c.2012 Alice G. Gosfield and Associates PC

Getting Payment Strategies to Work: The Critical Physician Nexus

Alice G. Gosfield, Esq.3d National ACO SummitJune 7, 2012

Alice G. Gosfield, J.D.Alice G. Gosfield and Associates, PC

2309 Delancey PlacePhiladelphia, PA 19103

(215) 735-2384Agosfield@gosfield.com

www.gosfield.com www.uft-a.com

An accountable health care organization is one which has explicitly focused on its clinical culture as supportive of appropriate quality for which such an organization is willing to be evaluated, compared and held responsible.

Gosfield, “Quality and Clinical Culture: The Critical Role of Physicians in Accountable Health Care Organizations,” (1998)

And today will have payment consequences from it’s activities

Non-FFS/DRG Payment FormsCase Rates: defined episodes of careBundled Payments: essentially undefined

Implies episode based payment because different provider services are ‘bundled’New CMMI opportunities are open-ended and flexible

Global capitation: actuarial riskPayor GainsharingACOs

New Forms of Payment

Medical Home and Advanced Medical Home

Care coordination, infrastructure, NCQA“If only….”

Geisinger ProvenCareSurgical, hospital focused, system-based

……This isn’t enough ….

Provider Payment Reform for Outcomes, Margins, Evidence, Transparency, Hassle- reduction, Excellence, Understandability and Sustainability

Background: www.hci3.org

501 (c)3Independent boardRWJF grant through March 2011Four pilot sites:

HealthPartners in MSP; Crozer-Keystone in PA; PriorityHealth in Grand Rapids,MI; ECOH in Rockford, IL

Other implementations: NY, CO, Providence in OR, NJ, FL, NC

Basic Concepts

Amount of payment is derived from assessment of projected resources to deliver care in a good CPG across ALL providers treating the patient for that condition

Negotiated base payment takes into account severity and complexity of patient’s condition

MoreEvidence informed case rate (ECR) encompasses all providers treating a patient for that condition and is allocated among them in accordance with that portion of the CPG they negotiate to deliver

Comprehensive scorecard measures process, outcomes, patient experience of care, measured at level of contracting provider (e.g., group, IDS, individual)

We don’t care what you are. It works for all

70% of the score turns on what you do; 30% on what everyone else does

Clinical collaboration to succeed

Typical v. PAC

Medical$595 Million

•Pharmacy•$732 Million

•Pharmacy•$407 Million

Medical $108 Million

Medical$488 Million

Pharmacy$325 Million

DiabetesRelevant Services

$1.32 billion

• Claims that do not have a “PAC” code

• All diabetes-related inpatient stays

• All professional services during stays

• All claims with “PAC” diagnosis codes

• All claims with “PAC” procedure codes

• Drugs used to treat PACs

Potentially Avoidable

Complications:$813 million

Typical claims and services:

$515 million

PAC Allowance after Re-basingFactors Avg

Cost Number Total Cost

Total DM cases $6,076 218,541 $1,327,855,11 6

Claims for typical patients $3,002 171,631 $515,236,262Claims for patients with PACs $6,685 121,576 $812,735,560Added Burden for PACs $6,685 $812,735,560Evidence-informed Adjustment (Adjustment for Underuse) 90% $957 154,462 $147,879,761

Allowable Cost of PACs 50% $332,427,899Flat Fee Portion (spread 25% costs of compl over all cases) 25% $380 $83,106,975

Proportional Rate (75% of compl costs as a rate over base costs) 75% 38%

Factors Patient 1

Patient 2 Patient 3

Cost of Care of Typical DM Case (severity adjustment models) $311 $2,453 $8,375Cost of Care of Typical DM Case (after rebasing on CPGs*) $1,317 $3,459 $9,381

Allowance for PACs $881 $1,695 $3,945Flat Fee Allowance (25% of compl costs spread over all) $380 $380 $380 $380Proportional Allowance 38% $500 $1,315 $3,565Margin 10% $132 $346 $938Margin Plus Allowance for PACs $1,012 $2,041 $4,883Net Percent Allowance for Margin plus PACs 77% 59% 52%Total ECR per Patient (severity-adjusted + margin + Allowance for PACs) $2,329 $5,500 $14,264

Inpatient for AMI

Hip Replacement Summary

HACs vs. PACs (Hip Replacement)

Care defects consume billions of dollars every year

The results of an analysis for a large national employer showed that 10% of overall costs of care, across all employees and dependents, could be saved if defects were reduced to zero.

