Past, Present, and Future Challenges in Healthcare Reform Kenneth H. Cohn, MD, MBA, Facilitator http://healthcarecollaboration.com ken.cohn@healthcarecollaboration.com
How Can We Make Sense of Healthcare Reform?
Daily News Pulse http://bit.ly/jq8lzz
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Mission to Learn http:// www.missiontolearn.com/ 2009/11/making-sense-of-itall/ Kenneth H Cohn, MD, MBA, FACS
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Overview • Historical context • Major aspects of Patient Protection and Affordable Care Act (HR 3590) and Health Care and Education Affordability Reconciliation Act (HR 4872) • Dealing with complexity • Steps that we can take to extend the quantity and quality of our lives http://www.rules.house.gov/bills_details.aspx?NewsID=4606
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Premises • A system requires that the pieces work together • Value = Quality/ Price • Uncompensated care is never free
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How Did We Get Here? • 1943: Healthcare insurance deductible by companies, tax-free to workers • 1965: Medicare, Medicaid enacted • 1973: Health Maintenance Organization Act • 1983: Diagnostic Related Groupings • 1994: Clinton health plan defeated • 2003: Human genome sequenced • 2010: Affordable Care Act Feldstein PJ. Market Competition in Managed Care, in Healthcare Economics, 6th ed. Clifton Park: Thomson Delmar Learning. 2005, 156-165. Past Present and Future
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2010 Reform Provisions • Established a high-risk insurance pool • Created a reinsurance program for retirees < 65 • Required coverage of preventive services with no cost sharing • Provided rebates up to $250 to seniors paying out-of-pocket costs due to doughnut hole gap in Medicare prescription drug coverage (part D), effective immediately • Offered small businesses (<101 employees) that choose to provide employees health insurance tax credits up to 35% of premiums, effective immediately Past Present and Future
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2010 Reform Provisions, II Jennings CC. Implementation and the Legacy of Health Care Reform. www.nejm.org. 10.1056/mejmp1003709. 3/31/10. This Week. A giant step toward universal healthcare. April 2, 2010, 6.
• Eliminated overall lifetime limits on essential health benefits • Plans that provide dependent coverage of children are required to continue coverage for adult children not eligible under another employer group plan until they reach 26 • Pre-existing condition exclusions eliminated with regard to children under 19 Past Present and Future
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2011 Reform Provisions, III • Non-grandfathered plans not allowed to impose deductibles or co-pays on preventive care services and immunizations that are recommended by governmental agencies under the act Sears CS et. al. Summary of the Impact of Healthcare Reform on Employers. http://www.icemiller.com/newsletter/Benefits/ Employer_Health_Reform_Effects.htm Modern Healthcare. 2010; 40 (13):12.
• Required insurers to spend at least 80% of premiums on medical services
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2011 Reform Provisions, IV • Began phased-in fees and taxes on health industry, starting with a $2.3b annual fee on drug makers • 2011 Medicare Advantage payments set at 2010 levels This Week. A giant step toward universal healthcare. April 2, 2010, 6.
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Changes in Provider Payments â&#x20AC;˘â&#x20AC;Ż 10% incentive payments for primary care physicians. All physicians in family medicine, general internal medicine, geriatrics and pediatrics whose Medicare charges for office, nursing facility and home visits comprise at least 60 percent of their total Medicare charges eligible for a 10% bonus payment for these services from 2011â&#x20AC;&#x201C;16.
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Changes in Provider Payments, II • 10% incentive payments for general surgeons performing major surgery in areas where more health professionals are needed. All general surgeons who perform major procedures (with a 10- or 90-day global service period) in a health professional shortage area eligible for a 10% bonus payment for these services from 2011–16. Mahar M. Myths & Facts about Health Care Reform Part 2: Doctors Who Take Medicare. http://www.healthbeatblog.com/ 2010/04/myths-facts-about-health-care-reform-part-2doctors-who-take-medicare-and-medicaid-patients-.html [online article, accessed 4/12/10] Past Present and Future
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Changes in Provider Payments, III • Geographic payment differentials. In 2010 and 2011, Medicare made a separate adjustment for the practice expense portion of physician payments that will benefit physicians in rural and low cost areas • In 2013 and 2014 Medicaid payments to primary care physicians will be lifted to match Medicare rates. Today, Medicaid typically pays doctors 30% less than Medicare for the same service.
