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1. Baskets of Care: A “Bundle” of Opportunities? An Overview/Perspective Gary Oftedahl, MD Institute for Clinical Systems Improvement November 9, 2009

4. Bundling Services--a Journey Carol.com – consumer oriented “Care Packages” PROMETHEUS model “PROMETHEUS” Pilot site for the Acute Myocardial Infarction bundle “Baskets of Care” – 2008 State of MN Health Care Reform

5. Carol.com Care Packages Specific package with elements identified Provided to consumer prior to making choice Information located at Carol.com website Using information provided by providers participating 2 markets active – Seattle and Minneapolis Focused on directly reaching out to consumers Engaging them in making choice Hope to address cost, questionable value in immature market A care package gives you a detailed description of a treatment or service so you know exactly what to expect before you go to the doctor and exactly what you’re getting for your money. Designed, priced and placed in the consumer directed Carol.com online market place by providers 2 markets active – Seattle and Minneapolis We are very interested in a bundled care approach that will be of direct interest to consumers – until this is a fully developed and functioning concept in the market, there probably limited cost savings potential A care package gives you a detailed description of a treatment or service so you know exactly what to expect before you go to the doctor and exactly what you’re getting for your money. Designed, priced and placed in the consumer directed Carol.com online market place by providers 2 markets active – Seattle and Minneapolis We are very interested in a bundled care approach that will be of direct interest to consumers – until this is a fully developed and functioning concept in the market, there probably limited cost savings potential

6. PROMETHEUS Provider payment Reform for Outcomes, Margins, Evidence, Transparency, Hassle-reduction, Excellence, Understandability, and Sustainability Start with Evidence Based Guidelines Develop ECR (Evidence Informed Care Rate) Risk adjust for patient complexity Bundled payment with withhold Complex, complicated, difficult for some to understand

7. “PROMETHEUS” Pilot – Acute Myocardial Infarction (AMI) with HP Commercial Population We have small numbers with AMI in our HP population Minnesota already at top of list in quality, low cost There may be limited opportunity to reduce cost (minimal potentially avoidable care) Question of value of investing in bundle to reduce costs While pilot focus on AMI, is chronic disease better opportunity? Chaotic markets elsewhere, or Medicare population might offer better opportunity We have small numbers with AMI in our commercial population.) Minnesota market has high adherence to best care clinical guidelines for CV disease and has had excellent clinical preventive care and health promotion interventions for more than a decade. Therefore for AMI, in Minnesota, there may be limited opportunity to reduce cost (minimal potentially avoidable care) Therefore, Savings opportunity may not support the investment required for implementing this approach for AMI in commercial populations in Minnesota. (preliminary impression, the pilot continues) In Minnesota, we understand that for chronic diseases bundles there are significantly better opportunities for cost savings relative to the cost of implementation. Medicare or markets with more chaotic and fragmented delivery systems may be better opportunities for cost savings for AMWe have small numbers with AMI in our commercial population.) Minnesota market has high adherence to best care clinical guidelines for CV disease and has had excellent clinical preventive care and health promotion interventions for more than a decade. Therefore for AMI, in Minnesota, there may be limited opportunity to reduce cost (minimal potentially avoidable care) Therefore, Savings opportunity may not support the investment required for implementing this approach for AMI in commercial populations in Minnesota. (preliminary impression, the pilot continues) In Minnesota, we understand that for chronic diseases bundles there are significantly better opportunities for cost savings relative to the cost of implementation. Medicare or markets with more chaotic and fragmented delivery systems may be better opportunities for cost savings for AM

8. State of MN “Baskets of Care” Define 7 bundles by Jan 1, 2010 (Asthma in children, Diabetes, Acute Low Back Pain, Obstetric Care, Preventive Care in Adults, Preventive Care in Children, Total Knee Replacement) Develop Quality Measures for each Identify operational and administrative challenges Providers will establish a single price for all payers (with some government exceptions) Price and Quality information will be published by July 1, 2010. Opinions on the potential for cost savings vary.

