Transcript Keynote_1_apii_for_marketing_11_9_2012 2738KB Feb 10

Arkansas Payment Transformation Initiatives
Discussion for 2013 IM Symposium
September 2013
“The Big Picture and Changing Times”
There are major health
care challenges facing
Arkansas. Health
outcomes in Arkansas
are poor, with the state
at or near bottom of all
states on national
health indicators.
The fragmented
health care system is
hard for patients to
navigate, and the
system does not
promote teambased care.
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The status quo is unsustainable
Health care spending is growing at an unsustainable rate. Insurance
premiums have doubled for Arkansas employers and families in the past
ten years.
Providing benefits to over 250,000 uninsured Arkansans will create
enormous pressure on the health care financing and delivery system.
It will also create substantial budget shortfalls for the State of Arkansas
and Medicaid. It could call for additional taxes to be levied and stress
on our local economy.
This is a trend which is not isolated to Arkansas – over 45 states are being
faced with significant budget deficits which are leading to reducing
benefits, slashing provider payments, restricting enrollment, and moving
toward a more managed environment.
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What are they saying?
LITTLE ROCK — The Arkansas
Department of Human
Services is preparing for
“significant” cuts in services
to fill a shortfall of at least
$100 million in the state’s
Medicaid program.
Department Director John
Selig said Tuesday that the
Medicaid shortfall will be
smaller than the nearly $200
million gap between its
funding request and Gov.
Mike Beebe’s
recommendation for next
year.
Beebe asks U.S. help to
fill Medicaid gaps
Gov. Mike Beebe has
asked the federal
government for a wideranging Medicaid deal
that would allow
Arkansas to access
federal funds to help
plug the $4.6 billion
program’s estimated
$138 million deficit,
quicken its payment
overhaul and pave the
way to expanding its
rolls by up to 250,000
people.
.
Source: AP Press release Nov 14 2012 & Ark
Democrat-Gazette Nov 15 2012
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What have employers told us?
…we have been
increasing
employee
premiums and can
only push the
envelope so far….
…what new
solutions are
you working on
to improve
quality of care
and
simultaneously
reduce cost?
…cost are driven by
inefficiencies in the
system and over use of
testing and surgical
procedures..What can
we do???
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Arkansas Blue Cross Blue Shield and many self-funded groups face many
of the same challenges that Medicaid does.
Transition to payment system that rewards value and patient
health outcomes by aligning financial incentives
Reduce payment levels for all providers regardless
of their quality of care or efficiency in managing costs
Pass growing costs on to consumers through higher
premiums, deductibles and copayments (private payers),
or higher taxes (Medicaid)
Intensify payer intervention in decisions through managed
care or elimination of expensive services (e.g. through prior
authorizations) based on restrictive guidelines
Eliminate coverage of expensive services or eligibility
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What are the alternative solutions?
•Develop a program to more effectively use the
existing health care dollars and reducing cost
related to duplicated tests, unnecessary
procedures, and poor coordination of services.
•Transition from fee for service or volume based
treatment
•Create a new payment system that rewards highquality, patient-centered, efficient care.
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Arkansas Payment
Improvement Initiative (APII)
Governor Beebe and Arkansas Medicaid invited Arkansas Blue Cross
Blue Shield to the table to collaborate in transforming the way we
pay for medical services.
– The current system pays for volume —
the more I do, the more I get paid
– The current system does not include incentives for
providers treating the same patient to work together
– The result is that there is significant variation in cost and quality
in the system, some of which cannot be justified
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Our vision to improve care for Arkansas is a comprehensive,
patient-centered delivery system…
For
patients
Objectives
How care is
delivered
Four aspects
of broader
program
Improve the health of the population
Enhance the patient experience of care
Enable patients to take an active role in their care
For
providers
Reward providers for high-quality, efficient care
Reduce or control the cost of care
Population-based care
Medical homes
Health homes
Episode-based care
Acute, procedures or
defined conditions
Results-based payment and reporting
Health care workforce development
Health information technology (HIT) adoption
