2011 Medical Professional Liability Symposium

Chicago, IL ~ March 24 & 25, 2011

EVOLUTION OF HEALTHCARE DELIVERY: ACO’S &

MEDICAL HOMES

EVOLUTION OF HEALTHCARE DELIVERY: ACO’S & MEDICAL HOMES

Moderator:Paul A. Greve, Jr., JD, RPLU, Executive Vice President, Willis Health Care Practice

Panelists:Thomas S. Campenella, Esq., Associate Professor, Health Economics

Baldwin Wallace College; Of Counsel to Baker & Hostetler

Of Counsel, Baker Hostetler

William M. Marella, MBA, Director, Patient Safety Reporting Programs, Risk Management Group, ECRI Institute

Andrew L. Shapiro, JD, Senior Vice President, HealthPro, CNA

• Unlimited financial demands placed on the finite resources available to society

• Medical care must be placed within the context of other goals considered important by society

• To a large extent these are competing priorities

The Financial Challenge Facing Healthcare

Stakeholders

The culmination of healthcare cost, quality and access to care issues:

1. Negative impact on employers

2. Negative impact on Medicare/Medicaid

3. Negative impact on both the “haves and have nots”

4. Which will in turn negatively impact healthcare stakeholders – no longer business as usual

The Financial Challenge Facing Healthcare Stakeholders

• Our healthcare system is shaped by how we pay for services and what we pay for

• Medicare, the primary architect of our healthcare system

• Will there be “real payment” reform of Medicare?

• Remember, healthcare cost is revenue to the healthcare stakeholders

Follow the Money

• Large urban hospital systems

• Rural and independent hospitals

• Physicians

• Managed care organizations

• Long-term care industry

• Free-standing ambulatory provider facilities

How will Healthcare Reform Impact the Stakeholders?

• Accountable Care Organizations are provider groups (e.g. hospitals/physicians) that accept responsibility for the cost and quality of care delivered to a specific population of Medicare patients cared for by the group’s clinicians. ACOs are rewarded in the form of shared savings if the group provides care to beneficiaries for less than the Medicare benchmark cost while meeting criteria for patient service and quality of care.

Healthcare Reform – Large Urban Hospital Systems

Hospital Systems and ACOs• Key to success – aligning incentives• Positive/negative stakeholder impact • The return of the HMO model?• The impact of transparency• Make or buy?• Winners and losers – house of cards?

Healthcare Reform –Large Urban Hospital Systems

What is the future of rural and independent hospitals under health

care reform?

1. Independent physician collaboration

2. Business community collaboration

3. Tertiary centers of excellence collaboration

Healthcare Reform –Rural & Independent Hospitals

• Patient centered medical home (PCMH) - a team based approach to delivering medicine. The PCMH practice is responsible for providing care for all the patient’s health needs or making appropriate arrangements with other quality professionals. This includes the provision of preventive care, treatment of acute chronic illness

Healthcare Reform –Physician Industry

Patient Centered Medical Homes

1. Focus on primary care

2. Can they stand alone?

3. Will payers support them?

What is the future of the independent physician practice?

1. Medicare payment policy

2. Hospital collaboration

Healthcare Reform –Physician Industry

71%

23%

72%

26%

68%

30%

69%

28%

61%

35%

54%

39%

48%50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2002 2003 2004 2005 2006 2007 2008

Doctors

Hospitals

Source: Medical Group Management Association

Percentages of Practices Owned by …

Healthcare Reform –Physician Industry

What is the future of the MCO industry under healthcare reform?

• Insurance reform• Health insurance exchanges• A new role for MCOs?• Increased consolidation?• Winner & losers

Healthcare Reform –Insurance Industry

What is the future of the long-term care industry under healthcare reform?

• Aging baby boomers – a different model• Medicaid financial crisis• The role of long-term care insurance• Winner & losers

Healthcare Reform –Long-term Care Industry

What is the future of free-standing

ambulatory provider facilities?

1. Transparency + prudent purchasers of healthcare services = financial success

2. Medicare payment policies

3. Independent physician collaboration

4. Collaboration with MCOs

Healthcare Reform –Free-standing Ambulatory

Provider Facilities

• Both challenges and opportunities for health care stakeholders

• Those stakeholders that are proactive in addressing these challenges will have the best chance for short and long-term success

The Healthcare Stakeholders’ Challenges/Opportunities

Major Trends in the Landscape

• Declining reimbursement, growth in less profitable populations

• Consolidation of providers• More coverage = more care = more claims• Shifting patients to least costly acceptable

settings Expanded utilization of ASCs and O/P Expansion of patients and procedures in ASCs More home care & tele-health

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• Exacerbates existing primary care shortage• Increased patient volume• Physicians more pressured for time (dx

error, lack of follow-up on tests)• ACOs: Financial incentive to reduce

utilization• Medical Homes: 24x7 responsibility; what

are they promising?

