Sharing Knowledge: Achieving Breakthrough Performance
2010 Military Health System Conference
T4 Study Group
TRICARE Fourth Generation Study Group –Exploring the Way Forward
26 January 2011
Dr. Guy CliftonDr. Brian UnwinAndrew Obermeyer
The Quadruple Aim: Working Together, Achieving Success
2011 Military Health System Conference
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4. TITLE AND SUBTITLE TRICARE Fourth Generation Study Group - Exploring the Way Forward
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Standard Form 298 (Rev. 8-98) Prescribed by ANSI Std Z39-18
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Policy Environment
Secretary of Defense Robert Gates has recently said health care costs are “…eating us alive,“...*
**SOURCE: Gates Criticizes Bloated Military Bureaucracy--Defense Secretary Vows Top-Down Assessment of Pentagon Budget, from Staffing to Ubiquitous "Overhead" Costs, By David Martin
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Health Care Grows Faster than DOD Budget Authority
44
! GAO .l!f::.. Aeeountabllily • Integrity • Reliability
DOD Health Care Spending has been Growing Faster than DOD's Discretionary Budget Authority
120 Cumulative percent increase
100
80
60
40
20
0 ~~~=--------------------------
103
78
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005
- DOD Health Care - DOD Total Discretionary Budget Authority
Source: GAO analysis of DOD data.
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In the Face of Record Federal Debt--- History Teaches that Defense Spending will be Cut.
5
Federal OutlaysShare of GDP
0.0
5.0
10.0
15.0
20.0
25.0
1962 1967 1972 1977 1982 1987 1992 1997 2002 2007
Perc
ent
Defense
Non-Defense
Mandatory
Interest
MIT Security Studies Program, November, 2010
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Why Should I Care?
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Price Cuts are not Effective for Long and can Destabilize Care.
7
Annual Change in Private per Capita National Health Spending (Adjusted for Inflation), with Historical Health Spending Events,
1960-2004 12
8
-s:: 4 Cll 0 ... Cll c.
0
-4
-8
9.0 8.3
7.0
...... ... 3.5
-0.2
-1.5 Voluntary Effort
Wage and -3.0 Price Controls
Medicare and Medicaid Implemented
8.9
Average Annual Change in Private
per Capita National Health
Spending, Adjusted for
Inf lation (3.7%)
-1.2 Managed Care and
Threat of Health Reform
6.4
3.8
1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2004
Source: Trends and Indicators in the Changing Health Care Marketplace. Exhibit 1.4. Publication 7031. Health Care Marketplace Project. Kaiser Family Foundation. May 2005.
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The Way Forward
Will Providers Accept Accountability for Cost and Quality?
If Not, Someone Else Will…And Neither Providers nor Patients Will
Like the Result.
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At Least 30% of Health Care is for Duplicative, Unnecessary, or Poorly Delivered Services
Four certain categories of unnecessary (sometimes harmful) spending in America– Inefficient hospitals– Poor management of chronic diseases
• 30% of health care spending– Unnecessary or poorly evaluated procedures
• >6% of hospital spending (estimate)– Emergency room over-usage
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Prime Direct and Indirect Spending is Similar to Overall US Health Care Spending
10
-c: Q) CJ .... Q) a.
50
40
30
20
10
0
Distribution of US Health Care Spending By Type of Services, 2003*
34.1%
Hospital Inpatient Services
Office-based Prescription Hospital Medical Medicines Outpatient Provider Services
Dental Services
Emergency Room
Services
Source: Center for Financing, Access, and Cost Trends, AHRQ, Household Component of the Medical Expenditure Panel Survey, 2003.
*US Civilian Noninstitutionalized Population
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MHS is Probably no Exception to Wasteful Spending.
