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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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2011 MHS Conference

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?

6

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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

17


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

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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

26

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

2011 MHS Conference

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

2011 MHS Conference

MTF Market Areas

3333

Meta-Market Areas with an MHS Population of over 25,000 (40-Miles)


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

2011 MHS Conference

MTF Market Areas

3434

Meta-Market Areas with an MHS Population of over 100,000 (40-Miles)


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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2011 MHS Conference

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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2011 MHS Conference

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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2011 MHS Conference

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

40


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

9


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

BKU1 How is this different from current TRICARE?BRIAN K. UNWIN, 1/21/2011

2011 MHS Conference

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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2011 MHS Conference

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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2011 MHS Conference

Discussion

Mr. Drew Obermeyer

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