Past, Present, and Future Challenges in Healthcare Reform

Kenneth H. Cohn, MD, MBA, Facilitator http://healthcarecollaboration.com

ken.cohn@healthcarecollaboration.com

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How Can We Make Sense of Healthcare Reform?

Daily News Pulse http://bit.ly/jq8lzz

Mission to Learn http://www.missiontolearn.com/2009/11/making-sense-of-it-all/

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Overview

•  Historical context •  Major aspects of Patient Protection and

Affordable Care Act (HR 3590) and Health Care and Education Affordability Reconciliation Act (HR 4872)

•  Dealing with complexity •  Steps that we can take to extend the quantity

and quality of our lives

http://www.rules.house.gov/bills_details.aspx?NewsID=4606

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Premises

•  A system requires that the pieces work together

•  Value = Quality/ Price •  Uncompensated care is never free

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How Did We Get Here?

•  1943: Healthcare insurance deductible by companies, tax-free to workers

•  1965: Medicare, Medicaid enacted •  1973: Health Maintenance Organization Act •  1983: Diagnostic Related Groupings •  1994: Clinton health plan defeated •  2003: Human genome sequenced •  2010: Affordable Care Act Feldstein PJ. Market Competition in Managed Care, in Healthcare Economics, 6th ed. Clifton Park: Thomson Delmar Learning. 2005, 156-165.

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2010 Reform Provisions

•  Established a high-risk insurance pool •  Created a reinsurance program for retirees < 65 •  Required coverage of preventive services with no

cost sharing •  Provided rebates up to $250 to seniors paying

out-of-pocket costs due to doughnut hole gap in Medicare prescription drug coverage (part D), effective immediately

•  Offered small businesses (<101 employees) that choose to provide employees health insurance tax credits up to 35% of premiums, effective immediately

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2010 Reform Provisions, II

Jennings CC. Implementation and the Legacy of Health Care Reform. www.nejm.org. 10.1056/mejmp1003709. 3/31/10. This Week. A giant step toward universal healthcare. April 2, 2010, 6.

•  Eliminated overall lifetime limits on essential health

benefits •  Plans that provide dependent coverage of children

are required to continue coverage for adult children not eligible under another employer group plan until they reach 26

•  Pre-existing condition exclusions eliminated with regard to children under 19

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2011 Reform Provisions, III

•  Non-grandfathered plans not allowed to impose deductibles or co-pays on preventive care services and immunizations that are recommended by governmental agencies under the act Sears CS et. al. Summary of the Impact of Healthcare Reform on Employers. http://www.icemiller.com/newsletter/Benefits/Employer_Health_Reform_Effects.htm

Modern Healthcare. 2010; 40 (13):12.

•  Required insurers to spend at least 80% of premiums on medical services

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2011 Reform Provisions, IV

•  Began phased-in fees and taxes on health industry, starting with a $2.3b annual fee on drug makers

•  2011 Medicare Advantage payments set at 2010 levels

This Week. A giant step toward universal healthcare. April 2, 2010, 6.

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Changes in Provider Payments

•  10% incentive payments for primary care physicians. All physicians in family medicine, general internal medicine, geriatrics and pediatrics whose Medicare charges for office, nursing facility and home visits comprise at least 60 percent of their total Medicare charges eligible for a 10% bonus payment for these services from 2011–16.

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Changes in Provider Payments, II

•  10% incentive payments for general surgeons performing major surgery in areas where more health professionals are needed. All general surgeons who perform major procedures (with a 10- or 90-day global service period) in a health professional shortage area eligible for a 10% bonus payment for these services from 2011–16.

Mahar M. Myths & Facts about Health Care Reform Part 2: Doctors Who Take Medicare. http://www.healthbeatblog.com/2010/04/myths-facts-about-health-care-reform-part-2-doctors-who-take-medicare-and-medicaid-patients-.html [online article, accessed 4/12/10]

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Changes in Provider Payments, III

•  Geographic payment differentials. In 2010 and 2011, Medicare made a separate adjustment for the practice expense portion of physician payments that will benefit physicians in rural and low cost areas

•  In 2013 and 2014 Medicaid payments to primary care physicians will be lifted to match Medicare rates. Today, Medicaid typically pays doctors 30% less than Medicare for the same service.