Major categories of Probably or Certainly Unnecessary MHS Spending (percent of total?) – Musculoskeletal outpatient procedures and
treatments – Emergency Room Over-usage – Pharmaceuticals
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Probable Overuse
OUTPATIENT MUSCULOSKELETAL CARE
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Growth in Musculoskeletal Visits and Treatments
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
Musculoskeletal and Physical Therapy Visits
Purchased Care
Direct Care
Contractors routinely authorize 20+ visits per episode
SOURCE: Dr. Bob Opsut, OSD (HA), 201013
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Almost Certain Overuse
EMERGENCY DEPARTMENT VISITS
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In the Bronx 80% of ER Visits Need Not Have Occurred
New York City, 6 Bronx Hospitals, 1994/1999– Non emergent-41%– Emergent, primary care treatable-33.5%– Emergent, ED Care Needed,
Preventable/Avoidable-7.3%– Emergent, ED Care Needed Not
Preventable/Avoidable—17.9%
SOURCE: Emergency Department Use in New York City: A Substitute for Primary Care? Billings J, Parikh K, and Mijanovich T, Commonwealth Fund Issue Brief, 2000
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Most Common MHS Emergency Department Diagnoses based on Total Visits* ; Non-AD MTF Prime Enrollee
– Acute Upper Respiratory Infections — 62,977– Unspecified Otitis Media — 52,272– Fever — 50,758– Chest Pain, Unspecified — 44,108– Acute Pharyngitis — 39,617– Urinary Tract Infection — 33,687– Headache – 33,050
*Total Visits based on DC encounters and TED visits for 2008
Most Common Reasons for ED Visit in MHS are Primary Care Treatable/Preventable.
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MHS Beneficiary use of EDs is Double that of Privately Insured.
Average Emergency Room Utilization Rates
Type of Patient Average Rate (per 1000, per year)
Privately Insured Patients 210
Medicare Patients 480
Uninsured Patients 480
Western Region Military Health System (MHS) Patients 494
SOURCE: TRICARE Management Activity (TMA) TRO-West ER Utilization Survey Results Final Report – Deloitte Consulting, 2009
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31
4855
31
59
89
55
0
10
20
30
40
50
60
70
80
90
100
Convenienthours
-Little to no copay
Faster thanmaking apptw ith PCM
No apptnecessary/can
w alk-in
Too diff icult toobtain auth foracute/urgent
care
Trust hospitaland providers
Problem criticaland I felt itneeded
attention thatonly ER can
deliver
Why did you go to the ED?
SOURCE: TRICARE Management Activity (TMA) TRO-West ER Utilization Survey Results Final Report – Deloitte Consulting, 2009
Survey Questions
Perc
enta
ge o
f Res
pond
ents
Reasons Why Respondents Utilize ER:Percentage Who Respond Agree
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Future of TRICARE
Accountability for cost and quality requires systems of
care.
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Means of Creating Value
Systems of care require clarity of purpose.
Establish desired Outcomes. Align Organization of Care and Provider
Payments with desired outcomes.
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An Example of Aligning Outcomes with Payment.
Observed/Expected Post-Operative Pneumonia Rates
21
Source: National Surgical Quality Improvement Program
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A Huge Investment…
Latter Day Saints Hospital (Salt Lake City) takes treatment of pneumonia to another level– Change in ICU culture– Collaborative protocol development– Monitoring of compliance– Reduced sedation and paralysis– Reduced blood glucose– Reduced intravenous feeding– Antibiotic protocol– Stress ulcer prophylaxis
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For Which the Hospital Was Penalized.
And loses money doing it – Hospital-acquired pneumonia rate decreased
from 12% to 3%– Substantial investment in best processes
reduced their cost by $5000 per patient*– Turned it all over to payers
*SOURCE: Clemmer et al, Critical Care Medicine, Vol. 27 1999
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Assumptions & Conclusions
Policy makers will use price cutting to manage cost if providers do not…
…which may result in access and quality problems for government-funded patients.
If providers accept accountability for cost and quality they can forestall price cutting.
Accountability for cost and quality requires systems of care
Systems of care require clarity of purpose---benchmarks and aligned incentives.
