Change is rapidly occurring in most aspects of the delivery of healthcare in this country. One of the most promising developments is the understanding that healthcare should strive to achieve the “Triple Aim” – better care for individuals, improved overall health of our communities, and lowered costs. The Triple Aim goals are about delivering better value in healthcare, not just delivering more care. The implications for our healthcare providers are enormous and may represent a fundamental change in the way care is delivered and paid. And the data needs are far greater than before – this represents a major challenge.
Many experts are advocating for new data steams to help find people at risk for diseases, even using non-traditional types of data, such as credit card purchases or use of social media, to define risk levels. Privacy advocates are adamantly opposed, and these debates will continue. Many employers have used medical claims data to understand population risk, but even using these data is worrisome to privacy advocates. Recent federal government revelations about NSA data probes into personal lives have generated much criticism, and I think the outcome will be more controls over the use of data. I think the “new data streams” will be narrowly defined. But the good news is new healthcare delivery models are finding ways to effectively use data to improve patient care.
In the new models of delivery, as seen in the patient centered medical home concept (PCMH), a healthcare team, captained by the physician, now has the responsibility to care for a defined population, not just the patients who show up for an appointment. Physicians are financially incented to provide better care. This drives the need for data, and health records need to find “gaps in care,” such as overdue cancer screening exams and missing lab tests. A PCMH team member is empowered to reach out to patients to help them get the care that is needed. The team is responsible for (and incented to provide) the healthcare needed in all phases of a person’s life. This requires integrated data from all settings – all outpatient encounters, hospital data, and follow-up care, including rehabilitation and nursing home and hospice care. Integrating all these data together will have tremendous potential to improve care. As an HIE contractor, we have constructed platforms that are delivering this kind of integrated data, so we know it’s possible today, and we’re working with hospitals toward the same end. Data integration will be necessary in order to understand when high value care is being delivered by hospitals, physicians, and all healthcare providers.
But more than finding gaps in care; the new model incents better care. Take a simple example of diabetes: the medical evidence shows lower mortality and morbidity in those who achieve blood pressure, lipid, and glucose control compared to those who are not well-controlled. New payment methods will pay physicians at a higher rate when their patients achieve better control of their diabetes. In this scenario, payment is more complicated, and now lab data must be analyzed to determine payment.
Paying more for better value has promise, but also many challenges. Defining better care for diabetes can be done, but what metrics should be used in other conditions? Physicians see literally hundreds of different conditions in the course of their work with patients; how should higher value be defined in other medical and surgical conditions? Is there value is ordering appropriate radiology exams and forgoing inappropriate tests? How can that be measured and compensated?
Medicare policy is driving much of the change in payment mechanisms, but large employers are also asking about value. Employers are tired of paying for medical treatments that don’t work or are unnecessary, and are looking for cooperative relationships with providers to incent better care. Hospitals are adjusting to focusing on providing better care, not more care. The transition is turbulent, but the result has the potential of achieving the Triple Aim. We will not achieve these results in a fee-for-service system. The changes we’ve seen in healthcare over the last decade are the start of real reform that is badly needed, and we need to continue driving change toward a higher value system. Innovative use of new data streams is vital to this effort.
Michael L. Taylor, MD, FACP
Chief Medical Officer
I read about the new bipartisan bill for the “doc-fix” with great anticipation. This bill is a solution to the sustainable growth rate (SGR) problem. The idea of the SGR was to put a limit on annual payment increases for physician services for Medicare patients. The SGR is generally acknowledged to be flawed, because it places arbitrary caps on spending without properly accounting for increases in the volume of services. Centers for Medicare and Medicaid Services (CMS) has experienced payment overruns in every year since it was enacted, and Congress, rather than enforcing the provisions of the bill, made a temporary adjustment, thereby worsening the overrun for the next year. By 2014, to maintain the SGR, CMS would need to decrease physician payments by 24 percent!
The new bill addresses this problem by replacing the SGR; instead, physicians will now see a 0.5 percent increase in payment annually for the next five years. It also incentivizes quality improvement in medical care by encouraging development of alternative payment models. Physicians may receive a 5% “bonus” payment, if at least 25% of their revenue is derived from a patient centered medical home arrangement by 2018. CMS is attempting to change from a fee-for-service payment model (the more services a physician provides, the higher the payment) to a model based on quality outcomes.
I applaud this effort, but there is significant work to be done in switching from a volume-based payment model to a quality-of-outcome model. The most basic (and difficult) challenge is defining which quality metrics to incentivize. The plan is to use the Physician Quality Reporting System or PQRS, (CMS loves acronyms!). As I reviewed the more than 300 quality metrics, it struck me that most measures were process measures, such as:
These are good metrics, but do they actually reflect the quality of care delivered? Physicians have long resisted being measured on quality, because they don’t trust the data. They generally feel the metrics represent just a small part of their practices and many of the metrics focus on primary care. There is less focus on specialty and surgical care metrics, and these areas comprise the bulk of the medical spend. Metrics that look at the patient experience, such as how well the patient fared, are available, but minimally represented in the PQRS metrics. Important outcome measures need to be included, such as what percent of those with diabetes achieved all recommended BP, LDL cholesterol, and A1c goals, not just what percent received recommended care.
- Testing appropriately or prescribing certain medications when treating diabetes patients
- Giving aspirin to heart attack patients in a timely manner
- Offering the right treatment advice for back pain
Metrics are necessarily patient-based, but as new deliver models emerge, new metrics need to be utilized. The Affordable Care Act incentivizes health systems to focus on treating entire populations, not individuals, and helps pay for the IT infrastructure needed to manage and measure the health of a population. We need to use metrics focused on entire populations, not just on patients who happen to see their doctors.
