agenda market forces driving providers to evaluate clinical integration & bundled payments...
TRANSCRIPT
Agenda
• Market Forces Driving Providers to Evaluate Clinical Integration & Bundled Payments
• Overview of Clinical Integration
• Key Elements of a Clinical Integration Strategy
• Bundled Payments Overview
• Customized Bundled Payment Report Review
Change Readiness Curve – Strategic Readiness
3
Urgency(Opportunity or Burning Platform)
TA
CT
ICA
LT
RA
NS
FO
RM
AT
ION
AL
ST
RA
TE
GIC
Major Change is Essential
LOW HIGH
Focused Change is Necessary
Been Here Before
Leading Change – Right of Passage
Urgency(Opportunity or Burning Platform)
4 4
TA
CT
ICA
LT
RA
NS
FO
RM
AT
ION
AL
ST
RA
TE
GIC
Major Change is Essential
LOW HIGH
Focused Change is Necessary
Been Here Before
Hospital With Multiple Co-Management Relationships
Hospital Launching IPA+HEP
Multi-Hospital System With Very Large Employed Physician Base
Multi-State, Multi-Hospital Investor Owned
Payment Models Supported by CIN Strategy
Source: HFMA 2010 The Advisory Board 2010
A
X
Y
Z
QU
ALIT
Y &
SER
VICE
High
LowLowHigh COST
Adding costs to improve quality/service
Cutting costs at the expense of quality/service
B
A
C
QU
ALIT
Y &
SER
VICE
High
LowLowHigh COST
Effectiveness: Improved quality/ service at the same or lower cost
Innovation: Improvement in all dimensions
Efficiency: Cutting costs without impacting quality/ service
PAST THINKING NEW PARADIGM
Value (V) = Quality (Q) * Service (S)
Cost (C)
Source: *Lean Hospitals, Graban, CRS Press, p106
Reshape the Value
Curve Optimizing value by focusing on quality, service and costs
Community Facilities
AMBULATORY
Community Physicians
PHYSICIANS
PAYORS & EMPLOYERSPAYORS &
EMPLOYERS
Community Hospital(s)
Community Facilities
Clinically Integrated Network
7
Clinically Integrated Network
1. Develop a network that includes independent physicians in
the market
2. Provide a mechanism to align the clinical practices of
physicians across service lines
3. Identify areas of opportunity within the system for quality and
efficiency improvements
4. Provide compensation for achieved results
5. Improve the value equation (cost and quality) for healthcare
delivered within the network
8
Clinical Integration Network Objectives
A Clinically Integrated Network (CIN) is a selective partnership of physicians collaborating with hospitals to deliver evidence-based care, improve quality, efficiency, and coordination of care, and demonstrate value to the market.
Clinically Integrated Network
Health System and Employed Physicians
Health System and Employed Physicians
Private Practice Physicians
Private Practice Physicians
CI EntityCI Entity
Payors and EmployersPayors and Employers
$
$ $
Contracts
Physicians •Preserving private practice model through alignment•Enhanced reimbursement through contracting for demonstrated network quality
Markets and Hospitals•Align independent, employed, and specialist physicians in one organization•Enhanced reimbursement under FTC guidelines for demonstrated quality
BENEFIT TO STAKEHOLDERSBENEFIT TO STAKEHOLDERS
WHAT IT’S NOTWHAT IT’S NOT
• Physician employment• Hospital-led initiative
• Mechanism to gain negotiating leverage over payors
Distribution of Funds
Participation Agreement
Participation Agreement
9
Clinically Integrated Network Defined
Network Considerations – Local Market PaceFi
nanc
ial P
erfo
rman
ce
Time
Local Market Conditions will Impact Timing of Network DevelopmentLocal Market Conditions will Impact Timing of Network Development
Declining FFS market will require network model to
meet Reform Era Imperatives
Declining FFS market will require network model to
meet Reform Era Imperatives
FFS
Risk-based Payment
10
HOSPITAL PROFILELocation, access, inpatient volume and market share, EBITDA, profit margin, quality scores, asset distribution, IT infrastructure, etc.