9. Success Factors in Bundling Payment and Care Delivery Clinically integrated systems Ability to address complex issues Measure performance across entire episode Unintended consequences if providers lack appropriate culture Team based Existence of established infrastructure “Clinically integrated systems of care are better positioned to design safe, effective, and efficient longitudinal care processes for patients with chronic conditions. With clinical integration, performance measurement and improvement can extend across each entire patient-focused episode and can help inform and redesign the whole care process.” Corrigan J and McNeill D. Building Organizational Capacity: A Cornerstone of Health System Reform. Health Affairs, March/April 2009; 28(2): w205-w215. To maximize the chances of success and minimize the possibility of unintended consequences (of payment reform), the appropriate culture and structure of health care institutions first must be in place.” Kahn C. Payment Reform Alone Will Not Transform Health Care Delivery. Health Affairs, March/April 2009; 28(2): w216-w218“Clinically integrated systems of care are better positioned to design safe, effective, and efficient longitudinal care processes for patients with chronic conditions. With clinical integration, performance measurement and improvement can extend across each entire patient-focused episode and can help inform and redesign the whole care process.” Corrigan J and McNeill D. Building Organizational Capacity: A Cornerstone of Health System Reform. Health Affairs, March/April 2009; 28(2): w205-w215. To maximize the chances of success and minimize the possibility of unintended consequences (of payment reform), the appropriate culture and structure of health care institutions first must be in place.” Kahn C. Payment Reform Alone Will Not Transform Health Care Delivery. Health Affairs, March/April 2009; 28(2): w216-w218

10. Payment and The Organization of Care Are Interdependent*

11. Pressure Points Lack of uniform objectives Controversial savings potential Large regional variation across US in quality and cost of care Variable opportunity for improvement Bundles focus on elements and payment, but don’t address appropriate indications Potential for “gaming” of opportunity The objectives of these efforts vary and cost savings potential of some of these models is controversial. Potentially avoidable care and efficiency of care may vary by region of the country presenting differential regional opportunities for cost savings by condition and procedure Bundles themselves do not address inappropriate indications for services and the potential for bundled procedures to be gamed to increase inappropriate hospitalizations and procedures existsThe objectives of these efforts vary and cost savings potential of some of these models is controversial. Potentially avoidable care and efficiency of care may vary by region of the country presenting differential regional opportunities for cost savings by condition and procedure Bundles themselves do not address inappropriate indications for services and the potential for bundled procedures to be gamed to increase inappropriate hospitalizations and procedures exists

12. Challenges to Work Development/design resource intensive Much work in testing feasibility remains Trying to implement in a fragmented system Clinical, payment, operational discontinuities Beginning pilots, prior to full roll out Complex Lack of automated systems How to layer on existing FFS system Design and development is important and resource intensive- from the level of legislation to expert development of the tools to the testing of feasibility and practicality by practitioners and payers in real markets. Bundles arrive in a very complex and fragmented clinical, payment and administrative environment (even in Minnesota) creating challenges for implementation Implementing pilots is resource intensive, requires sophistication, is complex, is not automated, and layers on an existing FFS payment system Design and development is important and resource intensive- from the level of legislation to expert development of the tools to the testing of feasibility and practicality by practitioners and payers in real markets. Bundles arrive in a very complex and fragmented clinical, payment and administrative environment (even in Minnesota) creating challenges for implementation Implementing pilots is resource intensive, requires sophistication, is complex, is not automated, and layers on an existing FFS payment system

13. Provider challenges Significantly sophisticated skills needed at provider organization level Not always compatible with present culture Hard in non-integrated organizations Challenges of managing patients with >1 bundle No definitive understanding of how this works Provider scale (organization) and sophistication may be required to successfully implement and manage bundled payment. It’s easier to do this inside integrated health care organizations Patients may not have the need for just one “Bundle” and managing services outside of that bundle may be required and difficult. Provider scale (organization) and sophistication may be required to successfully implement and manage bundled payment. It’s easier to do this inside integrated health care organizations Patients may not have the need for just one “Bundle” and managing services outside of that bundle may be required and difficult.

14. We’re all challenged…. Bundles of Care, Prometheus, Health Care Home, Accountable Care Organizations--will they collide or converge? Who will be the primary coordinator? Wide range of emotional responses Enthusiastic--->hostile Where will we meet? Everyone is confused about how “Health Care Homes,” “Bundles of Care” and “Accountable Care Organizations” relate to one another – How many times and how many providers will be paid for coordination of care? Provider views vary from very enthusiastic to very hostile. Everyone is confused about how “Health Care Homes,” “Bundles of Care” and “Accountable Care Organizations” relate to one another – How many times and how many providers will be paid for coordination of care? Provider views vary from very enthusiastic to very hostile.