Expanded access for health care services
Focus today
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How does it work?
Hip Replacement
The Orthopedic Surgeon is
considered the quarterback
for this episode.
Inpatient
Hospital
Procedure
Preadmission
work
Post-Op Physical
Therapy/Rehab
Orthopedic
Surgeon
Radiology
Procedures
(MRI)
•Decision Making Authority
•Influence related to other
ancillary provider
Hospital
Readmissions
•Does have economic
relevance in regards to the
total cost
Pharmacy
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How does APII enhance healthcare in Arkansas?
To create coordinated, team-based care for all services
related to the episode.
Develop accountability by identifying a provider
“quarterback” or Principal Accountable Provider
(PAP) for all services across the episode. This provider
has influence related to patient care and has
economic relevance.
Create incentives for high-quality, cost-effective care
which is rewarded beyond current reimbursement,
based on the PAP’s average cost and total quality of
care
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From a conceptual model to real world
application
1
Patients seek
care and select
providers as they
do today
2 Providers submit
claims as they do
today
3 Payers reimburse
for all services as
they do today
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Calculate
incentive
payments based
on outcomes
after
performance
period, typically
12
months long
(retrospective
reimbursement)
Review claims from the
Performance period to identify a
‘Principal Accountable Provider’
(PAP) for each episode
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Payers calculate average cost
per episode for each PAP
Compare average costs to
predetermined
‘’commendable’ and
‘acceptable’ levels
6 Based on results, providers will
Share savings:
If average costs below commendable levels
and quality targets are met
Pay part of excess cost:
if average costs are above
acceptable level
See no change in pay:
if average costs are between
commendable and acceptable
levels.
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Examples of episode cost variation
Cost for an uncomplicated hip/knee replacement
(general acute care hospital – highest-volume provider)
in Little Rock
$18,911
in Jonesboro
$22,014
in NW Arkansas
$21,864
in Ft. Smith
$24,114
in Russellville
$22,695
in El Dorado
$28,247
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Aligned incentives
In APII, the Principle Accountable Provider (PAP) is in a
position to share savings or excess cost for the entire
episode
– For hip/knee it is the orthopedic surgeon
– For perinatal it is the obstetrician
The outcome of the risk/reward settlement is based
on the total episode payment
– Thus there is an incentive to look at referral patterns for the best cost
and quality
Quality is a critical component of the episode
– Need to ensure we are not incenting “underuse” of care
– Encourages evidence-based medicine and practices
– Identifies and improves secondary outcomes not directly tied to the
primary procedure (reduced readmits, higher patient compliance)
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… Payers assess their historic provider average cost for an episode; then
selects thresholds to promote high-quality, guideline-based
and cost-effective care
Year 1: preparatory period – where we are today
Year 1: distribution
of PAP’s costs
high
COST
85th Percentile
Acceptable
50th Percentile
Commendable
Gain sharing limit
low
Individual providers, in order from highest to lowest average cost
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Selected thresholds applied to provider performance in the following
year… even though we expect that cost effectiveness will have improved
Year 2: performance period
high
Year 1: distribution
of provider costs
Year 2: distribution
of provider costs
COST
Acceptable
Commendable
Gain sharing limit
low
Individual providers, in order from highest to lowest average cost
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PAPs that meet quality standards and have average costs below
the commendable threshold will share in savings up to a limit
Year 2: performance period
Shared savings
high
Shared costs
No change
COST
Acceptable
Commendable
Gain sharing
limit
low
Individual providers, in order from highest to lowest average cost
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Impact of methodology
Providers who have episode costs below the average
will share savings
Rewards high-performing providers
Could move volumes of care
Sends a message that all could attain shared savings
Represents a decision point for some providers who need to work
to improve or possibly cease providing certain services
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The Arkansas Model integrates multiple payment methodologies to
align accountability of different parts of the health care value chain