MARKET CHARACTERISTICS Supply and demand of beds & access, demographics, population growth, CON requirements, uninsured, HIX
COMPETITIVE LANDSCAPE Competitive intensity, history of irrationality, pursuit of new strategies and/or payment models
PHYSICIAN PROFILEMix of independent, employed, multispecialty or super groups, historical hospital-physician and physician-physician relationships
PAYOR PROFILE Payor mix, rate parity and willingness to offer P4P or risk-based contracts
EMPLOYER PROFILELarge employers (>1,000 employees) pursuing contracts with providers; small employers likely to abandon plans for Exchanges
11
Critical Market Pacers to Consider
Infrastructure & Funding
Distribution of Funds
Contracting
Information Technology
Physician Leadership
Structure & Governance
Participation Criteria
Performance Objectives
Clinically Integrated
Network
12
Components of a Clinically Integrated Network
IPAHealth System Subsidiary PHO
Joint Venture PHO
Health System
Participating Physicians
Payors /Employers
PHOXX% XX%
Health System
Payors /Employers
IPAParticipatingAgreement
100%
Participating Physicians
Health System
Payors /Employers
ParticipatingAgreement
100%
Participating Physicians
Subsidiary
Overview: Other than an employment-only model, a CIN usually is structured as a joint venture or subsidiary Physician Hospital Organization, or an Independent Practice Association (IPA).
13
Structure & Governance
MATURITY OF CIN
Reporting Incentives and Membership Fees
LOW HIGH
Hospital Efficiency Program
Self Funded Health Plan
Payor Contracts
Employer Contracts
Pay-for-Performance
Overview: The CIN is a separate business entity with a distinct identity, mission, and vision, dedicated leadership and staff, sustainable sources of revenue, and participating provider agreements with physicians that create potential value for both physicians and payors.
The CIN will need to offset costs of building the network (Infrastructure) and eventually provide returns through various revenue sources depending on the maturity of the network.
Sources of Revenue
14
Infrastructure & Funding
Sample Participation Criteria
Participating Physicians Clinical Integration Legal Agreement (Independent & Employed)
Physician Leadership Information Technology Adoption Quality Improvement Contracting
Requirements
• Active member of “Hospital” Medical Staff
• Participate in educational programs
• Complete orientation program
• Provide leadership and oversight over defined operations
• Utilize professional and office email
• Access to high-speed internet
• Implement the preferred health information technology
• Share clinical information / data
• Develop, implement, and monitor clinical protocols
• Review member physician performance
• Develop / implement corrective action plans and process improvement initiatives
• Participate in jointly negotiated contracts
Overview: Member physicians or groups that satisfy certain guidelines and criteria must sign an agreement outlining the expectations and requirements for participation in the CI program.
15
Participation Criteria
Element Description Examples
Variance & Cost Reduction
Minimize variable physician performance not related to patient characteristics
• Minimize orthopedics supply chain cost
• Staffing and productivity opportunities
Unnecessary Care Reduction
Reduce avoidable, unproductive and duplicative services
• Prostate cancer screenings for elderly patients
• Reduce Readmissions
Clinical Restructuring
Ensure treatment in most optimal setting with most appropriate level of provider
• Early step down from an IP to SNF bed
• Partnerships with a local retail clinic to offer non-urgent care
System Optimization
Shift focus to upstream, preventative care with emphasis on CI and population health
• Disease-based medical homes• Patient engagement strategies using
telehealth
Source: Sg2 Analysis
Examples of Performance Improvement
Overview: CINs identify metrics and targets designed to meaningfully impact the clinical practice of all network physicians, and to align their conduct with hospital initiatives, so as to improve quality and demonstrate value across the entire continuum of care.
16
Performance Objectives
CIN
IT QUALITY CARE REDESIGN MEMBERSHIP FINANCE
Lead and participate on sub-committees supported by CIN or Health System personnel
Medicine
Primary Care
Neurosciences
Heart and Vascular
Surgery
Women & Children
Overview: Health systems must empower physicians to have an influence on the future direction of the network. This will help integrate physicians’ clinical expertise into hospital operations and increase cooperation and credibility of the CI network.
