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Navy Medicine Business Planning

20 July 2006

Prepared by: Captain E. C. Ehresmann, Ph.D., CAAMA, MSC, USN

Prepared for: Patient Administration Course

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Impetus for Change –The “Why”

• Legislative Changes (TFL)• Resource Allocation to be based on

Productivity• Leadership Direction (HA/HASC Language

3/03, SG/Measures of Performance)• Rising Health Care Costs• Larger Number of Beneficiaries & Growing

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Paradigm Shifts

• Prospective Payment System (PPS)

• Performance Based Budgeting with Fee for Service (FFS)

• Reality - Will have some elements of old and new for awhile…we are in a transitional state

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Why Business Planning?

• Data, metrics and performance objectives are available

• Systematic processes to monitor and improve performance are lacking (Such as peer group reviews)

• Business plans set specific goals and provide a roadmap for optimizing performance and funding

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Assumptions

– Resources and services are documented and accounted for

– Economies of care provided in the MTF are in place

– Proficiency in documenting and coding services

– Time and effort expended on Readiness is documented

– Providers can achieve production targets and have the necessary resources

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Bottom Line

– If the cost of government health services is not comparable to civilian benchmarks, we are at risk.

– MTF metrics will be compared to set Benchmarks. Examples of Benchmarks: Expense per RVU, Expense per RWP, Total Expense per Enrolled Beneficiary (PM/PM), Cost per DWV

– The MHS must provide care in a timely and efficient manner

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Mission

Market

Access

Personnel

Workload

Alignment

Net Value

Prioritization

Financial Model

Production Model

Requirements

MTF Business PlanRVU

MEPERS

Eligibles

Core Business

Non-Enrollees

Enrollees

Value of Care Produced

Standard Organizational Codes

Template Management

Market Segmentation

Opsut Spreadsheet

APF

Should do vs. Could do

Revised FinancingData Quality

BUMEDBusiness Planning Tool

Annual Business Plan

FY05 Business Planning Concept

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BUMED Business PlanningGuiding Principles

• Manage network expenses for MTF enrollees• Improve MTF documented productivity• Meet all operational taskings• Improve customer satisfaction with access• Improve critical internal processes (appointing

and referral management)• Institute evidence based medicine• Improve data quality

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Str

ate

gic

P

rio

riti

es

Medically Ready and Protected Force and Homeland Defense for Communities

Deployable Medical Capability

Manage and Deliver Beneficiary Care

MHS Core Mission Elements

Improve MHS Efficiency and Effectiveness

Coordinate Research and Development Programs

Achieve Jointness and Interagency Cooperation

Sustain the Health Benefit

MHS Mission: To enhance DoD and our Nation’s security by providing health support for the full range of military operations

and sustaining the health of all those entrusted to our care

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Alignment

• Strategic Plan is done at Headquarters– BUMED mission and vision

• Surgeon General’s Vision• Surgeon General’s Priorities

– Readiness – Aligned and Agile– Quality, Economical Health Services– One Navy Medicine – Active, Reserve and Civilian– Shaping Tomorrow’s Force– Joint Medical Capabilities

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Business Plan AlignmentPerspectives of MHSBalanced Score Card

Stakeholder/Financial

Customer

DoD Beneficiaries

Commanders

Service Members

Internal Process

Patient Centered

Mission Centered

Learning & Growth

Organizational Culture

Human Capital

Science & Technology

Resources

Surgeon General’sFive Priorities

Readiness – Aligned and Agile

Quality, Economical Health Services

One Navy Medicine – Active/Reserve/Civilian

Shaping Tomorrow’s Force

Joint Medical Capabilities

Navy Medicine Measures of Performance (MOPs)

Drive Warfighter Medical Readiness

Maintain Deployment Readiness

Shape Force Structure

Shape Civilian Structure

Optimize Production

Drive Down Cost

Accelerate Agility

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FY07 Tri-Service BusinessPlanning Tool

https://triservicebps.afmoa.af.mil

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FY07 Framework for MTF Healthcare Delivery

• Production Plan based on Supply and Demand

• 8 Critical Initiatives – Optimize Provider Productivity– Improve Access to Care– Manage Referrals – Improve Labor Cost Reporting and Management– Advance Evidence Based Health Care– Improve Documented Value of Care (coding)– Manage Pharmacy Expenses– Readiness/Expeditionary Planning

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Driving Force

• MHS Budget Concerns Continue– Currently $36B…projected to grow to $50B by

2010– Annual Rate of Growth in MHS Budget is

8%...compared to Pentagon’s 3-4%– Increased cost share reshaping the pharmacy

benefit– More beneficiaries

Reference: DoD Healthcare Spending Doubled in Past Four Years, American Forces Press Service. Jan. 25, 2005. http://www.defenselink.mil/news/Jan2005

