Walter Jones MUSC Dept. of Healthcare Leadership and Management College of Health Professions

1. Health Reform: How am I going to get paid?The Evolution toward pay for performance, bundled payments and Accountable Care Organizations, and what it means for the health professions Walter Jones MUSC Dept. of Healthcare Leadership and Management College of Health Professions jonesw@musc.edu

2. Cost inflation – Can’t keep spending an ever larger % of U.S. GDP on health care. • Access problems – Can’t accept 15%+ of U.S. population w/o health insurance. • Quality variations – unacceptably large regional, institutional variations in patterns, quality of care. • These problems are due to the fact that U.S. health care does not (perhaps cannot) have a viable market system. HC both an economic and a social good. Why major health reform is inevitable (ACA or not)

3. Lack essentials for a market system (info asymmetry, rational ignorance, agency, price discrimination). • Providers do not know the real costs of their service components. Prices are heavily subsidized and/or set through competitive contracting w/o transparency – a world of charge masters (2013 Brill article in Time). • Very hard to price the cost/value of HC social dimension (How much is insurance for the uninsured “worth”?) • So, can’t just use price signals to change health care practice – reforms have to redesign HC itself. Why health care is not like most economic goods

4. Examples: 1. Medicare Physician Group Practice (PGP) Demonstration (2007-present) – “Groups had incentives to integrate new care management strategies and electronic tools into day-to-day practice that, based on clinical evidence and patient data, improve patient outcomes and lower total medical costs.” reform policy – move payment from service units to outcomes

5. 2. Catalyst for Payment Reform (Commonwealth Fund, 2011) – “Examined the formation of eight private ACOs that use, or are planning to deploy, a payment arrangement in which payers and providers share risk. Continued experimentation with both shared-savings and shared-risk arrangements in the private sector will be critical in the search for successful ways to align incentives for high-value care.” reform policy examples (Contd.)

6. 3. National Commission on Physician Payment Reform (3/4/13)– “The Commission calls for drastic changes to the current fee-for-service payment and urges a rapid transition to new payment models, shifting the US to a blended payment system that rewards value over volume by using mechanisms such as bundled payments, financial risk sharing, pay for performance, and other experiments in reducing costs and improving quality.” reform policy examples (Contd.)

7. 4. Affordable Care Act (2010+)– National health reform legislation has provisions for “modernization” in payment, including higher reimbursement for preventive care services and patient-centered primary care, bundled payment for hospital, physician, and other services provided for a single episode of care, shared savings or capitation payments for accountable provider groups that assume responsibility for the continuum of a patient’s care, and pay-for-performance incentives for Medicare providers. Also establishes an Independent Payment Advisory Board, with the authority to make recommendations that reduce cost growth and improve quality in both the Medicare program and the health system as a whole. reform policy examples (Contd.)

8. 5. Accountable Care Organizations (ACOs)– According to CMS, ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients. The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. reform policy examples (Contd.)

9. In all of this, health reform policies are attempting to respond to cost, access and quality problems by using payment mechanisms to change the practice of medicine and reduce/eliminate fee-for-service payment. What issues do these developments raise for the health professions and professionals? Why should all health professionals be concerned about all this?

10. 1. Every health profession has historically been defined in terms of the application of identifiable service units, not what the services do (or don’t do) for patients. As we move into pay for performance / bundled payment, will have to determine what pay each profession will get for what performance – very little existing data on this. Out of each bundle, what should an MD vs. an RN vs. a CRNA vs. a PT get? Since we are just starting on this, there is the opportunity/threat to redefine professions in a way that increases, maintains or decreases customary compensation levels and forms. Why be concerned (Contd.)?

11. 2. Every health professions education curriculum is essentially based on training students to provide defined procedures (surgery, anesthesia, profusion, rehabilitation and so forth). Every training program is isolated from other training programs (that’s how we define and distinguish the professions). Professional programs do not focus on training with other professions. Nor do they consider it their responsibility to prepare their students to change professional activities in relation to other professions as a result of patient outcomes. Why be concerned (Contd.)?

12. 3. Professional advocacy is currently defined as fighting in the policy arena for the right of the profession to continue traditional activities and to expand their scope – not to negotiate changes in scope or practice with other professions as a result of patient outcomes research. Why be concerned (Contd.)?

13. 4. Provider organizations respond to market uncertainties in an economically rational fashion by input substitution – changing the mix of human and other resources to create a given result (as with MLPs.) This trend will be accelerated by the payment reforms. For health reform is successful, it must “lower the cost curve” for health service delivery and cover most/all of the uninsured. Given current unsustainable cost trends and an influx of uninsured, this can only happen if health organizations and programs are run “leaner and meaner”. Organizations have no alternatives to looking at their workforces and attempting to reduce or lower their total salaries and benefits. Why be concerned (Contd.)?

14. 5. In an era characterized by health reform disruption and uncertainty, it is possible to resolve these conflicts by in essence (and perhaps only implicitly) redefining health professions, a “new normal” where past expectations regarding salary, working conditions and specific work tasks are radically changed. This has been happening for some time in other economic sectors (manufacturing) and, to a limited extent, in health care (scope of practice changes). With payers providing financial incentives, this process may be greatly accelerated. Why be concerned (Contd.)?

15. 6. Despite scientific trappings, the pervasive workforce professions analysis and restructuring that will be taking place in the next decade will be intensely political. There will not be enough money to meet each profession’s priorities. Individual health professions, and their members, must look out for their own interests, or they may find their professional definition and customary services and payment/salary are redefined in a detrimental way by regulatory and payment bodies dominated by other professions. Why be concerned (Contd.)?

16. Nurses (ANA) on health delivery reforms: “Registered nurses are fundamental to the critical shift needed in health services delivery…. The ANA is actively engaging with federal policymakers and regulators to advocate for system transformation that includes the valuable contributions of nursing and nurses.” Physicians (AMA) on health delivery reforms: “We will build on the momentum for the adoption of appropriate delivery and payment models...and encourage their implementation by organizations seeking to attract physicians. This work builds on the AMA’s ongoing federal and state legislative activities to shape better payment and delivery models for physicians and patients, which we believe strongly will bridge to a more stable environment that better serves physicians and the patients under our care.” example: physicians vs.nurses on health reform

17. Different professions will inevitably have different (and self-interested) conceptions of “effective payment reforms” and “new health delivery models”. Research will be challenging and results complex and tentative, so each profession will undoubtedly interpret them as a call to protect and expand their profession at the expense of other professions. Political battles will be fought, as wolves fight over the carcass of a deer (the bundled payment). The strongest wolves will take away most of the best flesh. The weaker wolves will get less, or go without. So what do professions and professionals need to do?

18. Professions and professionals must: • Remember that everything, even research, has a political component and will be used politically. • Make sure that your profession is funding research and policy activism on the development of new technologies, delivery models and payment mechanisms. (If your research isn’t there, other professions’ research will dominate the agenda.) • Make sure that your profession has a positive public image – marketing isn’t just for physicians and nurses. • Always remember this (often said in Washington): “You are either at the table or on the menu.” So what do professions and professionals need to do?