Physicians will accept the metrics, if they have a role in determining, by specialty, which metrics best reflect high-quality care, and which metrics reflect appropriate care. This means measuring wasteful treatments and procedures.
I am a strong advocate of eliminating fee-for-service medicine. In my opinion, this payment model is a root cause for many of the problems in U.S. healthcare delivery. I applaud the effort to incentivize and measure value in health care, not volume. Developing and implementing a strong and accurate system of quality measures will be a giant step in the right direction.
Michael L. Taylor, MD, FACP
Chief Medical Officer
The recent New York Times article, As Hospital Costs Soar a Single Stitch Tops $500, discusses the cost of an Emergency Department (ED) visit. EDs are under intense scrutiny by all parties – payers, employers, providers, and the government – about cost, quality and patient-engaged care. In fact, nationally, 62% of ED visits are urgent care (not emergent), making them more of a “department of available medicine” than necessary. This varies across the country, where some markets show ED usage at 42% urgent visit share, while others tower north of 90%. Avoidable visits or overuse are typical of both Medicaid/self pay and commercially insured individuals. A national savings of $4.4 billion is possible if 20% of ED visits are redirected to an alternative or lower-cost care site.
Reform-based Medicaid expansion implies more demand for EDs, and requires adequate actual or virtual capacity. The opportunity is to provide alternative care settings. Some providers have had success in offering preventive screening physicals, care at urgent care centers (that accept insurance) and direct one-one patient engagement. One health system was able to reduce ED business by $1.5 million in Medicaid/self pay by reaching out to “frequent fliers” (5 or more ED visits per year) and educate them that the ‘next time,’ they can get the same or more appropriate care at a community health clinic. Providing the right capacity for the right care type in the right service setting goes a long way to protect the ED for the truly medically needy.
Commercially insured patients can also over-use the ED. 29% of employer-paid commercially insured patients, presenting with both an unavoidable and emergent condition, belong in the ED. 42% could have been cared for in a primary care setting. The net savings for redirecting commercially insured visits to a physician office setting is $1171 per visit. This invites a structure for an urgent care service line in physician offices.
The New York Times article states that compared to alternative outpatient care, the price of an ED visit is high, especially from the view of the cost-accountable consumer. However, EDs provide crucial health services, and there is a price for those life saving resources. What types of care belong in the ED is another matter that underscores its role at the eye of the storm of shifting outpatient care. All stakeholders – payers, employers, consumers, the government, and providers – are participating in the shift.
For more details, please download one of these publications.
Delivering Profitable Growth Through Market Intelligence, Dunn, MacCracken, 2012
Avoidable Emergency Department Usage, HealthLeaders Media Fact File, October 2013
VP, Advisory Services
In today’s market, providers planning for service reconfiguration are focusing on several areas: physician networks, outpatient networks, payer risk initiatives, acute care provider partnerships, and pre-/post-acute care provider partnerships. Driven by healthcare reform, the provider delivery system is rapidly consolidating and contracting in new ways. With the new risk and value-based reimbursement incentives, hospitals and health systems have to develop comprehensive care networks that will provide the right care, at the right price, in the right setting.
So how do providers begin to bridge fee-for-service and value-based care? With strategic planning. In fact, strategic planning has never been so important. Being willing to make new connections and take risks will be hallmarks of a successful planner.
Using the same approach to strategic planning and involving the same planning stakeholders won’t work under healthcare reform. Planning processes need to be more flexible, frequent, and adaptive to ensure that hospital leaders have a strategy for acquiring and delivering care through partnerships.
How can hospital planners get started?
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- Engage a larger group of internal stakeholders in the strategic planning process, such as physician leadership; fiscally aligned physicians via the physician-hospital organization (PHO) or employed group practices; and senior clinical and operational leaders.
- Prepare capacity for the arrival of the newly insured.
- Coordinate the outpatient network with the strategic business plans.
- Leverage performance best practices.
- Establish provider partnerships with pre- and post-care delivery providers.
- Assess payer risk initiatives by episode-driven care.
Vice President, Advisory Services
A Los Angeles Times article published over the past weekend seemed in some ways to imply that consumers who choose smaller-sized provider networks through the new California health insurance exchange could have problems gaining access to their doctors — which would contradict the intent of the Affordable Care Act.
But the fact that insurance plans are limiting network size to give healthcare consumers affordable options is a rational, direct intent of reform — and an example of natural market forces at work. The reason it may feel uncomfortable to some, though, is that it is a different approach to healthcare than the model we’ve seen in the U.S. in the past.
In a fee-for-service environment, it has long been in the best interests of insurers to have networks that were as wide and all-inclusive as possible. The focus of the old model was on more — more providers involved, more services performed.
Now, the focus in a value-based model is to provide the best care at the best price. Therefore, insurers are reaching out to different target audiences with different plan products. And one of the ways an insurer can meet the needs of a consumer who wants high-quality care at the lowest-possible cost is to offer a limited-network plan.
That’s logical — and no different for the newly eligible consumers, really, than the conventional health plan consumers (who are currently insured through their employers) who must make choices based on cost and in- and out-of-network options.
The aim of the health insurance marketplaces is not only to cover more Americans, but to also offer choice and competitive pricing. As the Times article stated, there are 12 different insurers offering plans through the California exchange. Consumers can choose, more than ever before, the price point they are comfortable with for their situations.
Of course, it will be important for both exchanges and insurers to use data and analytics to stay on top of consumer satisfaction and provider capacity, and to evolve offerings as needed.
In the meantime, as the federal exchange information site states, consumers are urged to “compare plans based on what's important to you, and choose the combination of price and coverage that fits your needs and budget.” Those decisions don’t have to be made in the dark, either. With one exchange marketplace application, consumers can compare coverage options side-by-side.
Michael L. Taylor, MD FACP
Chief Medical Officer