Share In Network Governance
17
Physician Leadership
MATURITY OVER TIME
CLINICAL CARE VALUE
Process/behavioral
change
Digitize critical information on an individual within each care site
View health-related data via a customizable user interface within an enterprise
Exchange health-related data within and between enterprises
Derivevalue and intelligence to improve care quality and outcomes and to curb costs
Deliver clinical and patient information to enhance patient care experiences and practitioner effectiveness
Intermediate Electronic Medical Records
Healthcare Portals or Registries (Clinicians and Patients)
Health Information Exchange (Private)
Health Analytics
Advanced Clinical Decision Support
IT Optimization
Source: IBM Center for Applied Insights
Overview: CINs use an IT-dependent performance improvement architecture with data-based mechanisms and processes to monitor and track utilization, quality, and efficiency of resource use to demonstrate value.
18
Information Technology
PAYORS & EMPLOYERS
• Cost Savings• Efficiency Gains
• P4P Contracts• Shared Savings• Increased Rates
• Hospital• Specialty• Location
• Equal distribution • Performance targets• Educational event attendance• Submission of Data• Adoption of IT platform
INDIVIDUAL ACTIVITY/OUTCOMES
%
LOCAL NETWORK PERFORMANCE
%
CLINICAL INTEGRATION
NETWORK
GLOBAL NETWORK PERFORMANCE
%
$ $
Overview: The CIN establishes an organized plan to link performance on defined gradients to eligibility for incentive payments.
HOSPITAL / SYSTEM
19
Distribution of Funds
Determining the right structure for your organization that supports your vision and aligns all stakeholders
Generating sufficient funding to support network development and incent physician members through initial contracting efforts
Developing a distribution methodology that appropriately incents physician members
Crafting a communication plan that effectively communicates the business case for CI for physicians and the health system
Keys to Developing a High-Performing CIN
Bundled Payments Represent Key Opportunity for CINs
Source: HFMA 2010 The Advisory Board 2010
BUNDLED PAYMENTS
What are Bundled Payments?
• One all-inclusive price, focusing on a patient’s total episode of care
• Includes payment for all of a patient’s services for a certain procedure or diagnosis over a set number of days (usually from 30-120)
• Mega-DRGs
23
How do Bundled Payments Relate to Population Health?
• Creates incentives for providers to work together to coordinate care
• Focus on the whole patient, not the visit• A targeted version of population health
24
Provider Services - Today
25
Dr. Office Visit
Dr. Office Visit
Dr. Office Visit
Initial Inpatient
Stay
Dr. Office Visit
Dr. Office VisitReadmission
Dr. Office Visit
Dr. Office Visit
Inpatient Post-Acute Stay (Rehab, Psych, LTC, SNF, HH)
Other Part B Services (Hospital Outpatient, Labs, Durable Medical
Equipment, Part B Drugs)
Part B Service
Part B Service
Part B Service
Part B Service
Bundled Services
26
Dr. Office Visit
Dr. Office Visit
Dr. Office Visit
Initial Inpatient
Stay
Dr. Office Visit
Dr. Office VisitReadmission
Dr. Office Visit
Dr. Office Visit
Inpatient Post-Acute Stay (Rehab, Psych, LTC, SNF, HH)
Other Part B Services (Hospital Outpatient, Labs, Durable Medical
Equipment, Part B Drugs)
Part B Service
Part B Service
Part B Service
Part B Service
Shared Savings
27
• Creates incentives for providers to work together to coordinate efficient, cost-effective care
• Bundled payment is set based on review of past performance and future expectations
• Savings “delta” between the set payment and actual is shared
Data Analytics
• Identify components of the bundle
• Discern patterns, variances and opportunities for efficiency
• Compare performance to benchmarks
• Determine potential for shared savings
• Monitor performance progress
28
REPORT REVIEW
ANALYTICS AVAILABLE
focus of today’s session
Episode Cost Variation
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
Paym
ents
per E
pisod
e
Anchor Admission Acute Transfer Readmission Inpatient Rehabilitation Home Health SNF
LTCH Inpatient Psychiatric Physician Office Outpatient Regional Average Regional 95th Percentile
31
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000
Anchor Admission
Acute Transfer
Readmission
Inpatient Rehabilitation
Home Health
SNF
Long-Term Care Hospital
Inpatient Psychiatric
Physician Office
Outpatient
HospitalRegionU.S.
