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Emergency Medicine and Value-Driven Healthcare Reform. EDPMA, April 2013 Brent R. Asplin, MD, MPH President and Chief Clinical Officer Fairview Health Services Minneapolis, MN E-mail: [email protected] Goals. Overview of Healthcare Macroeconomics Drivers of “population health”

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emergency medicine and value driven healthcare reform

Emergency Medicine and Value-Driven Healthcare Reform

EDPMA, April 2013

Brent R. Asplin, MD, MPH

President and Chief Clinical Officer

Fairview Health Services

Minneapolis, MN

E-mail: [email protected]

  • Overview of Healthcare Macroeconomics
    • Drivers of “population health”
  • Value Based Purchasing and Payment Reform
  • Disruptive Innovation
  • Strategic Landscape for EM
Average Annual Premiums for Single and Family Coverage, 1999-2012


* Estimate is statistically different from estimate for the previous year shown (p<.05).

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012.

Cumulative Increases in Health Insurance Premiums, Workers’ Contributions to Premiums, Inflation, and Workers’ Earnings, 1999-2012

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2012. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April), 1999-2012; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2012 (April to April).

variations in practice and spending
Variations in practice and spending

The Dartmouth Atlas

1. The paradox of plenty

2. What’s going on?

3. What might we do?

4. Is there reason for hope?

mortality amenable to health care global
Mortality Amenable to Health Care—Global

Deaths per 100,000 population*

* Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections. See Appendix B for list of all conditions considered amenable to health care in the analysis. Data: E. Nolte, RAND Europe, and M. McKee, London School of Hygiene and Tropical Medicine, analysis of World Health Organization mortality files and CDC mortality data for U.S. (Nolte and McKee, 2011).

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011.

implications for us
Implications for Us




Differential of:

2.5 Percentage Points


1 Percentage Point





















Total Federal Spending for Medicare and Medicaid Under Assumptions

About the Health Cost Growth Differential

Percent of GDP

Tax rates 2050:

10% 26%

25% 66%

35% 92%

leadership in a new age for healthcare
Leadership in a New Age for Healthcare
  • What needs to happen?
  • Who is going to make it happen?
value based reimbursement
Value-Based Reimbursement
  • What is Value?
  • Value is a function of quality (safety, outcomes, service) divided by cost over time
strategic bets of value based purchasing
Strategic Bets of Value Based Purchasing
  • Fee for service reimbursement drives inflation in the system
  • If you want different performance, you have to change financial incentives
  • For a population, high quality care (i.e. care that eliminates unnecessary utilization) costs less than low quality care in any given year
  • Global payments will drive efficiencies
value based purchasing
Value Based Purchasing

Pay for performance


Value-based Modifier

Episodes of care & bundled payments

Hospital readmissions

Accountable care organizations (ACOs)

what is the value based modifier
What is the Value Based Modifier?
  • The Affordable Care Act requires that Medicare phase in a value-based payment modifier (VM) that would apply to Medicare Fee for Service Payments starting in 2015, phase-in complete by 2017.
  • The VM assesses both quality of care and the costs of care.
  • CMS applies the VM to physician payment in all groups of 100 or more eligible professionals starting in 2015, based on your calendar year 2013 claims!
  • Meant to encourage shared responsibility and systems-based care for multi-specialty group practices
  • Attempt to “align” with Medicare Shared Savings program and Accountable Care Organizations (ACOs)
value based modifier for groups of 100 eligible professionals cy 2013 claims
Value Based Modifier for Groups of ≥ 100 Eligible Professionals CY 2013 Claims
  • Eligible Professionals = physicians, PAs, NPs, etc
  • “Group” ≥ 100 “eligible professionals” reporting under one TIN
  • Bonus or Ding –> TIN Physician Payments only
value based modifier and the physician quality reporting system
Value-Based Modifier and the Physician Quality Reporting System

Groups of ≥100 Eligible Professionals

(MDs, DOs, PAs, NPs)

Satisfactory PQRS Reporters

Non-satisfactory PQRS Reporters

(including those who do not report)