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T4 Study Group’s Initial Findings
COL Brian Unwin
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Membership
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Service Reps CAPT Lea Beilman (N) OASD (HA/TMA) Ms Martha Lupo (TRO-S)
Col JoAnne McPherson (F)LtCol Frederick Grantham (Alt) Ms Jennifer Porter (TRO-W)
LTC Lori Howes (ARC) Ms Paula Evans
LTC Floreyce Palmer (A) CDR Jamie Lindly
LT Leah Mooney (CG) Mr Drew Obermeyer
Ms Barbara Zeliff
Mr Rick Hart
Ms Beth Spearman
OSD-Cape Ms Carol Moore USUHS CDR Glen Diehl
Mr Garrett Summers COL Brian Unwin
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Core Principles
Achieve the Quadruple Aim– Readiness and responsiveness– A healthy and fit population– A positive patient experience of care– Responsible management of the per capita
cost of care
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T4 Study Group
Which of These Five Options (among others we may discover ) will Create the Most Value and Preserve Readiness?
1. Incremental change to the existing Direct/Purchased (Managed) Care Regional model
2. Federal Employees Health Benefit Program/Medicare
3. MTF-Centric Systems of Care4. Purchased systems of care from integrated
provider groups5. Model 3 + 4
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The T4 Study Group’s Focus is Purchased Care, But…
Purchased care decisions will affect direct care.
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200
250
300
350
400
FY 2004 FY 2005 FY 2006 FY 2007 FY2008 FY20009
(Tho
usan
ds)
In-House Care Private Sector Care
Inpatient Weighted Workload
(Excludes MERHCF)
25
30
35
40
45
50
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY2009
(Mill
ions
)
In-House Care Private Sector Care
Outpatient Weighted Workload
(Excludes MERHCF)
Direct Care Shifts
SOURCE: Dr. Bob Opsut, OSD (HA), 201030
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MTFs and Their Catchment Areas Vary Widely
One Size Will Not Fit All.
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MTF Market Areas
3232
[] + +
Meta-Market Areas for Select MTFs (40-Miles)
40-Mile Meta-Market Area
Sources TRtCARE ManagementActMty. AJtarvm lnslltute, ESRI Datasets i'lclude MHS benefiCiary population pulled Seplember 2010, and MTF IOcatlons from FY2010
Popylation ltldudes 81 AD, ADFMJGRIGRFM, and undef 65 RETIRETFMIOTH, eXCluding 65+ Albrlm EQUal Are<~ Pro;ecbon, 2011
H Hospital
+ Clinic
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MTF Market Areas
3333
Meta-Market Areas with an MHS Population of over 25,000 (40-Miles)
40-Mile Meta-Market Area
Sources TRICARE ManaQemenl Activity. AltanJm ln&tllute, ESRI Data:Ml$ inc;:ILXSe MHS beneficiaty PQ~X.tlation puled September 2010, and MTF locations frOm FY2010
PopylabOn •nclooet all AD. AOFMIGRIGRFM. and under 65 RETIRETFMIOTH, exclucllng 65+ Albets Equal Alea Prqectlon, 2011
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MTF Market Areas
3434
Meta-Market Areas with an MHS Population of over 100,000 (40-Miles)
40-Mile Meta-Market Area
Sources TRICARE Management ActiVIty, Altarum Institute, ESRI Datasets Include MHS beneticlary population puled September 2010, and MTF locabons from FY2010
Populallon 1ncludes all AD, AOFMIGRIGRFM, and unclef 65 RETIRETFMIOTH, exclucbng 65+ Albers Equal Area Prqect10n, 2011
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Five Models
TRICARE with incremental improvement FEHBP, Medicare MTF Centric Care Purchased care: Integrated Provider Groups MHS Preferred Systems of Care
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Criterion Evaluated
• Readiness• Population health• Patient centeredness• Cost management• Provider behavior incentives• Patient behavior incentives
• Member ranking 1-10 for each domain
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Model 1: Incremental ImprovementsC
once
ptC
once
pt Incremental improvement of TRICARE
