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The Role of Payment Reform in Improving Health System Performance. Stuart Guterman Vice President, and Executive Director, Commission on a High Performance Health System The Commonwealth Fund Society of American Business Editors and Writers Business of Health Care Symposium New York, NY

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the role of payment reform in improving health system performance

The Role of Payment Reform in Improving Health System Performance

Stuart Guterman

Vice President, and Executive Director,

Commission on a High Performance Health System

The Commonwealth Fund

Society of American Business Editors and Writers

Business of Health Care Symposium

New York, NY

January 18, 2013

international comparison of spending on health 1980 2010
International Comparison of Spending on Health, 1980–2010

Average health spendingper capita ($US PPP)

Total health spendingas a percentage of GDP

Notes: PPP = purchasing power parity; GDP = gross domestic product.

SOURCE: Commonwealth Fund, based on OECD Health Data 2012, available at http://stats.oecd.org/Index=aspx?DataSetCode=SHA.

total national health expenditures nhe 2011 2021 current projection and constant proportion of gdp
Total National Health Expenditures (NHE) 2011–2021:Current Projection and Constant Proportion of GDP

NHE in trillions

5.9% annual growth;

77% over 10 years

$4.8T

(19.6% of GDP)

$4.4T

(17.9% of GDP)

4.9% annual growth;

62% over 10 years

$2.7T

(17.9% of GDP)

NHE currently projected, 2012-2021: $36.8T

Total savings if NHE grows at same rate of GDP: $1.4T

Source: Commonwealth Fund CMS, Office of the Actuary, National Health Statistics Group, National Health Expenditure Projections 2011-2021, available at http://www.cms.hhs.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdf.

slide5
Rising health spending puts pressure on thefederal budget—but also onstate and local budgets, businesses, and households
slide6
Federal Health and Total Spending as a Percentage of GDP, 2000-2087(Under CBO’s Extended Alternative Fiscal Scenario)

Percentage of GDP

NOTE: Figures for 2012-2087 are projections; CBO’s extended alternative fiscal scenario assumes that Medicare payment rates for physicians are maintained at the 2012 levels, the automatic spending reductions required by the Budget Control Act of 2011 do not take effect, and after 2022 several policies that would restrain spending growth do not take effect; most other federal spending is assumed to grow at the same rate as GDP after 2027.

SOURCE: Congressional Budget Office, Supplemental Data for The 2012 Long-Term Budget Outlook (Washington, DC: Congressional Budget Office, June 2012), available at http://www.cbo.gov/sites/default/files/cbofiles/attachments/43288-LTBOSuppTables_0.xls.

slide7
Medicare Spending per Enrollee Projected to Increase More Slowly Than Private Insurance Spending per Enrollee and GDP per Capita

Annual rate of growth (percent)

Note: GDP = gross domestic product.

Source: CMS Office of the Actuary, National Health Expenditure Projections, 2011–2021, updated June 2012.

projected u s national health expenditures nhe by source 2013 2023
Projected U.S. National Health Expenditures (NHE) by Source, 2013–2023

NHE in $ billions

% GDP: 17.9%18.7%20.5%

Note: GDP = gross domestic product.

Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund.

premiums rising faster than inflation and wages
Premiums Rising Faster Than Inflation and Wages

Cumulative changes in insurance premiums and workers’ earnings, 1999–2012

Projected average family premium as a percentage of median family income, 2013–2021

Percent

Percent

180%

172%

47%

38%

Projected

Sources: (left) Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits Annual Surveys, 1999–2012; (right) Commonwealth Fund estimates based on CPS ASEC 2001–12, Kaiser/HRET 2001–12, CMS OACT 2012–21.

rating of u s health system s performance
Rating of U.S. Health System’s Performance

“On the whole, how successful is the U.S. health system in achieving high performance on the following domains?”

Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, Aug.2011.

how the u s health system scores on dimensions of a high performance health system
How the U.S. Health System Scores onDimensions of a High Performance Health System

*

*

* Note: Includes indicator(s) not available in earlier years.

Source: Commonwealth Fund Commission on a High Performance Health System. Why Not the Best? Results from the National Scorecard on U.S. Health System Performance, 2011 (New York: The Commonwealth Fund, October 2011)

2010 29 million adults under age 65 underinsured 81 million either underinsured or uninsured
2010: 29 Million Adults Under Age 65 Underinsured, 81 Million Either Underinsured or Uninsured

Uninsured

during year

52 million

(28%)

Uninsured

during year

45.5 million

(26%)

Insured, not

underinsured

110.9 million

(65%)

Insured, not

underinsured

102 million

(56%)

Underinsured*

29 million

(16%)

Underinsured*

15.6 million

(9%)

2003

Adults 19–64

(172 million)

2010

Adults 19–64

(184 million)

* Underinsured defined as insured all year but experienced one of the following: medical expenses equaled 10% or more of income; medical expenses equaled 5% or more of income if low income (<200% of poverty); or deductibles equaled 5% or more of income.