Cost of care defects as % total cost of care for each condition/procedure

How can PROMETHEUS Payment data be used today?

Identifying PACs in a claims database can provide actionable information for hospitals and their physiciansHospitals are employers and don’t deliver care any differently to their own covered populations than to the patients who come to them independentlyThe ECRs say who should be paid for what avoiding the PHO food fights in ACOsThis can help primaries surviveIt is a bundled payment, episode grouper, clinically integrated model

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But what happens below the payment from the payor?

Governance issuesSupermajority issues: e.g. 75% of each class of ownership/representation

To change compensation/allocation metricsAdding providers Adding classes of providersTerminating a provider Resolving an appealTerminating the agreement

Contractual issuesDistributing upside and allocating downside riskAppeals and Dispute resolutionFinancial consequences to providers

Why Is Physician Engagement around Quality and Value So Important ?

Physician centrality Plenary legal authorityPortal to the system

Their involvement can enhance results, improve the culture, and foster truly effective inter-disciplinary collaboration;but their disengagement or malevolent engagement can thwart other efforts

E.g., Cedars Sinai CPOE

What Makes Physicians Different?

Responsibility for individualsAccountability for life and deathLegal captain of the shipCollegiality and “groupiness”Evidence based, scientific decision-makingOutcomes and quality improvement feedback (the dynamism of medicine)Due process as the scientific method

Why physician engagement?Health systems will not succeed without the enthusiastic engagement of their physiciansAcquisition/employment has nothing to do with potential successIt is about physician values

GEMS report for Cmwlth Fundhttp://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2010/Apr/1389_Minott_group_employed_model_hlt_reform_ib_v2.pdf

True Clinical Integration“Physicians working together systematically, with or without other organizations and professionals, to improve their collective ability to deliver high quality, safe, and valued care to their patients and communities.”

Gosfield and Reinertsen, 2010 http://www.gosfield.com/PDF/ACI-fnl-11-29.pdf

http://www.uft-a.com/CISAT.pdf

OPERATIONS

: Standardization: Guidelines and Protocols

Not Really in the Game

Making an Effort Committed and Capable

We are either a multi- specialty group practice, or we are hospital-employed physicians

Each doctor does his own thing. Any standing order sets etc. are for each individual doctor.

We formally adopted some practice-wide protocols but only a few enthusiasts actually use them.

We have standardized whatever is standardizable. We are all measured on and expected to follow the protocols that we’ve adopted.

We are the hospital medical staff, trying to be more clinically integrated with each other, and with the hospital, e.g. becoming an ACO

We don’t evaluate physicians for their economic performance, nor do we require standardization for privileging or participation.

A few clinics and practices have adopted guidelines and some standing order sets, but they are not an expectation of all physicians on the medical staff.

Standardization is an expectation of all physicians, is taken into account in credentialing and privileging and those who cannot conform or actively resist have their privileges and/or ACO contracts terminated.

© 2011 Alice G. Gosfield, JD and James L. Reinertsen, MD

Principles of Engagement

Involve physicians from the earliest moment.Identify the real leaders, early adopters.Choose messengers and messages carefully.Make the involvement of the physicians visible.Build and then rebuild trust: do what you say, say what you do, consistently over time.Use open, frequent and candid communication.

“Cooperation can get started by even a small cluster of individuals who are prepared to reciprocate cooperation, even in a world where no one else will cooperate. There are two key requisites… reciprocity and the shadow of the future.”

---Robert Axelrod

ResourcesGosfield, "Clinical Integration Self Assessment Tool v.2.1 (Network/IPA Version), Jan 2012 http://www.gosfield.com/PDF/CISAT_IPA_V.2.1.pdfGosfield and Reinertsen,“Achieving Clinical Integration With Highly Engaged Physicians” (Nov 2010), 31pp http://www.gosfield.com/PDF/ACI-fnl-11-29.pdfGosfield, “Making PROMETHEUS Payment® Rates Real: Ya’Gotta’ Start Somewhere ” (June 2008) 15pp http://www.gosfield.com/PDF/MakingItReal-Final.pdfGosfield, Quality and Clinical Culture: The Critical Role of Physicians in Accountable Health Care Organizations American Medical Association, Chicago, Illinois, 1998,47 pp http://www.ama-assn.org/ama1/pub/upload/mm/21/quality_culture.pdf