Emergency Medicine and Value

Report
Emergency Medicine and ValueDriven Healthcare Reform
EDPMA, April 2013
Brent R. Asplin, MD, MPH
President and Chief Clinical Officer
Fairview Health Services
Minneapolis, 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
$15,745*
* Estimate is statistically different from estimate for the previous year shown (p<.05).
Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012.
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
The Dartmouth Atlas
1.
2.
3.
4.
The paradox of plenty
What’s going on?
What might we do?
Is there reason for hope?
Mortality Amenable to Health Care—Global
Deaths per 100,000 population*
1997–98
150
2006–07
134
127
116
115
109
99
100
89
88
120
113
106
97
97
88
81
76
50
96
60
57
55
61
61
64
66
74
67
76
79
78
77
80
83
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* 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.
Implications for Us
Total Federal Spending for Medicare and Medicaid Under Assumptions
Percent of GDP
About the Health Cost Growth Differential
25
Actual
Differential of:
20
2.5 Percentage Points
1 Percentage Point
Projection
Tax rates 2050:
10%
26%
25%
66%
35%
92%
Zero
15
10
5
0
1966 1972 1978 1984 1990 1996 2002 2008 2014 2020 2026 2032 2038 2044 2050
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
Upward or
Downward
Adjustment Based
on Quality Tiering
No Election
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)
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 10.1.2012
 Reductions of 1% increasing to 3% in 2015
 Acute Myocardial Infarction
 Heart Failure
 Pneumonia
21
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)
New payer/provider partnerships
are emerging in the Twin Cities market
Providers
Relationship
New products
50% ownership;
new products
New product
Merger
27
Payer
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)
Opportunity #1
Opportunity #2
Source: Smulowitz et al. Annals of EM. 2012
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 noncompetitive 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




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

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)
Opportunity #1
Source: Smulowitz et al. Annals of EM. 2012
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
Hubs for Managing
Population Health
Primary Care
Patient-Centered
Medical Home
Geriatric Services
Continuum
The Emergency Care
System
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

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