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Changes in Provider Payments, IV

•  The federal government is providing 100% of the funding needed for states to meet this requirement

Mahar M. Myths & Facts about Health Care Reform Part 2: Doctors Who Take Medicare. http://www.healthbeatblog.com/2010/04/myths-facts-about-health-care-reform-part-2-doctors-who-take-medicare-and-medicaid-patients-.html [online article, accessed 4/12/10]

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2012 Reform Provisions

•  In 2012, Medicare Advantage payments ranged from 95% of Medicare Fee For Service (FFS) in high-cost areas to 115% in low-cost areas

•  Employers required to provide an abbreviated summary of their health plans to participants by March 23, 2012

Sears CS et. al. Summary of the Impact of Healthcare Reform on Employers. http://www.icemiller.com/newsletter/Benefits/Employer_Health_Reform_Effects.htm

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2013 Reform Provisions •  Medicare Part D prescription drug subsidy for

employers that provide retiree prescription drug coverage loses its tax-free status

•  Employer contributions to medical flexible spending accounts limited to $2,500

•  Employee FICA taxes rise by 0.9% for wages above $200,000 ($250,000 joint)

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2013 Reform Provisions, II

•  3.8% Medicare tax imposed on high-income earners ($200, 000 individual, $250,000 joint) for investments and other unearned income Sears CS et. al. Summary of the Impact of Healthcare Reform on Employers. http://www.icemiller.com/newsletter/Benefits/ Employer_Health_Reform_Effects.htm

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2014 Reform Provisions •  Imposes individual mandate, enforced by

escalating fines starting at 1% of income, requiring most uninsured Americans to purchase health insurance

•  Provides subsidies to individuals and families with incomes up to 400% above the poverty line ($88,200 for family of four) to help them purchase insurance

•  Expands eligibility for Medicaid to anyone earning up to 133% of poverty line ($29,300 for family of four) This Week. A giant step toward universal healthcare. April 2, 2010, 6.

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2014 Reform Provisions, II •  Requires most employers to provide coverage of

employees or pay penalties •  Prohibits denial of coverage to anyone with a

pre-existing condition •  Establishes health insurance exchanges to serve

as a competitive insurance market, enabling those without employer-based coverage to shop for coverage

•  Wellness incentives up to 30-50% of the cost of coverage are allowed for group plans (insured and self-funded) This Week. A giant step toward universal healthcare. April 2, 2010, 6.

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Additional Reform Provisions

•  Establishes Innovation Center to rest and implement new Medicare provider payment mechanisms (HR 3590, sec. 3021)

•  Establishes independent Medicare Payment Advisory Board to report on system-wide healthcare costs, access, and quality and recommend policy changes to slow the rate of national healthcare and Medicare spending growth (HR 3590, sec. 3403)

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Additional Reform Provisions, II

•  After 2014, plans may not establish lifetime limits or annual limits on the dollar value of essential health benefits (Amendments to the Public Health Service Act, sec. 2711)

•  Links Medicare payments to quality outcomes, starting in 2016 (p. 1394, HR 4872)

•  COOP Program

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The Accountable Care Organization

Core Principles (Mark McClellan, Elliott Fisher) 1  Provider-led organizations based in primary

care, collectively accountable for quality and total per capita costs across the full continuum of care for a population of patients

2  Payments linked to quality improvements that also reduce overall costs

3  Reliable and progressively more sophisticated performance measurement Engleberg Center for Healthcare Reform. The ACO Toolkit. http://www.nachc.com/client/documents/ACOToolkitJanuary20111.pdf

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Initial Steps to Consider re: ACOs

•  Take stock of internal capabilities: – Leadership – Services: quality improvement, medical

management, contracting, information management, public reporting

– Partners •  Decide on extent to which build on strengths vs.

outsource •  Specify timeframes ACO Learning Network Toolkit, p.25-6. https://xteam.brookings.edu/bdacoln/Documents/ACO%20Toolkit%20January%202011.pdf. [Online article, accessed 4/19/11]

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Five Steps to ACO Readiness

•  Envision and educate •  Assess and analyze •  Prioritize and plan •  Design and deliver •  Measure and monitor

Bard M, Nugent, M. 2011. Accoountable Care Organizations: Your Guide to Strategy, Design, and Implementation. Chicago. Health Administration Press, 66.