15. National Policy Issues Abound No comprehensive prospective payment system available for widespread testing Where to begin locally? How will we link policy makers, providers and payers to make a coherent design How to take national policy (when it’s decided) and translate to technical assistance at all levels Management Quality improvement Especially at small clinic organizations Need for linkage of bundled payment strategy with delivery system reform--not clear at all Need to coordinate Medicare and State programs--> as example for commercial market At least in the early going, this is not for the faint of heart, for those poor in resources or skills, or the unsophisticated Design and implementation pilots are necessary, there is no current comprehensive, off the shelf, open architecture, prospective bundled payment system that is available for implementation today. Design needs to be done by experts with a clear idea of the objectives from policy makers, and input from providers and others (Prometheus is a good example of this approach) Plan to provide technical assistance on management and quality improvement at the local level, especially to smaller clinical practices and organizations The national strategy for bundled payment also needs to be the national strategy for delivery system reform. They are intimately related. Medicare and State Funded programs should be coordinated (“harmonized”) and set the example for the private commercial market (as Medicare does with DRGs for hospitals and RBRVS for FFS) At least in the early going, this is not for the faint of heart, for those poor in resources or skills, or the unsophisticated Design and implementation pilots are necessary, there is no current comprehensive, off the shelf, open architecture, prospective bundled payment system that is available for implementation today. Design needs to be done by experts with a clear idea of the objectives from policy makers, and input from providers and others (Prometheus is a good example of this approach) Plan to provide technical assistance on management and quality improvement at the local level, especially to smaller clinical practices and organizations The national strategy for bundled payment also needs to be the national strategy for delivery system reform. They are intimately related. Medicare and State Funded programs should be coordinated (“harmonized”) and set the example for the private commercial market (as Medicare does with DRGs for hospitals and RBRVS for FFS)

16. Balancing National vs. Local How to recognize regional variation Learn from RBRVS Address present payment variation Need to address conflict between PCMH, ACO, FFS Need to address appropriateness of services at conceptual level or… Poor design may have unexpected outcomes How to manage “special interests” or even identify them Attacks on comparative effectiveness Regional variation is important, please do not add to the problems created by existing federal payment policies (RBRVS and Regional payment variations) Plan to provide technical assistance on management and quality improvement at the local level to provider and payer organizations. Design as a comprehensive payment system. (Work out the conflicts with Medical Home, ACOs, FFS, etc) Address appropriateness explicitly in the design of the “Bundle” or regret that forever when you look for cost savings Beware of the special interest politics undermining the intent in government designed payment programs (e.g. comparative effectiveness research and its application to benefit design, etc. under ARRA) Regional variation is important, please do not add to the problems created by existing federal payment policies (RBRVS and Regional payment variations) Plan to provide technical assistance on management and quality improvement at the local level to provider and payer organizations. Design as a comprehensive payment system. (Work out the conflicts with Medical Home, ACOs, FFS, etc) Address appropriateness explicitly in the design of the “Bundle” or regret that forever when you look for cost savings Beware of the special interest politics undermining the intent in government designed payment programs (e.g. comparative effectiveness research and its application to benefit design, etc. under ARRA)

17. Managing Obstacles Engage providers and other stakeholders Allow technical assistance to have local flavor--not overmanaged by gov’t. Again, awareness of special interests Win/win strategy if at all possible Both for high and low performing regions Engage providers and other stakeholders Plan to provide technical assistance on management and quality improvement at the local level to provider and payer organizations. Provide a way for all to win if performance against cost and quality for patients are improved – in both high and low performing regions of the country Beware of the special interest politics undermining the intent in government designed payment programs (e.g. comparative effectiveness under ARRA) Engage providers and other stakeholders Plan to provide technical assistance on management and quality improvement at the local level to provider and payer organizations. Provide a way for all to win if performance against cost and quality for patients are improved – in both high and low performing regions of the country Beware of the special interest politics undermining the intent in government designed payment programs (e.g. comparative effectiveness under ARRA)

18. References MedPac (Hackbarth JD, Reischauer R, and Mutti A, Collective Accountability for Medical Care – Toward Bundled Payments. NEJM 359;1 July 3, 2008, pp.. 3-5.) Fisher ES, Berwick DM, and Davis K. Achieving Health Care Reform – How Physicians Can Help. NEJM 360; 24 June 11, 2009, pp. 2495-7. de Brante F, Rosenthal MB and Painter M. Building a Bridge from Fragmentation to Accountability – The Prmethues Payment Model. www.nejm.org August 19, 2009 (10.1056/NEJMp0906121) Porter, ME. A Strategy for Health Care Reform – Toward a Value-Based System. NEJM 361;2, July 9, 2009, pp. 109- 12. Davis K. Slowing the Growth of Health Care Costs – Learning from International Experience. NEJM 359;17 October 23, 2008. pp. 1751-5. Corrigan J and McNeill D. Building Organizational Capacity: A Cornerstone of Health System Reform. Web Exclusive at www.healthaffairs.org. Vol. 28, no. 2 (2009): w205-w215 (Published online 27 January 2009) doi: 10.1377/hlthaff.28.2.w205 Mechanic RE and Altman SH. Payment Reform Options: Episode Payment is a Good Place to Start. Web Exclusive at www.healthaffairs.org.  Vol. 28, no. 2 (2009): w262-w271 (Published online 27 January 2009) doi: 10.1377/hlthaff.28.2.w262

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