32
Episode Components Benchmark Comparisons
52%
50%
53%
4%
3%
3%
6%
8%
1%
8%
7%
5%
21%
23%
30%
6%
6%
6%
3%
2%
2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
U.S.
Region
Hospital
Percent of Total Episode Dollars by Category
Anchor Admission Acute Transfer Readmission Inpatient Rehabilitation Home Health SNFLong-Term Care Hospital Inpatient Psychiatric Physician OfficeOutpatient
33
Episode Components Benchmark Comparisons
# of Episodes
Average Total Payment
Episode Component/Service Type Average Number
of Claims per Episode
Average Payment per
Episode
% of Average Episode
Payment
Average Number of Claims per
Episode
Average Payment Per
Claim
Average Payment per
Episode
% of Average Episode
Payment
Average Number of Claims per
Episode
Average Payment Per
Claim
Average Payment per
Episode
% of Average Episode
Payment
Anchor Admission 1.0 $13,225 53% 1.0 $13,024 $13,024 50% 1.0 $13,375 $13,375 52%
Acute Transfer 0.0 $0 0% 0.0 $11,686 $10 0% 0.0 $8,501 $6 0%
Readmission 0.1 $745 3% 0.1 $7,273 $902 3% 0.1 $7,375 $913 4%
Inpatient Rehabilitation 0.0 $233 1% 0.2 $12,988 $2,174 8% 0.1 $12,347 $1,501 6%
Home Health 0.5 $1,215 5% 0.7 $2,713 $1,862 7% 0.7 $2,979 $2,049 8%
SNF 1.3 $7,515 30% 1.0 $5,881 $6,021 23% 0.8 $6,844 $5,357 21%
Long-Term Care Hospital 0.0 $0 0% 0.0 $0 $0 0% 0.0 $30,751 $86 0%
Inpatient Psychiatric 0.0 $0 0% 0.0 $8,124 $7 0% 0.0 $8,553 $20 0%
Physician Office 1.8 $1,463 6% 2.2 $663 $1,476 6% 2.3 $645 $1,480 6%
Outpatient 3.3 $556 2% 3.3 $178 $591 2% 2.6 $274 $722 3%
U.S.
Average Payment Per
Claim
$13,225
MS - DRG Description206 1,129 206,185
$25,510
$2,690
$7,671
$11,978
Hospital Region
$0
$0
$791
$167
470 - Major Joint Replacement Or
Reattachment Of Lower Extremity W/O Mcc
$5,886
$24,950 $26,068
$0
34
Episode Components Benchmark Comparisons
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Ave
rage
Pay
men
ts p
er E
piso
de
Region Hospital With Less Than 10 Episodes Region Hospital With 10 To 50 Episodes
Region Hospital With 50 Or More Episodes Hospital
Regional Average Regional 95th Percentile
35
Average Episode Payment Benchmark Comparisons
15.0% 16.4% 19.4%
15.0% 12.1%13.6%
30.0%24.3% 21.1%
40.0%47.1% 45.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hospital Region U.S.
30-90 Days
15-29 Days
8-14 Days
1-7 Days
36
Timing of Readmissions Benchmark Comparisons
Total EpisodesTotal Claims for Readmissions
Readmissions to Episode Provider
Average Episode Price
Average Dollars for Episodes
w/Readmission
Average Dollars for Episodes
w/out Readmission
Percent Difference
206 20 12 $24,950 $44,039 $23,343 88.7%
1,129 140 104 $26,068 $42,538 $24,200 75.8%
206,185 25,536 17,683 $25,510 $41,722 $23,700 76.0%
Hospital
Region
U.S.