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Five Critical ACO Success Factors

•  Clinical integration •  Ability to manage care •  Aligned incentives •  Information technology infrastructure •  Extension of ACO model to all payers

Dunn L. 5 Critical ACO Success Factors. http://www.beckershospitalreview.com/hospital-physician-relationships/5-critical-aco-success-factors.html [Online article, cited 4-19-11]

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Proposed ACO Quality Metrics

Domain Metrics 1)  Patient-Caregiver Experience 7 2)  Care Coordination 16 3)  Patient Safety 2 4)  Preventive Health 9 5)  At-risk Populations 31

Miff S. Making Sense of the New ACO Quality metrics. http://members.sg2.com/content-detail-standard/default.aspx?contentid=8393057300762111751. [online article, cited 4/19/11]

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Early ACO Participants Advocate HealthCare IL

http://www.advocatehealth.com Atlantic Health NJ

http://www.atlantichealth.org Banner Health AZ

http://www.bannerhealth.com/ Cape Cod Healthcare MA

http://www.capecodhealth.org/ Catholic Healthcare West CA

http://www.chwhealth.org/ Dartmouth-Hitchcock NH

http://www.dhmc.org

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Early ACO Participants, II

Montefiore Medical Center NY http://www.montefiore.org/

Norton Healthcare KY http://www.nortonhealthcare.com

Optimus NJ http://

www.optimushealthcarepartners.com Steward Healthcare MA

http://www.steward.org/

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Accountable Care Organizations: (ACO) Accountable Care Act,

Section 3022 Requires the Health & Human Services (HHS)

secretary to establish a shared savings program by January 1, 2012 in which authorized providers contract with HHS to manage and coordinate care for Medicare beneficiaries

ACOs must: •  Care for at least 5,000 patients •  Have sufficient primary care professionals •  Use defined processes to promote evidence-based

medicine

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•  Coordinate care through telehealth and remote patient monitoring

•  Meet patient-centered criteria established by HHS secretary http://www.hospitalimpact.org/index.php/2010/05/27/aco_approval_deadline_approaching_faster

Accountable Care Organizations: (ACO) Accountable Care Act,

Section 3022, II

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The ACO Proposed Rule

•  SUMMARY: This proposed rule would implement section 3022 of the Affordable Care Act which contains provisions relating to Medicare payments to providers of services and suppliers participating in Accountable Care Organizations (ACOs). Under these provisions, providers of services and suppliers can continue to receive traditional Medicare fee-for-service payments under Parts A and B, and be eligible for additional payments based on meeting specified quality and savings requirements.

•  Proposed Rule: (429 pages)

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Understanding Complexity

•  Complicated problems – Require coordination, expertise, and knowledge

sharing – For example, preparing for Joint Commission site

visit •  Complex problems

– Relationships are key – Experience is no guarantee of future success, but

people remain generally optimistic (child-rearing)

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Understanding Complexity, II

– For example, patient flow, risk management, clinical priority setting

Moral: complexity can help us make sense of healthcare interactions that we can influence but cannot control Glouberman S, Zimmerman B. 2004. Complicated and Complex Systems: What Would Successful Reform of Medicare Look Like? www.changeability.ca.

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Healthcare Complexity Appreciative Inquiry

Community

Control

Caring Curing

Glouberman S, Mintzberg H. Managing the care of health and the cure of disease- Part I: Differentiation. Health Care

Management Review. 2001; 26(1): 56-69.

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Complexity Redrawn

Caring

Curing Stewardship

Communityhttp://healthcarecollaboration.org/ecosystem-mastery-a-review-of-ron-adners-the-wide-lens/

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Decision-Making in Complex Situations

•  Look for improved outcomes rather than ideal solutions

•  Encourage brainstorming and innovative thinking •  Synthesize conflicting ideas with an iterative

approach Act, learn, adapt "Ready, fire, aim“

Stacey R. 1996. “Emerging strategies for a chaotic environment.”

Long-Range Planning 29(2):182-189.

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Decision-Making in Complex Situations, II

•  Do not expect to get things right initially •  Reward intuition and muddling through •  Strive for effectiveness over efficiency •  Use face-to-face dialogue over e-mail •  Celebrate learning

Informed, Activated Patient

Productive Interactions

Prepared, Proactive Practice Team

Delivery System Design

Decision Support

Clinical Information

Systems

Self- Management

Support

Health System Resources and Policies

Community Health Care Organization

Improved Outcomes Hindmarsh M. www.improvingchroniccare.org, hindmarsh.m@ghc.org

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What is Clinical Integration?

•  Clinical integration represents an approach to working more interdependently to improve clinical and financial outcomes

•  It recognizes that role boundaries are blurring between clinicians and non-physician clinical leaders and that both groups need to be involved in finance, operations, and brand-building.