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Changes in Provider Payments, IV â&#x20AC;˘â&#x20AC;Ż The federal government is providing 100% of the funding needed for states to meet this requirement Mahar M. Myths & Facts about Health Care Reform Part 2: Doctors Who Take Medicare. http://www.healthbeatblog.com/ 2010/04/myths-facts-about-health-care-reform-part-2doctors-who-take-medicare-and-medicaid-patients-.html [online article, accessed 4/12/10]
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2012 Reform Provisions • In 2012, Medicare Advantage payments ranged from 95% of Medicare Fee For Service (FFS) in high-cost areas to 115% in low-cost areas • Employers required to provide an abbreviated summary of their health plans to participants by March 23, 2012 Sears CS et. al. Summary of the Impact of Healthcare Reform on Employers. http://www.icemiller.com/newsletter/Benefits/ Employer_Health_Reform_Effects.htm
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2013 Reform Provisions • Medicare Part D prescription drug subsidy for employers that provide retiree prescription drug coverage loses its tax-free status • Employer contributions to medical flexible spending accounts limited to $2,500 • Employee FICA taxes rise by 0.9% for wages above $200,000 ($250,000 joint)
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2013 Reform Provisions, II â&#x20AC;˘â&#x20AC;Ż 3.8% Medicare tax imposed on high-income earners ($200, 000 individual, $250,000 joint) for investments and other unearned income Sears CS et. al. Summary of the Impact of Healthcare Reform on Employers. http://www.icemiller.com/newsletter/ Benefits/ Employer_Health_Reform_Effects.htm
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2014 Reform Provisions • Imposes individual mandate, enforced by escalating fines starting at 1% of income, requiring most uninsured Americans to purchase health insurance • Provides subsidies to individuals and families with incomes up to 400% above the poverty line ($88,200 for family of four) to help them purchase insurance • Expands eligibility for Medicaid to anyone earning up to 133% of poverty line ($29,300 for family of four) This Week. A giant step toward universal healthcare. April 2, 2010, 6. Past Present and Future
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2014 Reform Provisions, II • Requires most employers to provide coverage of employees or pay penalties • Prohibits denial of coverage to anyone with a pre-existing condition • Establishes health insurance exchanges to serve as a competitive insurance market, enabling those without employer-based coverage to shop for coverage • Wellness incentives up to 30-50% of the cost of coverage are allowed for group plans (insured and self-funded) This Week. A giant step toward universal healthcare. April 2, 2010, 6. Past Present and Future
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Additional Reform Provisions • Establishes Innovation Center to rest and implement new Medicare provider payment mechanisms (HR 3590, sec. 3021) • Establishes independent Medicare Payment Advisory Board to report on system-wide healthcare costs, access, and quality and recommend policy changes to slow the rate of national healthcare and Medicare spending growth (HR 3590, sec. 3403)
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Additional Reform Provisions, II • After 2014, plans may not establish lifetime limits or annual limits on the dollar value of essential health benefits (Amendments to the Public Health Service Act, sec. 2711) • Links Medicare payments to quality outcomes, starting in 2016 (p. 1394, HR 4872) • COOP Program
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The Accountable Care Organization Core Principles (Mark McClellan, Elliott Fisher) 1 Provider-led organizations based in primary care, collectively accountable for quality and total per capita costs across the full continuum of care for a population of patients 2 Payments linked to quality improvements that also reduce overall costs 3 Reliable and progressively more sophisticated performance measurement Engleberg Center for Healthcare Reform. The ACO Toolkit. http://www.nachc.com/client/documents/ ACOToolkitJanuary20111.pdf Past Present and Future
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Initial Steps to Consider re: ACOs • Take stock of internal capabilities: – Leadership – Services: quality improvement, medical management, contracting, information management, public reporting – Partners • Decide on extent to which build on strengths vs. outsource • Specify timeframes ACO Learning Network Toolkit, p.25-6. https://xteam.brookings.edu/ bdacoln/Documents/ACO%20Toolkit%20January%202011.pdf. [Online article, accessed 4/19/11] Past Present and Future
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Five Steps to ACO Readiness • • • • •
Envision and educate Assess and analyze Prioritize and plan Design and deliver Measure and monitor
Bard M, Nugent, M. 2011. Accoountable Care Organizations: Your Guide to Strategy, Design, and Implementation. Chicago. Health Administration Press, 66.