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Crunch on Primary Care

• Will physicians push them too far• Level of supervision• Defining scope of practice• Who is reviewing their cases• What standard of care applies• Issues around ostensible agency

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Expanded Use of Mid-Level Providers

• CMS non-payment for hospital acquired conditions (HACs)

• Medicare payment reduced by 1% for all d/cs for hospitals in the top quartile of HACs (2015)

• Incentive payments for hospitals (Oct 2012) exceeding standards for AMI, heart failure,

pneumonia, surgery, & HAIs

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Value-Based Purchasing

• 30-day Readmissions payment penalties (Oct 2012)

• Results posted on HospitalCompare and PhysicianCompare

• Changes the ROI calculations for safety improvements

• Liability for failure to adopt specific patient safety practices?

21

Value-Based Purchasing

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Foreign Object Retained After

SurgeryAir Embolism Blood

Incompatibility Pressure Ulcer Falls & Trauma Catheter Associated UTI

Vascular Catheter

Associated Infection

Poor Glycemic Control

Surgical Site Infection

Orthopedic Procedure &

PE/ DVTTotal

Medicare HACs Reported Using POA Indicator (Numerator)

No HACs Reported

No HACs Reported

No HACs Reported

No HACs Reported 4 3 No HACs

ReportedNo HACs Reported

No HACs Reported 1 8

Medicare Discharges Related to the HAC Category (Denominator) 769 5,832 5,832 5,832 5,832 5,832 5,832 1,561 2 187 5,832

All Surgical Cases All Cases All Cases All Cases All Cases All Cases All Cases All Diabetic CasesCertain Ortho Procedures,

Bariatric Surgery and CABG Cases

Hip and Knee Replacement

CasesAll Cases

Estimated Medicare HAC Rate per 1,000 Discharges 0.00 0.00 0.00 0.00 0.69 0.51 0.00 0.00 0.00 5.35 1.37

Discharges Subject to Reduced Medicare Payment Because the HAC Reported was the Only Qualifying CC/MCC

0 0 0 0 2 0 0 0 0 0 2

Source: Hospital and HealthSystem Association of Pennsylvania

Hospital Acquired Conditions - Sample

• ACOs and Medical Homes will fail without information flow across care settings

• $19B in incentives for EHR adoption in ARRA • Critical that we adopt the EHR, despite the short-

term problems• Many problems are analogous to those with the

paper record Orders & studies posted to wrong chart Inaccurate info charted, failure to chart Wrong box checked, wrong selection chosen from list Privacy concerns/HIPAA

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EHR is Integral toHealth Reform

• VA terminates access to data from DOD EHR system when entries appear intermittently in wrong patients’ charts (March 2010)

• Selected cases of massive data loss

• First year of HITECH: 166 breaches, 4.9M people affected

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The Scale ofProblems has Changed

• Technical Learning curve associated with new technology User errors (failure to save entries, connectivity failures) Data corruption, availability Can lead to delay in treatment, misdiagnosis Alert atrophy and alert fatigue

• Legal EHR audit trail of document access, changes made Failure to act on information timely Automation of discovery process in fraud investigations Marginal risk of actively rejecting evidence-based guidelines

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Some Problems areNew and Unique to HIT

• Data communication/transmission problems and software problems may be less detectable

• Failure of images being transferred to PACS from diagnostic devices (CT, radiography, echocardiography)

• Incorrect processing of information (spatial orientation, patient position, measurements of pathology)

• Missing sections of CT studies, images reconstructed incorrectly

• Some cases of mass data loss

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The Case of PACS

• In February 2010, MIM Software received FDA marketing clearance for an App for diagnostic viewing of CT, PET, MRI, and SPECT images on iPhone, iPod Touch, & iPad

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Source: PR Newswire

Get Ready for theGolf Course Diagnosis

• Corporate Form• Leadership Structure• Governance• Providers• Members• Capitalization

Organizational Issues

• Coverage of entity and or providers• Breadth of coverage• Transient nature of insureds• Primary or secondary?• Character of patient population• Financial Risk

Insurance Considerations

• Quality of provider integration• Degree of physician leadership• Quality of systems for coordination of

care• Patient satisfaction monitoring• Progress toward meaningful use

More Insurance Considerations

• Causes of action relative to coordination of care

• Standard of care relative to EMR• Financial risk impact on level of care

decisions

Liability Issues

QUESTIONS?

EVOLUTION OF HEALTHCARE DELIVERY: ACO’S & MEDICAL HOMES

Moderator:Paul A. Greve, Jr., JD, RPLU, Executive Vice President, Willis Health Care Practice

Panelists:Thomas S. Campenella, Esq., Associate Professor, Health Economics

Baldwin Wallace College; Of Counsel to Baker & Hostetler

Of Counsel, Baker Hostetler

William M. Marella, MBA, Director, Patient Safety Reporting Programs, Risk Management Group, ECRI Institute

Andrew L. Shapiro, JD, Senior Vice President, HealthPro, CNA