FTC-DOJ. 2004. Improving Healthcare, p. 36-37. http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf

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Supporting Clinical Integration (CI)

Clinical integration requires:

•  Transparency •  A commitment to developing a shared

mission, vision, and values •  Authentic engagement based on mutual

respect •  Systems that support CI, especially

information technology

FTC-DOJ. 2004. Improving Healthcare, p. 36-37. http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf

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Some Differences Between Employment and Clinical Integration

Employment Integration Role Hired hands Co-owners Work type Shift-work Build enterprise Horizon Days-weeks Years Authority Linear/ vertical Dotted-line,

horizontal Advantage Fleeting Sustainable

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Predictions

•  We are headed into a decade of transformation

•  Documentation will be destiny •  Episode-based fee-for-service will decrease •  Bundled payments for the continuum of care

will become more prevalent

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Early Lessons from Bundled Payment Pilot

•  A case manager is essential to manage length of stay A program liaison must interface with government regulators to set up systems that work

•  A cost accounting program that allows for individual patient tracking is critical for success

•  Everyone benefits from transparency, so that there are no surprises

•  Multi-divisional agreements need to move from dividing the pie to transforming the patient care experience collectively

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Early Lessons from Bundled Payment Pilot, II

•  The enterprise needs to be able to scale up rapidly as market share increases http://healthcarecollaboration.com/what-i-learned-at-ache-congress-march-2013/

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Implications •  Expect continuing procedural challenges to

implementation in Congress, federal agencies, and the courts

•  State officials, some of whom oppose reform, will play a large role in implementation

•  Eligibility for subsidies should be based on current income, but IRS has income information for past years

•  Small changes in family income may push family members from one form of coverage to another (Medicaid, exchanges)

Aaron HJ, Reischauer RD. The War Isn’t Over. www.nejm.org. 10.1056/mejmp1003394. 3/31/10.

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What We Can Do

•  Lifestyle and behavior have the largest influence on longevity (40%)

•  Human biology (genetics) accounts for 30% •  Socioeconomic status (education) accounts for

15% •  Environmental variables (exposure to pollution,

radiation) account for 5% •  Medical care accounts for only 10%

McGinnis JM, Williams-Russo P, Knickman JR. The Case for Active Policy Attention to Health Promotion. 2002. Health Affairs; 21(2):83.

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Conclusion •  The provision and delivery of healthcare are

complex •  People’s actions change the context for everyone

else •  Doing something once gives no assurance of future

success •  Relationships and influence matter •  Having formal and informal conversations is a way

to deal with complexity and become more comfortable with processes that we cannot control Cohn KH. 2005. “Embracing Complexity,” in Cohn KH. Better Communication for Better Care: Mastering Physician-Administrator Collaboration, Chicago: Health Administration Press, 30-38.

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Appendix: The Consumer Owned and Operated Plan (Co-Op) Program

•  Sections 1322 and 10104 of the Affordable Care Act

•  Purpose: to foster creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small-group markets in states in which issuers are licensed to offer such plans

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How the CO-OP Program Works

•  The CO-OP Board awards start-up interest-free loans to help physicians and collaborating organizations form a healthcare system

•  Responsibility rests within each organization to – Decrease variation in care processes – Continuously improve care outcomes – Document value provided to purchasers and

patients

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Year One Co-Op Model

Employers Self-pay Individuals

$$$ $$$

HOSPITALS PHYSICIANS

START-UP COSTS and RESERVES

Administrative Costs Marketing Costs = 6%

MEDICAL AND ADMINISTRATIVE SAVINGS

Norm Webb, norm@webbcare.com, 630-241-1956

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On-Going Co-Op Model

Employers Self-pay Individuals

$$$ $$$

HOSPITALS PHYSICIANS

RESERVES

Administrative Costs Marketing Costs = 6%

M & A SAVINGS

•  Pay for Performance Bonuses (Hospitals and Physicians)

•  Lower Premiums and increased Services

•  Non-Profit Enhancements: Staff and Equipment

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CO-OP Advantages

•  Aligns incentives between physicians and participating organizations to improve care outcomes

•  Fosters improved communication and collaboration

•  Eliminates middlemen •  Increases physician influence •  Provides improved services at lower cost to

patients and families

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CO-OP Requirements

•  A climate of dialogue, inquiry, and active listening

•  Data sharing, commitment to transparency •  Information technology interoperability •  Detailed business plan •  CO-OP Board approval before 7/1/13