Elect Quality Tiering


No Election

-1.0 % VBM Adjustment

-1.5 % PQRS Adjustment

-2.5 % Total Adjustment

Upward or Downward Adjustment Based on Quality Tiering


No adjustment

interaction between pqrs value based modifier
Interaction Between PQRS & Value-Based Modifier
  • To avoid -1.5% payment adjustment in 2015, based on CY 2013 claims must successfully report PQRS
  • To avoid all penalties, groups ≥ 100 eligible professionals must report at the group level
  • If the group reports at the individual level instead, they will all be subject to the value modifier of -1.0%
  • Total Failure to Report PQRS = -2.5% (2015 payment adjustment, based on CY 2013 claims)
  • Total Failure to Report PQRS = -3.0% (2016 payment adjustment, based on CY 2014 claims)
CMS Readmission Measures 2013
  • Hospital Readmission Reduction Program
    • HRRP
  • “Program is designed to reduce CMS payments to hospitals with higher than expected risk-adjusted readmission rates.”
    • Baseline period 6.1.2008 – 6.30.2011
  • Began 10.1.2012
  • Reductions of 1% increasing to 3% in 2015
    • Acute Myocardial Infarction
    • Heart Failure
    • Pneumonia
cms inpatient proposed rule released 4 26 13
CMS Inpatient Proposed Rule (released 4/26/13)

Adds knee and hip implants and COPD admissions to the readmissions reduction program starting in 2015

Pays for the 2013 physician “SGR fix” with $11B in hospital cuts over 4 years

accountable care organizations
Accountable Care Organizations
  • Provider-led organizations with a strong primary care base that take accountability for the full spectrum of healthcare services for a defined population
  • Financial incentives tied to:
    • Total cost of care
    • Quality and patient satisfaction
cms aco programs 260 participating organizations
CMS ACO Programs(260 Participating Organizations)
  • Physician Group Practice Transitions Program
    • Six organizations (started Jan 2011)
  • Pioneer ACO Program
    • 32 organizations (started Jan 2012)
  • Medicare Shared Savings Program
    • 27 organizations began in April 2012
    • 89 organizations began in July 2012
    • 106 organizations announced in Jan 2013
interesting acos
Interesting ACOs
  • “Diagnostic Clinic Walgreens Well Network”
    • All of Florida
  • “Scott and White Healthcare Walgreens Well Network, LLC”
    • Texas
private exchanges and narrow network products
Private Exchanges and Narrow Network Products
  • Don’t underestimate how quickly markets will move toward value-based insurance products
    • Partnerships between payers and delivery systems
    • Many of the providers are Independent Practice Associations (IPAs)
new payer provider partnerships are emerging in the twin cities market
New payer/provider partnerships are emerging in the Twin Cities market


New products

50% ownership;

new products

New product



the paradox of acos public and private
The Paradox of ACOs(public and private)
  • Every dollar of waste in healthcare is somebody’s dollar of revenue
  • Hospitals stand to lose the most from reductions in TCOC
    • Admissions for chronic diseases
    • Readmissions
    • ED visits
implications for emergency medicine
Implications for Emergency Medicine
  • Reduction of avoidable ED visits is a goal for every one of the 260 ACOs and private insurance products in the US today
  • Contrary to what you may hear, this is based on sound economics
  • Every smart ACO should try to partner with EDs to coordinate care and create alternatives to admissions/readmissions
types of business models
Types of Business Models
  • Solution shops
    • “All things to all people”
    • Fee for service reimbursement
    • E.g. consulting firms, hospitals
  • Value added process (VAP) business
    • Reliable, rules-based processes
    • Fee for outcome reimbursement
    • E.g. MinuteClinic, Shouldice Hospital
types of business models1
Types of Business Models
  • Facilitated networks
    • Businesses where people exchange things with one another
    • Fee for membership
    • E.g. Insurance
disruptive innovation
Disruptive Innovation
  • An innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network.
  • A “value network” is the collection of upstream suppliers, downstream channels to market, and ancillary providers that support a common business model in an industry.
requirements for disruptive innovation
Requirements for Disruptive Innovation
  • Technological enabler
    • E.g. the microprocessor
  • Business model innovation
    • Ability to profitably deliver the new technological innovation
  • Value network
    • A commercial infrastructure of constituencies that reinforce and support the new business model
control data vs ibm
Control Data vs. IBM
  • Both were supercomputer giants of the 1970s
  • Enjoyed huge profit margins on mainframe supercomputers
  • Responded very differently to the advent of the microprocessor and personal computing
the hospital value network
The Hospital Value Network
  • Emergency medicine is integrally tied to the hospital business model
  • Much of the criticism of the economics of emergency medicine is tied to the hospital business model in which it lives
disrupting healthcare
Disrupting Healthcare
  • A simple question:
  • Will your economics be disrupted or will you do the disrupting?
ed acute care framework peter smulowitz md and colleagues
ED Acute Care Framework(Peter Smulowitz, MD and colleagues)