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Five Critical ACO Success Factors • • • • •
Clinical integration Ability to manage care Aligned incentives Information technology infrastructure Extension of ACO model to all payers
Dunn L. 5 Critical ACO Success Factors. http:// www.beckershospitalreview.com/hospital-physicianrelationships/5-critical-aco-success-factors.html [Online article, cited 4-19-11]
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Proposed ACO Quality Metrics Domain
Metrics
1) Patient-Caregiver Experience 2) Care Coordination 3) Patient Safety 4) Preventive Health 5) At-risk Populations
7 16 2 9 31
Miff S. Making Sense of the New ACO Quality metrics. http:// members.sg2.com/content-detail-standard/default.aspx? contentid=8393057300762111751. [online article, cited 4/19/11]
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Early ACO Participants Advocate HealthCare IL http://www.advocatehealth.com Atlantic Health NJ http://www.atlantichealth.org Banner Health AZ http://www.bannerhealth.com/ Cape Cod Healthcare MA http://www.capecodhealth.org/ Catholic Healthcare West CA http://www.chwhealth.org/ Dartmouth-Hitchcock NH http://www.dhmc.org Past Present and Future
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Early ACO Participants, II Montefiore Medical Center NY http://www.montefiore.org/ Norton Healthcare KY http://www.nortonhealthcare.com Optimus NJ http:// www.optimushealthcarepartners.com Steward Healthcare MA http://www.steward.org/
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Accountable Care Organizations: (ACO) Accountable Care Act, Section 3022 Requires the Health & Human Services (HHS) secretary to establish a shared savings program by January 1, 2012 in which authorized providers contract with HHS to manage and coordinate care for Medicare beneficiaries ACOs must: • Care for at least 5,000 patients • Have sufficient primary care professionals • Use defined processes to promote evidence-based medicine Past Present and Future
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Accountable Care Organizations: (ACO) Accountable Care Act, Section 3022, II • Coordinate care through telehealth and remote patient monitoring • Meet patient-centered criteria established by HHS secretary http://www.hospitalimpact.org/index.php/2010/05/27/ aco_approval_deadline_approaching_faster
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The ACO Proposed Rule • SUMMARY: This proposed rule would implement section 3022 of the Affordable Care Act which contains provisions relating to Medicare payments to providers of services and suppliers participating in Accountable Care Organizations (ACOs). Under these provisions, providers of services and suppliers can continue to receive traditional Medicare fee-for-service payments under Parts A and B, and be eligible for additional payments based on meeting specified quality and savings requirements. • Proposed Rule: (429 pages) Past Present and Future
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Understanding Complexity • Complicated problems – Require coordination, expertise, and knowledge sharing – For example, preparing for Joint Commission site visit • Complex problems – Relationships are key – Experience is no guarantee of future success, but people remain generally optimistic (child-rearing)
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Understanding Complexity, II â&#x20AC;&#x201C;â&#x20AC;Ż For example, patient flow, risk management, clinical priority setting Moral: complexity can help us make sense of healthcare interactions that we can influence but cannot control Glouberman S, Zimmerman B. 2004. Complicated and Complex Systems: What Would Successful Reform of Medicare Look Like? www.changeability.ca.
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Healthcare Complexity Appreciative Inquiry
Control Caring
Curing Community
Glouberman S, Mintzberg H. Managing the care of health and the cure of disease- Part I: Differentiation. Health Care Management Review. 2001; 26(1): 56-69. Past Present and Future
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Complexity Redrawn
Caring
Curing
Stewardship
Community http://healthcarecollaboration.org/ecosystem-mastery-a-reviewof-ron-adners-the-wide-lens/ Past Present and Future
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Decision-Making in Complex Situations • Look for improved outcomes rather than ideal solutions • Encourage brainstorming and innovative thinking • Synthesize conflicting ideas with an iterative approach Act, learn, adapt "Ready, fire, aim“ Stacey R. 1996. “Emerging strategies for a chaotic environment.” Long-Range Planning 29(2):182-189.
