Emergency Medicine and Value-Driven Healthcare

Reform

EDPMA, April 2013

Brent R. Asplin, MD, MPHPresident and Chief Clinical OfficerFairview Health ServicesMinneapolis, MN

E-mail: basplin1@fairview.org

Goals

Overview of Healthcare Macroeconomics – Drivers of “population health”

Value Based Purchasing and Payment Reform

Disruptive Innovation Strategic Landscape for EM

US Gross HC Spending

2010 Healthcare Spending

as a Percent of GDP

Average Annual Premiums for Single and Family

Coverage, 1999-2012

* Estimate is statistically different from estimate for the previous year shown (p<.05).Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012.

$15,745*

Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings, 1999-2012

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2012; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2012 (April to April).

Variations in practice and spending

1. The paradox of plenty2. What’s going on?3. What might we do?4. Is there reason for hope?

The Dartmouth Atlas

76

88 8981

8899 97

109116

10697

134

115 113

127120

55 57 60 61 61 64 66 67 74 76 77 78 79 80 8396

0

50

100

150 1997–98 2006–07

Mortality Amenable to Health Care—Global

* Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections. See Appendix B for list of all conditions considered amenable to health care in the analysis. Data: E. Nolte, RAND Europe, and M. McKee, London School of Hygiene and Tropical Medicine, analysis of World Health Organization mortality files and CDC mortality data for U.S. (Nolte and McKee, 2011).Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011.

Deaths per 100,000 population*

Implications for Us

1966 1972 1978 1984 1990 1996 2002 20082014 2020 2026 2032 2038 2044 20500

5

10

15

20

25 Actual Projection

2.5 Percentage Points1 Percentage Point

Zero

Differential of:

Percent of GDPTotal Federal Spending for Medicare and Medicaid Under Assumptions

About the Health Cost Growth DifferentialTax rates 2050:10% 26%25% 66%35% 92%

Leadership in a New Age for Healthcare

What needs to happen?

Who is going to make it happen?

Paul Starr’s account of the rise of the American medical industry during the 20th century

Value-Based Reimbursement

What is Value?

Value is a function of quality (safety, outcomes, service) divided by cost over time

Strategic Bets of Value Based Purchasing Fee for service reimbursement drives

inflation in the system If you want different performance, you have

to change financial incentives For a population, high quality care (i.e. care

that eliminates unnecessary utilization) costs less than low quality care in any given year

Global payments will drive efficiencies

Value Based Purchasing

Pay for performance– PQRS– Value-based Modifier

Episodes of care & bundled payments

Hospital readmissions Accountable care organizations

(ACOs)

What is the Value Based Modifier?

The Affordable Care Act requires that Medicare phase in a value-based payment modifier (VM) that would apply to Medicare Fee for Service Payments starting in 2015, phase-in complete by 2017.

The VM assesses both quality of care and the costs of care.

CMS applies the VM to physician payment in all groups of 100 or more eligible professionals starting in 2015, based on your calendar year 2013 claims!

Meant to encourage shared responsibility and systems-based care for multi-specialty group practices

Attempt to “align” with Medicare Shared Savings program and Accountable Care Organizations (ACOs)

Value Based Modifier for Groups of ≥ 100 Eligible

Professionals CY 2013 Claims

Eligible Professionals = physicians, PAs, NPs, etc

“Group” ≥ 100 “eligible professionals” reporting under one TIN

Bonus or Ding –> TIN Physician Payments only

Value-Based Modifier and the Physician Quality Reporting System

Groups of ≥100 Eligible

Professionals(MDs, DOs, PAs, NPs)

Satisfactory PQRS Reporters

Non-satisfactory PQRS Reporters

(including those who do not report)

Elect Quality Tiering

Calculation

No Election

Upward or Downward

Adjustment Based on

Quality Tiering

0.0%No adjustment

-1.0 % VBM Adjustment-1.5 % PQRS Adjustment-2.5 % Total Adjustment

Interaction Between PQRS & Value-Based Modifier

To avoid -1.5% payment adjustment in 2015, based on CY 2013 claims must successfully report PQRS

To avoid all penalties, groups ≥ 100 eligible professionals must report at the group level

If the group reports at the individual level instead, they will all be subject to the value modifier of -1.0%

Total Failure to Report PQRS = -2.5% (2015 payment adjustment, based on CY 2013 claims)

Total Failure to Report PQRS = -3.0% (2016 payment adjustment, based on CY 2014 claims)

21

CMS Readmission Measures 2013

Hospital Readmission Reduction Program HRRP

“Program is designed to reduce CMS payments to hospitals with higher than expected risk-adjusted readmission rates.” Baseline period 6.1.2008 – 6.30.2011

Began 10.1.2012Reductions of 1% increasing to 3% in 2015

Acute Myocardial Infarction Heart Failure Pneumonia

CMS Inpatient Proposed Rule

(released 4/26/13) Adds knee and hip implants and

COPD admissions to the readmissions reduction program starting in 2015

Pays for the 2013 physician “SGR fix” with $11B in hospital cuts over 4 years

Accountable Care Organizations

Provider-led organizations with a strong primary care base that take accountability for the full spectrum of healthcare services for a defined population

Financial incentives tied to:– Total cost of care– Quality and patient satisfaction

CMS ACO Programs(260 Participating

Organizations)

Physician Group Practice Transitions Program– Six organizations (started Jan 2011)

Pioneer ACO Program– 32 organizations (started Jan 2012)

Medicare Shared Savings Program– 27 organizations began in April 2012– 89 organizations began in July 2012– 106 organizations announced in Jan 2013