 Arkansas model
Basis of payment
Population-based
Episode-based
Fee-for-service
including
“pay for
performance”
Total health, quality of
healthcare, and total cost of
a population of patients
over time
Example approaches


Patient-centered medical
homes (PCMH)

Accountable Care
Organizations (ACO)

Global capitation
Achieving a specific patient
objective at including all
associated upstream and
downstream care and cost


Retrospective EpisodeBased Payment (REBP)

Prospective Bundled
Payment
Discrete service and
related incentives for
activities correlated with
favorable outcomes or
lower costs

Bonus payments tied to
quality measures

Bonus payments tied to
efficiency measures
SOURCE: McKinsey Center for U.S. Health System Reform
Anecdotal Information
• Rational discussions about facility competitive
standing based on current reimbursement
levels and requests for increases
• Conversations between “virtual teammates”
in an episode about how to create
efficiencies
• Providers who were very resistant to having
their cost/quality profiles shared are now
asking us to “fix the black box problem”
Some Interesting Things Have
Happened Along the Way
Comprehensive Primary Care Initiative
Wal-Mart Financial Support
State Innovation Model Grant
Anticipated Alignment of Medicare in
Episodic Reporting
• Expansion of Medicaid via the “Private
Option”
• This may be replicable in other rural markets
•
•
•
•
Lessons learned along the way
• “Flood the zone”
• The power of “inevitability”
• Transparency as enabler rather than threat to
providers
• Pragmatic approach to multi-payor alignment
• Tension between fairness, simplicity, and
scalability
Why does theArkansas Payment
Improvement Initiative matter to
Arkansas Stakeholders?
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Wal-Mart implements innovative care delivery
model
BENTONVILLE, AR – As it looks to both reduce out-of-pocket costs for employees, while
also lowering its total healthcare costs, global retailer Wal-Mart announced last month
a new program that will pay 100 percent of the costs for certain spine and cardiac
surgeries plus travel expenses at six selected healthcare systems across the country.
….What is also driving the Wal-Mart program is the documented wide variations in
both cost and quality for common medical procedures from region to region and
even hospital to hospital. As the largest private employer in the country, Wal-Mart
also has the purchasing clout to negotiate bundled payments for care episodes as
a way to address these significant cost variations.
“I think what you are seeing is the beginning of what healthcare in this country is
transitioning to. Whether it is employers or insurers, they are searching out the
greatest value for the lives that they cover,” said Steve Sibbitt, chief medical
officer for Wal-Mart Centers of Excellence partner, Scott & White.
Source: November 2012 Healthcare Finance News
www.healthcarefinancenews.com
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Several stakeholders have publicly voiced their
support for Arkansas’ healthcare transformation
Randy Zook,
President and CEO of
Arkansas State Chamber of
Commerce
“The value of our healthcare
expenditures is lacking, the costs
are unsustainable, and the
fragmented system of care
demands major change… We
applaud your initiative to
overhaul the healthcare payment
system and move from a
fee-for-service
reimbursement model
that has resulted in a fragmented
and inefficient system to one that
aligns payments with desired
outcomes.”
Maria Reynolds-Diaz
AARP, Arkansas State
Director
“The Arkansas Health Care
Payment Improvement Initiative
is well aligned with our work
toward a more efficient health
care system that improves
quality outcomes. We will
support consumer awareness of
new models and benefits that
meet these goals. AARP
Arkansas supports the initiatives’
push for coordinated care that is
better and easier to navigate for
patients.”
Sally Welborn
Walmart, Senior Vice
President of Global Benefits
“Part of Walmart’s mission is to
create opportunities so people
can live better… We recognize
that our associates and
communities that we serve
cannot live better if the health
care they need is not available or
affordable. Therefore, we have
been active in the national health
care reform dialog for years…
Thus, we support the effort you
are leading to align payments
with needed changes.”
Source: www.paymentinitiative.org/referenceMaterials/Documents/APII%20overview.pdf
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Comments or Questions
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