,383

High Deductible: Lexus Wins
HYUNDAI SONATA LEXUS LS 460 5 yr/60,000m warranty 5 star crash rating 4 yr/50,000m warranty No crash rating MSRP: $22,450 MSRP: $63,825  $1,000 Copay: $1,000 $1,000  10% Coinsurance: $2,245 $6,383  High Deductible: $10,000 $10,000

Price Difference: Hyundai Wins for Most People
HYUNDAI SONATA LEXUS LS 460 5 yr/60,000m warranty 5 star crash rating 4 yr/50,000m warranty No crash rating MSRP: $22,450 MSRP: $63,825  $1,000 Copay: $1,000 $1,000  10% Coinsurance: $2,245 $6,383  High Deductible: $10,000 $10,000  Price Difference: $0 $41,375

Better Ways of Controlling Prices
Value-Based Competition by Providers for Consumers Define episode prices and global fees so it’s easier to compare costs of different providers and procedures Publish information on prices and quality of all providers Require consumers to pay the “last dollar” of providers’ prices (i.e., the difference between the prices of more expensive and less expensive providers/services with equivalent quality) Create shared decision-making processes to help consumers decide among services based on benefits and costs

Better Ways of Controlling Prices
Value-Based Competition by Providers for Consumers Define episode prices and global fees so it’s easier to compare costs of different providers and procedures Publish information on prices and quality of all providers Require consumers to pay the “last dollar” of providers’ prices (i.e., the difference between the prices of more expensive and less expensive providers/services with equivalent quality) Create shared decision-making processes to help consumers decide among services based on benefits and costs Ensuring There Are Competitors Prevent anti-competitive consolidations and encourage limited duplication of services (assuming consumers are made price-sensitive) Regulate prices where monopolies exist (e.g., the Maryland Hospital rate-setting commission) Prohibit all-or-nothing contracting for services by large providers

Benefit Design Changes Are Also Critical to Success
Ability and Incentives to: Improve health Take prescribed medications Allow a provider to coordinate care Choose the highest-value providers and services Ability and Incentives to: Keep patients well Avoid unneeded services Deliver services efficiently Coordinate services with other providers Benefit Design Payment System Patient Provider

Extreme Views of Patient Role in Use of Medical Home/ACO
ROCK MIDDLE GROUND HARD PLACE CONSUMERS/ PATIENTS CAN CHANGE OR USE MULTIPLE PROVIDERS AT WILL CONSUMERS/ PATIENTS ARE “LOCKED IN” TO A SINGLE GATEKEEPER PROVIDER

Creating a Middle Ground to Support the Medical Home/ACO
ROCK MIDDLE GROUND HARD PLACE CONSUMERS/ PATIENTS CAN CHANGE OR USE MULTIPLE PROVIDERS AT WILL CONSUMERS/ PATIENTS HAVE INCENTIVES TO CHOOSE & USE AN ACO OR MEDICAL HOME CONSUMERS/ PATIENTS ARE “LOCKED IN” TO A SINGLE GATEKEEPER PROVIDER

Importance of Coordinating Pharmacy & Medical Benefits
Single-minded focus on reducing costs here... ...could result in higher spending on hospitalizations Pharmacy Benefits Medical Benefits Drug Costs Hospital Costs PhysicianCosts High copays for brand-names when no generic exists Doughnut holes & deductibles Other Services Principal treatment for most chronic diseases involves regular use of maintenance medication

Better Payment Systems Require Good Quality Measurement
Concern: Giving healthcare providers more accountability for costs reduces the incentives for overuse, but raises concerns about whether patients will get too little care

Concern: Giving healthcare providers more accountability for costs reduces the incentives for overuse, but raises concerns about whether patients will get too little care Solution: Measure healthcare quality and include incentives for providers to maintain/improve quality as well as reduce costs

Concern: Giving healthcare providers more accountability for costs reduces the incentives for overuse, but raises concerns about whether patients will get too little care Solution: Measure healthcare quality and include incentives for providers to maintain/improve quality as well as reduce costs Ideal: Develop quality measures with participation of physicians, as Regional Health Improvement Collaboratives do Massachusetts Health Quality Partners Wisconsin Collaborative for Healthcare Quality Minnesota Community Measurement

Functions Needed for Healthcare Payment & Delivery Reform...
Consumer Education & Engagement Quality/Cost Measurement & Reporting Value-Driven Payment Systems & Benefit Designs Value-Driven Delivery Systems

...Functions Can’t Proceed in Silos...
Consumer Education & Engagement Quality/Cost Measurement & Reporting Value-Driven Payment Systems & Benefit Designs ? Value-Driven Delivery Systems

Coordinated Support for All Functions at the Regional Level...
Consumer Education & Engagement Quality/Cost Measurement & Reporting Value-Driven Payment Systems & Benefit Designs Regional Health Improvement Collaborative Value-Driven Delivery Systems

Coordinated Support for All Functions at the Regional Level...
Consumer Education & Engagement Quality/Cost Measurement & Reporting Value-Driven Payment Systems & Benefit Designs Nevada Partnership for Value-Driven Healthcare (HealthInsight) Value-Driven Delivery Systems

...With Active Involvement of All Healthcare Stakeholders
Healthcare Providers Healthcare Payers Regional Health Improvement Collaborative Healthcare Purchasers Healthcare Consumers

For More Information on Payment and Delivery Reforms

For More Information: Harold D. Miller Executive Director, Center for Healthcare Quality and Payment Reform and President & CEO, Network for Regional Healthcare Improvement (412)

FROM VOLUME TO VALUE: Better Ways to Pay for Healthcare

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