Opportunity #1

Opportunity #2

Source: Smulowitz et al. Annals of EM. 2012

acute unscheduled care patient satisfiers
Acute Unscheduled Care Patient Satisfiers
  • Biggest drivers of satisfaction for most acute unscheduled conditions:
    • Timely access
    • Low cost
marginal cost of acute care for low acuity conditions
Marginal Cost of Acute Care for Low Acuity Conditions
  • Regardless of setting, the marginal cost of producing acute care is relatively low
    • How expensive is it for you to diagnose acute otitis in your ED?
  • This is much different than the cost incurred by the payer (i.e. patient, health plan, government)
    • Widely variable depending on the location
medicare reimbursement ed vs office visit
Medicare ReimbursementED vs. Office Visit

Source: Smulowitz et al. Annals of EM. 2012 (In Press)

the strategic opportunity
The Strategic Opportunity
  • We already know how to deliver acute unscheduled care quickly and at a low marginal cost
  • Why are we content to do this in an environment that has:
    • Long waiting times due to hospital boarding; and
    • High fixed hospital costs that drive a non-competitive business model?
disruptive alternatives to ed care
Disruptive Alternatives to ED Care
  • Free-standing centers
  • Target complexity is above standard urgent care
  • Rapid throughput and lower cost
  • Not hospital-based (no EMTALA)
disruptor vs disruptee
Disruptor vs. Disruptee?
  • We have already solved the most difficult challenge of acute unscheduled care:

The 168 Hour Work-Week!

  • There are important opportunities to step out of the hospital (literally and virtually) to capture demand for low-cost alternatives to ED care
the cycle of disruption
The Cycle of Disruption

Original Provider

Disruptive Alternative

Ambulatory Surgery

ED Observation

Non-Surgical Specialists

Primary Care

Retail Clinics

Virtual Care

Free-Standing EDs plus which of the above???

  • Hospital OR
  • Inpatient Stay
  • Surgical Specialists
  • Specialty Care
  • Primary Care
  • Retail Clinics
  • The Hospital ED
ed acute care framework peter smulowitz md and colleagues1
ED Acute Care Framework(Peter Smulowitz, MD and colleagues)

Opportunity #1

Source: Smulowitz et al. Annals of EM. 2012

the value of emergency care
The Value of Emergency Care
  • The most expensive routine decision in healthcare
  • The more “accountability” we take for reducing potentially avoidable admissions and re-admissions, the more “value” we will create for the system
hub of the enterprise
Hub of the Enterprise?
  • “Accountability” + “Value” = ?
  • A new revenue stream for emergency medicine?
  • Why wouldn’t you become part of risk based products?
    • Private insurance, ACOs, Medicare Advantage plans, etc….
opportunities for an emergency care hub
Opportunities for an Emergency Care Hub
  • Coordination of transitions
  • Reducing avoidable admissions and readmissions
  • Rapid complex diagnostic evaluations
    • Especially for patients with complex conditions
  • Communication interface with other care delivery hubs
    • PCMH and geriatrics
the irony of emergency medicine and value based healthcare
The Irony of Emergency Medicine and Value Based Healthcare

We are often pushed to the fringe as a provider to avoid rather than pulled into the middle of the operation

Providing better care for complex patients is the answer---won’t happen without better coordination in the ED

hubs for managing population health
Hubs for Managing Population Health

Primary Care


Medical Home

Geriatric Services Continuum

The Emergency Care System

Behavioral Health Capabilities

leadership in a new age for healthcare1
Leadership in a New Age for Healthcare
  • What needs to happen?
  • Who is going to make it happen?
a short list of health policy imperatives
A Short List of Health Policy Imperatives
  • Move away from fee for service payment for the majority of services
    • Global payments tied to population outcomes and cost (i.e. value)
  • Re-orient care delivery and financing toward a health outcomes framework
    • Across entire population spectrum
  • Engage consumers in dramatically different ways