Interesting ACOs

“Diagnostic Clinic Walgreens Well Network”– All of Florida

“Scott and White Healthcare Walgreens Well Network, LLC”– Texas

Private Exchanges and Narrow Network

Products Don’t underestimate how quickly

markets will move toward value-based insurance products– Partnerships between payers and

delivery systems– Many of the providers are

Independent Practice Associations (IPAs)

27

New payer/provider partnerships are emerging in the Twin Cities market

Providers Relationship Payer

New products50% ownership;

new products

New product

Merger

The Paradox of ACOs(public and private)

Every dollar of waste in healthcare is somebody’s dollar of revenue

Hospitals stand to lose the most from reductions in TCOC– Admissions for chronic diseases– Readmissions– ED visits

Implications for Emergency Medicine

Reduction of avoidable ED visits is a goal for every one of the 260 ACOs and private insurance products in the US today

Contrary to what you may hear, this is based on sound economics

Every smart ACO should try to partner with EDs to coordinate care and create alternatives to admissions/readmissions

Types of Business Models

Solution shops– “All things to all people”– Fee for service reimbursement– E.g. consulting firms, hospitals

Value added process (VAP) business– Reliable, rules-based processes– Fee for outcome reimbursement– E.g. MinuteClinic, Shouldice Hospital

Types of Business Models

Facilitated networks– Businesses where people exchange

things with one another– Fee for membership– E.g. Insurance

Disruptive Innovation

An innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network.

A “value network” is the collection of upstream suppliers, downstream channels to market, and ancillary providers that support a common business model in an industry.

Requirements for Disruptive Innovation

Technological enabler– E.g. the microprocessor

Business model innovation– Ability to profitably deliver the new

technological innovation Value network

– A commercial infrastructure of constituencies that reinforce and support the new business model

Control Data vs. IBM

Both were supercomputer giants of the 1970s

Enjoyed huge profit margins on mainframe supercomputers

Responded very differently to the advent of the microprocessor and personal computing

The Hospital Value Network

Emergency medicine is integrally tied to the hospital business model

Much of the criticism of the economics of emergency medicine is tied to the hospital business model in which it lives

Source: Christensen et al. The Innovator’s Prescription

Source: Christensen et al. The Innovator’s Prescription

Disrupting Healthcare

A simple question:

Will your economics be disrupted or will you do the disrupting?

ED Acute Care Framework(Peter Smulowitz, MD and

colleagues)

Source: Smulowitz et al. Annals of EM. 2012

Opportunity #2

Opportunity #1

Acute Unscheduled Care Patient Satisfiers

Biggest drivers of satisfaction for most acute unscheduled conditions:– Timely access– Low cost

Marginal Cost of Acute Care for Low Acuity

Conditions Regardless of setting, the marginal

cost of producing acute care is relatively low– How expensive is it for you to

diagnose acute otitis in your ED? This is much different than the cost

incurred by the payer (i.e. patient, health plan, government)– Widely variable depending on the

location

Medicare Reimbursement

ED vs. Office Visit

Source: Smulowitz et al. Annals of EM. 2012 (In Press)

The Strategic Opportunity

We already know how to deliver acute unscheduled care quickly and at a low marginal cost

Why are we content to do this in an environment that has:– Long waiting times due to hospital

boarding; and– High fixed hospital costs that drive a

non-competitive business model?

Disruptive Alternatives

to ED Care Free-standing

centers Target complexity

is above standard urgent care

Rapid throughput and lower cost

Not hospital-based (no EMTALA)

Disruptive Alternatives

to ED Care

Disruptor vs. Disruptee?

We have already solved the most difficult challenge of acute unscheduled care:

The 168 Hour Work-Week!

There are important opportunities to step out of the hospital (literally and virtually) to capture demand for low-cost alternatives to ED care

The Cycle of Disruption

Original Provider Hospital OR Inpatient Stay Surgical Specialists Specialty Care Primary Care Retail Clinics

The Hospital ED

Disruptive Alternative Ambulatory Surgery ED Observation Non-Surgical

Specialists Primary Care Retail Clinics Virtual Care

Free-Standing EDs plus which of the above???

ED Acute Care Framework(Peter Smulowitz, MD and

colleagues)

Source: Smulowitz et al. Annals of EM. 2012

Opportunity #1

The Value of Emergency Care

The most expensive routine decision in healthcare

The more “accountability” we take for reducing potentially avoidable admissions and re-admissions, the more “value” we will create for the system

Hub of the Enterprise?

“Accountability” + “Value” = ? A new revenue stream for

emergency medicine? Why wouldn’t you become part of

risk based products?– Private insurance, ACOs, Medicare

Advantage plans, etc….

Opportunities for an Emergency Care Hub

Coordination of transitions Reducing avoidable admissions and

readmissions Rapid complex diagnostic evaluations

– Especially for patients with complex conditions

Communication interface with other care delivery hubs– PCMH and geriatrics

The Irony of Emergency Medicine

and Value Based Healthcare

We are often pushed to the fringe as a provider to avoid rather than pulled into the middle of the operation

Providing better care for complex patients is the answer---won’t happen without better coordination in the ED

Primary Care Patient-Centered

Medical Home

Geriatric Services Continuum

The Emergency Care System

Hubs for Managing Population Health

Behavioral Health Capabilities

Leadership in a New Age for Healthcare

What needs to happen?

Who is going to make it happen?

A Short List of Health Policy Imperatives

Move away from fee for service payment for the majority of services– Global payments tied to population

outcomes and cost (i.e. value) Re-orient care delivery and

financing toward a health outcomes framework– Across entire population spectrum

Engage consumers in dramatically different ways

Discussion

E-mail: basplin1@fairview.org