my hypotheses: healthcare reform will pass and will usher in unprecedented change

ACMHA SummitThursday, March 25,2010Dale Jarvis, CPAMCPP Healthcare Consulting, [email protected]

Taking Action to Address Global Problems Emerging Payment Reform Models for Health and Behavioral Healthcare

My Hypotheses: Healthcare Reformwill Pass and will usher in Unprecedented Change

• Federal Healthcare reform will trigger dramatic changes in how health and behavioral health services are organized and funded

• These changes will create a tipping point in how the healthcare needs of persons with serious mental illness and the behavioral healthcare needs of all Americans are addressed

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New Payment Reform and System Management Models

Provider Bonuses & Incentives

Differential Rates

Grants & Seed Money

Bundled Payments Case Rates

Global Subcapitation

Direct Payments to

PatientsLow Risk

Low Risk

Medium Risk

Higher RiskPrimary & Specialty

Subcapitation

Community Incentive

Pool

Can/Should Mix and

Match the Components based on the

Design

Medical Homes

HospitalsMedical Homes

Food Mart

Specialty Clinics

Food Mart

Specialty Clinics

Medical Homes

Hospitals

Clinic

Clinic

Accountable Care Organization

Health Plan

The Two-Part Problem

“The American healthcare system is a dysfunctional mess.” (Ezekiel Emanuel, MD, Chair of the Department of Bioethics at the Clinical Center of the National Institutes of Health)

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60

70

80

90

100

110

65

71 7174 74

7780 82 82 84 84

9093

96101 103 103

104

110

Preventable Deaths* per 100,000 Populationin 2002-2003 (19 Industrialized Nations,

Commonwealth Fund)(* by conditions such as diabetes, epilepsy, stroke, influenza,

ulcers, pneumonia, infant mortality and appendicitis)

As much as 30% of health care costs (over $700 billion per year) could be eliminated without reducing quality

$2.3 - $5.2 Trillion

The Two-Part Problem

Fixing the problem can be described as: Moving further upstream with prevention

& early intervention services to prevent health conditions from becoming chronic health conditions

Dramatically improving the management of chronic health conditions for the 45% of Americans with one or more such conditions whose treatment draws down 75% of total medical costs

Reducing errors and waste in the system Reducing incentives for high cost, low value, procedure-based care

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Emerging Delivery System and Payment Reform Models

Where the U.S. Healthcare System is headed (at a glance)

Increase Preventive Care

Promote Early Intervention

Improve the Coordination of Care

Expand the use of Evidence-Informed Care

Decrease Overuse and Underuse of Services

Reduce Error Rates

Institute for Healthcare Improvement Triple Aim- Improve the Health of the Population- Enhance Patient Experience (quality, access, reliability)- Reduce (or at least) Control Costs

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Person Centered

HC Homes

Inpatient: Reducing Errors & Waste

Delivery System Redesign Elephant in the Room

• Need to invert the Resource Allocation Triangle

• Prevention Activities must be funded and widely deployed

• Primary Care must become a desirable occupation and

• Decrease Demand in the Specialty and Acute Care Systems

• These are dramatic shifts that will not magically take place

Acute Care

Specialty Care

Prevention, Primary

Care

Current Resource Allocation

Prevention & Primary Care

Specialty Care

Acute Care

Needed Resource Allocation

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Two Types of Payment Reform are the Key

Value-Based Purchasing (VBP) Value-Based Insurance Design (VBID)

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Value-Based Purchasing – The Holy Grail

Global Capitation to an Integrated Health SystemIntegrated Health Care System

Person Centered

HC Homes

High performing Hospitals

Person Centered

HC Homes

Food Mart

High Performing Specialty Clinics

Food Mart

High Performing Specialty Clinics

Person Centered

HC Homes

High performing Hospitals

Clinic

ClinicSupportive Health Plan

But... Integrated Health Systems will be only one of many system models9

• Fee for Service is headed towards extinction• Health Care Home models will begin with a 3-layer funding design with the goal

of the FFS layer shrinking over time• Being replaced with case rate or capitation with a pay for performance layer

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Value-Based Purchasing – Medical Homes

Case Rate

Fee for Service/PPS

Bonus

· Prevention, Early Intervention, Care Management for Chronic Medical Conditions

· Per Service Payment· Prospective Payment System (PPS)

Settlement (FQHC model) to cover shortfalls

· Share in Savings from Reduced Total Healthcare Expenditures (bending the curve)

Person Centered

HC Homes

• Payment for inpatient care will bundle hospital and physician services

• Bundled payments that only pay for part of Potentially Avoidable Complications (PACs) will penalize providers that have higher error rates and reward those with lower PAC rates

• Bundled payments may include all costs in the 30 days post an inpatient stay, including any return to the hospital

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Value-Based Purchasing – Inpatient Care

• Pay for Performance funding layer

• Differential Rates for providers that use published Practice Guidelines (EBPs)

• Capacity-Based Funding to kick start innovations

• Funding to community organizations that improve health status and bend the cost curve

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Value-Based Purchasing – Other Strategies


Differential Rates

Capacity-Based

Funding

Community Incentive

Pool

• Developed in response to problems related to increases in co-payments implemented by employers and insurance companies to save money

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Value-Based Insurance Design (VBID)

Value-Based Insurance Design Features (VBID)

• Decreasing cost-sharing for interventions that are known to be effective

• Increasing cost-sharing for those that are not known to be effective

• Providing financial incentives based on behavioral economics research

• Providing a deep education component to explicitly guide patients to use high-value, and avoid low-value, interventions

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So How does the MH/SU System Fit into this New Equation?

