1. THE COMMONWEALTH FUND Developing Innovative Payment Approaches: Finding the Path to High Performance Stuart Guterman Vice President, Payment and System Reform Executive Director, Commission on a High Performance Health System The Commonwealth Fund Alliance for Health Reform Briefing on The Innovation Center: How Much Can It Improve Quality and Reduce Costs – and How Quickly? Washington, DC July 18, 2011

2. THE COMMONWEALTH FUND The country needs, and unless I mistake its temper, the country demands, bold, persistent experimentation. It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something. Franklin D. Roosevelt, 1932

3. THE COMMONWEALTH FUND Problems with the Current Payment System and Goals of Reform Problems: –Fragmented care –Lack of coordination –Variable quality –High and rapidly-growing costs Goals: –Create incentives for providers to take broader accountability for patient care, outcomes, and resource use –Provide rewards for improved care coordination among providers –Slow growth in health spending –Put in place an infrastructure to support providers in improving quality and efficiency

4. THE COMMONWEALTH FUND Center for Medicare and Medicaid Innovation Innovation Center to test innovative payment and service delivery models to reduce program expenditures under Medicare, Medicaid, and CHIP while preserving or enhancing the quality of care; current demonstration authority expanded Models to be selected based on evidence that they address a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable expenditures Emphasis on care coordination, patient-centeredness Could increase spending initially, but over time must improve quality without increasing spending, reduce spending without reducing quality, or both Evaluation should include quality of care, including patient- level outcomes, and changes in spending; could consider cross-program impact Secretary could expand duration and scope if model reduces spending without reducing quality

5. THE COMMONWEALTH FUND Models to be Tried by the Innovation Center Patient-centered medical homes for high-need individuals, womens health care needs, and comprehensive or salary-based payment Promotion of innovative care delivery models with providers such as risk-based comprehensive payment or salary-based payment Using geriatric assessments and comprehensive care plans to coordinate care Promote care coordination through salary-based payment Support care coordination for chronically-ill through the use of health information technology Vary payment to physicians ordering diagnostic imaging services based on appropriateness criteria of the order Use medication therapy management services Establish community-based health teams to support small practice medical homes Support individuals in making health care decisions through the use of patient decision support tools (cont.)

6. THE COMMONWEALTH FUND Models to be Tried by the Innovation Center Allow states to test and evaluate care for dual eligibles Allow states to test and evaluate all-payer payment reform Align nationally recognized, evidence-based guidelines of cancer care with payment incentives Improve post-acute care through continuing care hospitals Fund home health providers offering chronic care management Develop a collaborative of high-quality, low-cost health care institutions to develop, disseminate, and implement best practices and provide assistance to other institutions Use electronic monitoring to facilitate inpatient care of hospitalized individuals at their local hospital Promote efficiency and timely access to outpatient services through models not requiring a physician or other health professional to make a referral Establish comprehensive payments to Healthcare Innovation Zones

7. THE COMMONWEALTH FUND Key Considerations for Successful Pilots Multi-payer involvement Ground-up as well as top-down development Array of potential models Flexibility in design and implementation Innovation with Evidence Development Establish infrastructure to support success Work with MedPAC, MACPAC/feed into IPAB deliberations

8. THE COMMONWEALTH FUND Improving the Process Transparency Site selection and approval Evaluation Translating pilots into policy Resource availability

9. THE COMMONWEALTH FUND At this point, we cant afford any illusions: the system wont fix itself, and theres no piece of legislation that will have all the answers, either. The task will require dedicated and talented people in government agencies and in communities who recognize that the countrys future depends on their sidestepping the ideological battles, encouraging local change, and following the results. But if were willing to accept an arduous, messy, and continuous process we can come to grips with a problem even of this immensity. Weve done it before. Atul Gawande, 2010