37
Cost of Readmissions Benchmark Comparisons
Analysis of Readmissions
$51,030
Episode IDReadmission
DRGDescription
Days from Anchor
Discharge (1)
Readmission Dollars
Readmission Dollars % of
Total Episode Price
Total Episode Price (2)
1 394Other Digestive System Diagnoses
W Cc9 $5,133 20.0% $25,667
2 872Septicemia Or Severe Sepsis W/O
Mv 96+ Hours W/O Mcc43 $5,962 19.7% $30,193
3 638 Diabetes W Cc 24 $4,289 10.3% $41,648
4 311 Angina Pectoris 32 $2,618 3.9% $66,764
4 234Coronary Bypass W Cardiac Cath
W/O Mcc33 $24,933 37.3% $66,764
5 903Wound Debridements For Injuries
W/O Cc/Mcc29 $5,486 19.0% $28,904
6 467Revision Of Hip Or Knee
Replacement W Cc45 $16,691 20.3% $82,210
7 885 Psychoses 8 $4,669 7.6% $61,184
7 65Intracranial Hemorrhage Or
Cerebral Infarction W Cc38 $6,025 9.8% $61,184
8 253 Other Vascular Procedures W Cc 37 $12,401 16.5% $75,061
9 908Other O.R. Procedures For Injuries
W Cc26 $9,941 16.6% $59,844
10 683 Renal Failure W Cc 18 $5,290 17.7% $29,825
Regional 95th Percentile
Readmission Provider
Hospital A
Hospital A
Hospital A
Hospital B
Hospital B
Hospital A
Hospital A
Hospital A
Hospital B
Hospital A
Hospital A
Hospital A
38
Acute Transfer
Readmission
Inpatient Rehabilitation
Home Health
Long-Term Care Hospital
SNF
Inpatient Psychiatric
No Institutional Care
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Hospital Region U.S.
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000
Average Inpatient LOS Average Post-Acute Payment
39
First Post-Acute Setting Benchmark Comparisons
Acute Transfer 0Readmission 0Inpatient Rehabilitation 2 1% 4.0 $13,281 $18,756 $32,037 58.5%Home Health 14 7% 3.7 $12,821 $4,231 $17,052 24.8%Long-Term Care Hospital 0SNF 179 87% 3.7 $13,252 $12,856 $26,108 49.2%Inpatient Psychiatric 0No Institutional Care 11 5% 2.9 $13,281 $1,592 $14,873 10.7%Acute Transfer 1 0% 1.0 $8,814 $13,180 $21,995 59.9%Readmission 6 1% 4.0 $13,519 $9,240 $22,760 40.6%Inpatient Rehabilitation 177 16% 3.4 $12,577 $20,920 $33,497 62.5%Home Health 269 24% 3.1 $12,630 $5,232 $17,861 29.3%Long-Term Care Hospital 0SNF 637 56% 3.7 $13,303 $14,860 $28,163 52.8%Inpatient Psychiatric 0No Institutional Care 39 3% 3.3 $13,253 $2,091 $15,345 13.6%Acute Transfer 155 0% 3.2 $12,459 $28,323 $40,782 69.5%Readmission 2,499 1% 3.3 $13,494 $16,071 $29,565 54.4%Inpatient Rehabilitation 23,074 11% 3.8 $13,330 $21,380 $34,710 61.6%Home Health 69,707 34% 3.1 $13,180 $5,985 $19,165 31.2%Long-Term Care Hospital 108 0% 7.1 $14,194 $51,423 $65,617 78.4%SNF 81,641 40% 3.9 $13,527 $18,034 $31,561 57.1%Inpatient Psychiatric 39 0% 5.6 $13,459 $22,783 $36,242 62.9%No Institutional Care 28,962 14% 2.8 $13,439 $2,357 $15,796 14.9%
Total Average Payment
Post Anchor % of Payments
Hos
pita
l
206
Total Episodes
First Post-Anchor SettingEpisode Count
% Distribution
Regi
on
1,129
U.S
.
206,185
Anchor Admission Average Payment
Post Anchor Average Payment
Anchor Admission
ALOS
40
First Post-Acute Setting Benchmark Comparisons
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Hospital Region U.S.Acute Transfer ReadmissionInpatient Rehabilitation Home HealthSNF Long-Term Care HospitalInpatient Psychiatric No Institutional Care
First Post-Acute Setting Benchmark Comparisons
41
ANALYTICS AVAILABLE
Questions?
43
Gloria Kupferman
Vice President, National Information Products
DataGen, a HANYS Solutions Company
518-431-7968
www.datagen.info
Brian Esser
Manager, Healthcare Consulting
Dixon Hughes Goodman LLP
330-650-1752
www.dhgllp.com