Medi-Cal FFS Total

Medi-Cal FFS SMI

Medi-Cal FFS Enrollees 1,580,440 166,786 11% SMI % of TotalMedi-Cal FFS Costs $6,186,331,620 $2,395,938,298 39% SMI % of TotalMedi-Cal FFS Cost/Enrollee $3,914 $14,365 3.7 SMI/Non-Ratio

Diabetes 4% 11% 2.8 SMI/Non-RatioIschemic Heart Disease 2% 6% 3.0 SMI/Non-RatioCerebrovascular Disease 1% 3% 3.0 SMI/Non-RatioChronic Respiratory Disease 5% 13% 2.6 SMI/Non-RatioArthritis 2% 7% 3.5 SMI/Non-RatioHealth Failure 1% 3% 3.0 SMI/Non-Ratio

Inpatient Episodes 100 293 2.9 SMI/Non-RatioER Visits 337 1,167 3.5 SMI/Non-RatioInpatient Acute Days 609 2,094 3.4 SMI/Non-RatioPrimary CareVisits 128 492 3.8 SMI/Non-RatioSpecialist Visits 1,211 6,058 5.0 SMI/Non-Ratio

California Fee for Service Medi-Cal Analysis - 2007

Metric

Prepared by JEN Associates, Cambridge, MA15


The MH/SU delivery system has two roles to play:• Integration of CBHOs into Person Centered Healthcare Homes• High Performing, Recovery and Wellness-Oriented MH/SU ProvidersAnd, in both cases, will need to learn toplay by the payment reform rules

Integrated Delivery Systems

Accountable Care OrganizationsBundled Case Rates that

pay a Percentage of PACs and Non-Payment for Never

Events

Payment Model to cover Prevention, Primary Care

and Chronic Disease Management; Bonus

Structure for managing Total Health Expenditures

Person Centered

Health Care

Homes

Specialty Hospitals

Person Centered

Health Care

Homes

Linkages to High Performing Specialists that

can support the management of Total Health Expenditures and minimize

Defect Rates

Food Mart

Specialty Clinics

Food Mart

Specialty Clinics

Person Centered

Health Care

Homes

Specialty Hospitals

Hospitals within Hospitals

Clinic

Clinic

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Bundled Payments

Case Rates

Global Subcapitation

Direct Payments to

Patients

Primary & Specialty

Subcapitation

Community Incentive Pool


• We’ve learned from 50 years of effort that if you work in the BH Safety Net...

• Focusing inward to create a high-performing CBHO does not always prevent you from ending up at the bottom...

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Understanding Where the Healthcare Management Models are Headed

• Status Quo: Fee-For-Service, Non-Integrated Model: All the wrong incentives and disincentives

Primary Care Clinic

HospitalsPrimary

Care Clinic

Food Mart

Specialty Clinics

Food Mart

Specialty Clinics

Primary Care Clinic

Hospitals

Clinic

Clinic

Health Plan

18


• Integrated Healthcare SystemIntegrated Health Care System

Medical Homes


Food Mart

Specialty Clinics

Food Mart

Specialty Clinics

Medical Homes

Hospitals

Clinic

Clinic

Health Plan

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• Accountable Care Organization (ACO) Model

Medical Homes


Food Mart

Specialty Clinics

Food Mart

Specialty Clinics

Medical Homes

Hospitals

Clinic

Clinic


Health Plan

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So How does the MH/SU System Fit into this Second Part of the New Equation?

Integrated Healthcare System• If you are operating in a state and community where integration efforts are

under way and the IHS model is being pushed, your choices are:• Do nothing and hope

they ignore the SMI/SED population

• Become a PreferredProvider of an IHS

• Create a consortium of BH Providers and contract with the IHSas a Provider Network

• Become an Acquisition Target and become part of the IHS’ BH Division

Integrated Health Care System

Medical Homes


Food Mart

Specialty Clinics

Food Mart

Specialty Clinics

Medical Homes

Hospitals

Clinic

Clinic

Health Plan

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So How does the MH/SU System Fit into this Second Part of the New Equation?

Accountable Care Organization• If you are operating in a state and community where integration efforts

are under way and the ACO model is being pushed, your choices are:• I’m going to skip “do nothing”• Become a Preferred Provider to

the ACO• Become a Member

of the ACO• Get in on the ground

floor and become a Founding Member/Owner of the ACO Medical

HomesHospitals

Medical Homes

Food Mart

Specialty Clinics

Food Mart

Specialty Clinics

Medical Homes

Hospitals

Clinic

Clinic


Health Plan

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Get ready... it’s going to Happen

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Uninsured Insured

Dis-Integration Integration

Fee for Service Payment Reform

Uncoordinated Providers Accountable Care Orgs

BH Disconnect with HC BH is Part of Health

my hypotheses: healthcare reform will pass and will usher in unprecedented change

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