Payers and Providers Collaborate for Success

In Age of Reform

March 10, 2011

Need to bend the cost curve

Increased attention to quality metrics

Reimbursement models that incent patients and providers to move toward both lower cost and higher quality

The New Realty

Reduced payment per service, reduced trend/annual rate increases

More efficient use of medically necessary services

Elimination of unnecessary services Fewer complications/higher cost services

due to improved quality and more coordinated care

Cost Curve – How do you Bend It?

Shared savings Resources/support to initiate and maintain

Investment in the tools to accomplish Ongoing monitoring and sharing of data

Added value to provider, payer and employer/patient

Achievable? With Collaboration

Payers -◦ Achieve a savings they can pass on to their

customers, investors, providers◦ Hit metrics they can market – utilization, quality,

and cost metrics Providers -

◦ Deliver the tools to better manage utilization◦ Demonstrate willingness to invest in changes that

will ultimately result in savings◦ Share in savings

Key Players – How to Engage?

Win-Win Structures◦ Agreement on Goals that Benefit All

Lower cost BEFORE lower reimbursement Improve quality BEFORE increasing reimbursement Common set of metrics and attainable goals Data everyone can trust/rely on Meaningful shared savings – dollars significant

enough to generate/maintain interest

Coming Together – How?

Pay for Performance/Gainsharing

Enhanced, data driven, primary care initiatives

Global risk, bundled payments and other alternative financial arrangements

Options for Collaboration

Pay for Performance/Gainsharing Why?

Simple Method to Align and Achieve Physician and Hospital (and Payer) Goals

Engages physicians, payments to docs within the year, collaboration/improvements begin immediately

Not complicated - data is readily available & accepted as valid

Flexible - adapt to special needs of hospital

Perfect tool for any start up ACO and other “risk” entities

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Many efforts underway aimed at efficiency and quality improvements - BUT◦ Getting the attention and involvement needed from

physicians?◦ Physicians have a true understanding of their role in

achieving the goals – how to hit the benchmarks?◦ Providers getting the right kind of data, on a regular

basis, that give direction on behavior changes?

Usually Not…..

Pay for Performance/Gainsharing

‣ 2006 Managed Care, 2008 Medicare demo‣ Designed to compensate Physicians who improve

quality and implement more efficient inpatient practice patterns

‣ Savings shared with physicians who move toward or hit benchmarks

‣ Upside bonus only, based on individual performance

‣ No change in current billing process or payment (and loss of income factor included in bonus)

Continuum Health PartnersPay for Performance Overview

CHP Pay for Performance

Basic Framework

All cases severity adjusted to 4 levels using APR-DRGs to account for ‘sicker’ patients.

Benchmarks established using CHP actual experience – average cost of the top 25th percentile (lowest cost) performers.

Monies to pay bonus come from hospital savings generated by improvements in efficiency. No savings - no bonuses paid out.

Payments withheld from physicians who do not meet quality standards (Core Measures, Infection indicators, Readmission rates, medical record completion, patient complaints etc)

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Preliminary Results – Significant cost reductions and improved quality

Shrinking gap between bottom 75th percentile and top 25th percentile

Greater understanding of data and interest in clinical guidelines – moving toward standardization of care

Incentives more closely aligned

Successful Partnership Achieved

AMI HF PN SCIP0

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BIMC CORE MEASURE COMPLIANCE GRAPH 2006 - Present

2006 2007 2008 2009 1st half 2010

Core Measure Trends

Enhanced, comprehensive data distribution among providers

Primary care/patient focused medical home Stratification of high risk patients with

directed case management Medical benefit redesign to incent greater

compliance Directing patients toward provider networks

sharing data/managing patients

Additional Initiatives