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Decision-Making in Complex Situations, II • • • • •
Do not expect to get things right initially Reward intuition and muddling through Strive for effectiveness over efficiency Use face-to-face dialogue over e-mail Celebrate learning
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Community
Health System Health Care Organization
Resources and Policies SelfManagement Support
Informed, Activated Patient
Delivery System Design
Productive Interactions
Decision Support
Clinical Information Systems
Prepared, Proactive Practice Team
Improved Outcomes Hindmarsh M. www.improvingchroniccare.org, hindmarsh.m@ghc.org
What is Clinical Integration? • Clinical integration represents an approach to working more interdependently to improve clinical and financial outcomes • It recognizes that role boundaries are blurring between clinicians and non-physician clinical leaders and that both groups need to be involved in finance, operations, and brandbuilding. FTC-DOJ. 2004. Improving Healthcare, p. 36-37. http:// www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf
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Supporting Clinical Integration (CI) Clinical integration requires: • Transparency • A commitment to developing a shared mission, vision, and values • Authentic engagement based on mutual respect • Systems that support CI, especially information technology FTC-DOJ. 2004. Improving Healthcare, p. 36-37. http://
www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf
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Some Differences Between Employment and Clinical Integration Employment
Integration
Role
Hired hands
Co-owners
Work type
Shift-work
Build enterprise
Horizon
Days-weeks
Years
Authority
Linear/ vertical
Dotted-line, horizontal
Advantage
Fleeting
Sustainable
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Predictions • We are headed into a decade of transformation • Documentation will be destiny • Episode-based fee-for-service will decrease • Bundled payments for the continuum of care will become more prevalent
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Early Lessons from Bundled Payment Pilot • A case manager is essential to manage length of stay A program liaison must interface with government regulators to set up systems that work • A cost accounting program that allows for individual patient tracking is critical for success • Everyone benefits from transparency, so that there are no surprises • Multi-divisional agreements need to move from dividing the pie to transforming the patient care experience collectively
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Early Lessons from Bundled Payment Pilot, II â&#x20AC;˘â&#x20AC;Ż The enterprise needs to be able to scale up rapidly as market share increases http://healthcarecollaboration.com/what-i-learned-at-achecongress-march-2013/
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Implications • Expect continuing procedural challenges to implementation in Congress, federal agencies, and the courts • State officials, some of whom oppose reform, will play a large role in implementation • Eligibility for subsidies should be based on current income, but IRS has income information for past years • Small changes in family income may push family members from one form of coverage to another (Medicaid, exchanges) Aaron HJ, Reischauer RD. The War Isn’t Over. www.nejm.org. 10.1056/mejmp1003394. 3/31/10. Past Present and Future
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What We Can Do • Lifestyle and behavior have the largest influence on longevity (40%) • Human biology (genetics) accounts for 30% • Socioeconomic status (education) accounts for 15% • Environmental variables (exposure to pollution, radiation) account for 5% • Medical care accounts for only 10% McGinnis JM, Williams-Russo P, Knickman JR. The Case for Active Policy Attention to Health Promotion. 2002. Health Affairs; 21(2):83. Past Present and Future
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Conclusion • The provision and delivery of healthcare are complex • People’s actions change the context for everyone else • Doing something once gives no assurance of future success • Relationships and influence matter • Having formal and informal conversations is a way to deal with complexity and become more comfortable with processes that we cannot control Cohn KH. 2005. “Embracing Complexity,” in Cohn KH. Better Communication for Better Care: Mastering Physician-Administrator Collaboration, Chicago: Health Administration Press, 30-38. Past Present and Future
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Appendix: The Consumer Owned and Operated Plan (Co-Op) Program • Sections 1322 and 10104 of the Affordable Care Act • Purpose: to foster creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small-group markets in states in which issuers are licensed to offer such plans
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How the CO-OP Program Works • The CO-OP Board awards start-up interest-free loans to help physicians and collaborating organizations form a healthcare system • Responsibility rests within each organization to – Decrease variation in care processes – Continuously improve care outcomes – Document value provided to purchasers and patients
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Year One Co-Op Model Employers
Self-pay Individuals
$$$
$$$ Administrative Costs Marketing Costs
HOSPITALS
= 6%
PHYSICIANS
MEDICAL AND ADMINISTRATIVE SAVINGS
START-UP COSTS and RESERVES Norm Webb, norm@webbcare.com, 630-241-1956 Past Present and Future
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On-Going Co-Op Model Employers
Self-pay Individuals
$$$
$$$ Administrative Costs Marketing Costs
HOSPITALS
= 6%
PHYSICIANS
M & A SAVINGS
• Pay for Performance Bonuses (Hospitals and Physicians) • Lower Premiums and increased Services • Non-Profit Enhancements: Staff and Equipment
RESERVES Past Present and Future
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CO-OP Advantages • Aligns incentives between physicians and participating organizations to improve care outcomes • Fosters improved communication and collaboration • Eliminates middlemen • Increases physician influence • Provides improved services at lower cost to patients and families
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CO-OP Requirements • A climate of dialogue, inquiry, and active listening • Data sharing, commitment to transparency • Information technology interoperability • Detailed business plan • CO-OP Board approval before 7/1/13
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