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Effect of Business Plans on Direct Care Budgets

•Budgets will reconcile performance against the plan

Prior Year Funding

Readiness

“Other” Value of HealthCare

Provided

Prospective Funding for Budget Year

Business Plan (based on number of

enrollees and nonenrollee care provided)

Readiness+”Inflation”

“Other”+”Inflation” Value of

HealthCare Planned

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PPS – Where We Are

• PPS applied in FY05 initial allocation – 25% blend with traditional budget

• PPS applied at Mid Year– Based on most recent 12 months– 25% blend with traditional budget

• PPS to be applied to FY06 allocation– Based on recent business plan– 50% blend with traditional budget– Rate calculations being done now for PPS – HA sets

the tone.

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Results of PPS

FY05 Plan FY 05 Actual

Army $24.6 $8.4

Navy $ .8 $4.1

Air Force ($2.2) ($4.4)

FY05 PPS RESULTS – PPS VALUE (25% of Service Budget)

Desired Outcome: Actual above Plan

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FY07 – PPS Next Steps

• Monitor FY06 performance to plan

• Apply to future budgets– FY07 = 75% blend with traditional budget– FY08 = 100% PPS

• Incorporate ancillary and pharmacy data

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How to use the tool

• For each module:– Validate the base year with

• Source data system (M2)• Reality check

– Adjust the module for • Projected changes from base year

– Review summary data before moving to next module

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Begin at the beginning

• Guidance– Who gives guidance

• TMA to Services• TRO to MSMO• Services to Commands

– What guidance did they give – FY06 (alignment)• Executive Summary• Production Plan – Prescriptive -Target Ranges• Critical Initiatives - 8• Timeline – Usually very short for each stop• Approval process• Metrics/review process

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The “How”

• Teamwork with variety of skill sets– Executive direction– Human capital management– Resource management– Data quality/flow management – Clinical management– Clinical support process management– Contingency planning– Performance improvement– Clinical leadership– Market management (MSMO)

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FY07 ImproveAccess To Care

• ATC Self Assessment

• Minimum of two initiatives (select from menu)– Meet minimum access to care standards >90% – Exceed access to care standards >=95%– Primary care provider schedules reflect at least 30 days out– Primary care provider schedules reflect at least 45 days out– Decrease the primary care “Unused/Unbooked” appointment rate <5%– Decrease the primary care “No Show” rate <5%– Decrease the primary care “MTF Book Only” appointment rate <10%– Increase beneficiary appointment booking through TRICARE Online

>10%– Increase TRICARE Online registration >=20% (of total enrolled

beneficiaries) – Implement “Open Access” appointing (one clinic)

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FY07 Readiness and Expeditionary Planning

• Medically Deployable Force

• Ready Medical Force

• Impact of Deploying Forces

• Contingency Template

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FY07 Evidence Based Health Care

• Continue FY06 Initiatives

PLUS:

• Healthy Weight

• Dental Health

• Tobacco Cessation

VA/DoD CPG at http://www.qmo.amedd.army.mil/pguide.htm

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FY07 Labor Cost Reporting and Management

• PBD – 712 and POM impact and conversion plans

• Labor Reporting – MEPRS accuracy

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FY07 Manage Pharmacy Expenses

• Direct Care Pharmacy– Data integrity– Inventory Management

• Turnover and ordering processes

• Purchased Care Pharmacy– TRICARE Mail Order Pharmacy referrals and

marketing– Enrollee utilization of Network Pharmacy

• Manage Pharmacy Expenses– Monitor Plan to Execution (SMART)

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FY07 Optimize Provider Productivity

• MGMA Benchmarks and the productivity expectations of each provider by specialty

• Department level commitment to increasing productivity

• Efficiency measures help

• Workload capture is very important

• Coding accuracy has direct impact on documented productivity

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Region Productivity Thresholds & Targets

• Enrollment– Working with the regional analysts, MTFs may

propose increased enrollment levels

• Thresholds– Thresholds are based on FY05 production levels– Thresholds are minimums and will be managed at the

regional level

• Targets– Specialty Productivity Standards are available and

may be used to demonstrate what an MTF can produce, but those levels are not required

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FY07 Manage Referrals

• RM Self Assessment

• Initiatives– Initiate, develop, and implement formal processes for referral

management/tracking– Implement CHCS electronic consult tracking– Meet minimum specialty care access standards 90% of the time– Increase specialty self-referral availability and appting through

TRICARE On Line– Initiate, develop and implement RM metrics– Timely return of results to provider – Ensure specialty care schedules available 30 days out

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FY07 Improve Documented Value of Care

• Completeness (code for all procedures

performed in a visit)