Incremental improvement of TRICARE
Act
ions
Act
ions
Reduce MCSC admin cost Preserves ReadinessEnhance to support population healthAcquire, manage, and adjust scope of contracts
Reduce MCSC admin cost Preserves ReadinessEnhance to support population healthAcquire, manage, and adjust scope of contracts
Out
com
esO
utco
mes
Tied to civilian cost growth and qualityCost controls (co-pays, other)No pop. health in purchased carePCMH in purchased care?Could use disease management, PCMH, and ACOsBeneficiaries “unattractive” because of low reimbursement
Tied to civilian cost growth and qualityCost controls (co-pays, other)No pop. health in purchased carePCMH in purchased care?Could use disease management, PCMH, and ACOsBeneficiaries “unattractive” because of low reimbursement
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Model 2: FEHBP and Medicare
Concept
• For NAD beneficiaries• MCSC no longer support PRIME and Standard• MTF Prime continues where possible
Actions
• Lower admin cost with Medicare (3% v. 9%)• Govt. pays full premium
Outcomes
• Loss of MCSC network discounts• Increased OOP costs for beneficiaries• Negative impact on readiness & GME• Same cost escalation as private sector• No population health
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Model 3: MTF Centric Care
Concept• MTF CDR responsible for capitated budget • Primary care and Population health emphasis• Patient complexity aligned to provider skill
Concept• MTF CDR responsible for capitated budget • Primary care and Population health emphasis• Patient complexity aligned to provider skill
Action• MCSC: smallest number of best specialty care• Care management and reporting to providers• Right of 1st refusal If MTF meets quality metrics
Action• MCSC: smallest number of best specialty care• Care management and reporting to providers• Right of 1st refusal If MTF meets quality metrics
Outcomes• Quality measures, data collection, report cards• MHS controls: processes, costs, & outcomes• Integration of population health• 5-7 year transition from TRICARE
Outcomes• Quality measures, data collection, report cards• MHS controls: processes, costs, & outcomes• Integration of population health• 5-7 year transition from TRICARE
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Model 4: Integrated Provider Groups
OutcomeOutcome
Cost savings? Uncertain…
ActionActionComplex patient
movement Readiness impact? GME Impact?
ConceptConceptPurchase care from groups that accept capitation
Integrates pop health, cost control and quality
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Overlap of TRICARE Beneficiary Population with Civilian Integrated Delivery Systems and MTFs
MTFIDS Affiliate
Sum of Total BENS by 3 Digit ZIP Code
200,000
1,342
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Overlap of TRICARE Beneficiary Population with Civilian Integrated Delivery Systems and MTFs (HI + AK)
Sum of Total BENS by 3 Digit ZIP Code
200,000
1,342
9
MTFIDS Affiliate
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Model 5: MHS Preferred Care
Combined 3&4– MTF Centric and Integrated Provider Groups
43
BKU1
Slide 43
BKU1 How is this different from current TRICARE?BRIAN K. UNWIN, 1/21/2011
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Criterion Scores by T4 Members
Criterion Option 1Incremental
TRICARE
Option 2FEHBP & Medicare
Option 3MTF Centric
Option 4Purchase care
from ACOs
Readiness 7 3.8 7.3 5.3Pop. Health 4.2 2.2 8 7.2Patient Centeredness
4.9 3.9 7.3 7.8
Cost Management
3.9 3.8 6.3 7.7
Provider behavior incentives
5.3 3.3 7.3 7.6
Patient behavior incentives
3.6 4.1 7.1 6.9
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Timeline
Kick-Off – October 2010 Phase 1: Framing the Problem Phase 2: Scenario Development Phase 3: Detailed Analysis—outcomes, risks,
consequences, feasibility
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Discussion
Mr. Drew Obermeyer
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