• Accuracy (for all coding)

• Education and Training (ensure all education

and training are properly recorded)

• Record Availability (all visits must be documented

in medical records)

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FY 07 and Beyond

• Focus on the 8 Critical Initiatives

• Increase system efficiencies

• Expand current foundation and integrate other areas into business planning (i.e. disease management)

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Tool Time

https://triservicebps.afmoa.af.mil

FY07 Tri-Service Business Planning Tool

http://toc.tma.osd.mil/cgi-bin/broker.exe

TRICARE Operations Center

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FY07-FY09Business Planning Tool

A brief introduction to the Tri-Service Business Planning Tool for Navy

Users

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Elements of a Business Plan

• Executive Summary• Contingency Plan• Production Plan• Access to Care Plan• Referral Plan• Coding and Documentation Plan• Labor Management Plan• Pharmacy Management Plan

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Timelines

• The tool is available now

• MTF plans are due to the Regions by 01March 2006

• Regional plans are due to BUMED by

01 April 2006

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Regions and Roles

• Regions will provide direct assistance to the MTFs– MTF plans will be approved at the regional

level

• BUMED will evaluate the plans at an aggregate level by region

• MSM plans follow a different path– Surgeons General will collectively approve the

MSM plans in mid April.

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APFs and the Business Plan

• No direct connection

• Plans will be analyzed for changes in requirements by the regions

• BUMED will analyze the plans for changes that cross regional lines

• For any changes in resourcing to be possible, analyses must be complete and demonstrate need

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Critical Initiatives

• Access to Care• Labor Reporting• Provider Productivity• Referral Management• Evidence-Based Health Care• Managing Pharmacy Expenses• Documenting the Care• Expeditionary Planning

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Action Plans

• Linkage• Problem Definition• Measurements• “Key Issue”• Best Practices• Approval Chain will be evaluating both

quantitative and qualitative submissions during this process

• Navy has the opportunity to lead the Services again

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Measurements

• Several measures are available through the tool– RVUs– RWPs– Financial Impact– Etc.

• For those that are not available, supporting documentation is available

• Impacts of the intended actions need to be expressed in quantitative and temporal terms

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Technical Informationand Support

• URL– https://triservicebps.afmoa.af.mil

• EI/DS Contractor– IMS (Synchronous Knowledge– SGZI.Support@Pentagon.af.mil– Phone: DSN 297-5040 or 202-767-5040

• Regions– Implementation and coordination

• URL– https://triservicebps.afmoa.af.mil

• “Open Mike”– BUMED is coordinating a open session for help and assistance.

More information to follow.

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Questions?

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Back up Slides on Coding

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Short Coding PrimerRVURWPDWV

DWLV

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CodingRVUs

• Resource Relative Value Scale-CMS– Reflects skill, time, and resources required for

each patient encounter– Used to set standard fee schedule– Practice management tool

• Productivity• Patient case mix• Compensation rates

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CodingRVUs

• Relative Value Unit is the coin of the realm– Measure of professional services– Gives valid estimate of physician work– The more difficult the service, the higher the RVU

earned– Three components

• Work RVU (55%) – Current DoD element• Practice Expense (42%)• Professional liability (3%) (considered in PPS Tables)

*Locality factor is used to compensate for high cost of living areas (Incorporated into PPS Tables)

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CodingRVUs

• Evaluation and Management Codes – E&M codes represents the difficulty factor

• Accounts for: – time, skill, effort, level of judgment, risk.

• Simple RVU is sum of all CPT Values– 99213 – Office Visit = 0.67 RVU– 99214 – Office Visit = 1.10 RVU– 99291 – Critical Care first hour – 4.0 RVU– 47135 – Liver Transplant – 81.52 RVU

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CodingRVUs

• Coding issues– Provider specialty codes– Over coding– Under coding– DoD Guidelines vary in Industry– Training – professional trainers/ALTHA/CCE– Clinic processes to support best coding

practices– Audits and data evaluation imperative

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CodingRWPs

• Relative Weighted Product – Inpatient – Facility related work effort for inpatient care– Includes institutional charges

• Equipment• Inpatient staff• Overhead• Routine inpatient services (pharmacy, ancillary)

– Exclusions• Professional services measured in CPT codes • Rounds encounters (E&M and other CPTs)

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DWV/DWLV

• Dental Weighted Value– Coded dental interventions– Industry based tables that attempt to equate

level of effort and resources– One DWV is worth $100. – Tables are periodically updated

• Dental Weighted Lab Value– Dental Lab production measure

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Net Value

• Demonstrates value of care

• Identifies loss margin as it relates to expense accounting

• Estimates the relative cost of enrollee purchased care

• Use to identify opportunities for Venture Capital Initiative or management of enrollee leakage.