Source: C. Schoen, M. Doty, R. Robertson, S. Collins, “Affordable Care Act Reforms Could Reduce the Number of Underinsured U.S. Adults by 70 Percent,” Health Affairs, Sept. 2011. Data: 2003 and 2010 Commonwealth Fund Biennial Health Insurance Surveys.

underinsured and uninsured adults at high risk of going without needed care and of financial stress
Underinsured and Uninsured Adults at High Risk of Going Without Needed Care and of Financial Stress

Percent of adults (ages 19–64)

* Did not fill prescription; skipped recommended medical test, treatment, or follow-up; had a medical problem but did not visit doctor; or did not get needed specialist care because of costs. ** Had problems paying medical bills; changed way of life to pay medical bills; or contacted by a collection agency for inability to pay medical bills or medical debt.

Source: C. Schoen, M. Doty, R. Robertson, S. Collins, “Affordable Care Act Reforms Could Reduce the Number of Underinsured U.S. Adults by 70 Percent,” Health Affairs, Sept. 2011. Data: 2003 and 2010 Commonwealth Fund Biennial Health Insurance Surveys.

mortality amenable to health care
Mortality Amenable to Health Care

Deaths per 100,000 population*

* Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections.

Source: Commonwealth Fund Commission on a High Performance Health System. Why Not the Best? Results from the National Scorecard on U.S. Health System Performance, 2011 (New York: The Commonwealth Fund, October 2011)

slide16

Quality and Costs of Care for Medicare Patients Hospitalized for Heart Attacks, Hip Fractures, or Colon Cancer,by Hospital Referral Regions, 2004

Quality of Care*

(1-Year Survival Index, Median=70%)

* Indexed to risk-adjusted 1-year survival rate (median=0.70).

** Risk-adjusted spending on hospital and physician services using standardized national prices.

Data: E. Fisher, J. Sutherland, and D. Radley, Dartmouth Medical School analysis of data from a 20% national sample of Medicare beneficiaries.

Source: The Commonwealth Fund Commission on a High Performance Health System, Why Not the Best? Results from the National Scorecard on U.S. Health System Performance, 2008, (New York: The Commonwealth Fund, July 2008).

what drives variation in spending
What Drives Variation in Spending?

SOURCE: G. Hackbarth, R. Reischauer, and A. Mutti, "Collective Accountability for Medical Care—Toward Bundled Medicare Payments,"New England Journal of Medicine July 3, 2008 359(1):3–5.

Source: G. Hackbarth, R. Reischauer, and A. Mutti. “Collective Accountability for Medical Care—Toward Bundled Medicare Payments” New England Journal of Medicine July 3, 2008 359(1):3-5.

receipt of recommended screening and preventive care for adults
Receipt of Recommended Screening andPreventive Care for Adults

Percent of adults age 18+ who received all recommended screening and preventive care within a specific time frame given their age and sex*

U.S. Average

U.S. Variation 2008

* Recommended care includes at least six key screening and preventive services: blood pressure, cholesterol, Pap, mammogram, fecal occult blood test or sigmoidoscopy/colonoscopy, and flu shot.

Source: Commonwealth Fund Commission on a High Performance Health System. Why Not the Best? Results from the National Scorecard on U.S. Health System Performance, 2011 (New York: The Commonwealth Fund, October 2011)

18

access problems more than two of three adults have difficulty getting timely access to their doctor
Access Problems: More Than Two of Three AdultsHave Difficulty Getting Timely Access to Their Doctor

Percent reporting that it is very difficult/difficult:

Getting an appointment with a doctor the same or next day when sick, without going to the emergency room

Getting advice from your doctor by phone during regular office hours

Getting care on nights, weekends, or holidays without going to the emergency room

Any of the above

Source: K. Stremikis, C. Schoen, and A.-K. Fryer, A Call for Change: The 2011 Commonwealth Fund Survey of Public Views of the U.S. Health System (New York: The Commonwealth Fund, April 2011).

slide20
Potential Waste and Inefficiency: More Than Half of AdultsExperience Wasteful and Poorly Organized Care

Percent reporting in past two years:

Doctors ordered a testthat had already been done

Time spent on paperwork related to medical bills and health insurance a problem

Health care system poorly organized

Any of the above

Source: K. Stremikis, C. Schoen, and A.-K. Fryer, A Call for Change: The 2011 Commonwealth Fund Survey of Public Views of the U.S. Health System (New York: The Commonwealth Fund, April 2011).

slide21

Poor Coordination of Care Is Common,Especially if Multiple Doctors Are Involved

Source: K. Stremikis, C. Schoen, and A.-K. Fryer, A Call for Change: The Commonwealth Fund 2011 Survey of Public Views of the U.S. Health System (New York: The Commonwealth Fund, April 2011).

slide23

A Majority of Americans Say the Health Care SystemNeeds Fundamental Change or Complete Rebuilding

Note: Subgroups may not sum to total due to rounding.

Source: K. Stremikis, C. Schoen, and A.-K. Fryer, A Call for Change: The 2011 Commonwealth Fund Survey of Public Views of the U.S. Health System (New York: The Commonwealth Fund, April 2011).

slide24

Support for More Accessible, Coordinated,and Well-Informed Care

Note: Subgroups may not sum to total due to rounding.

Source: K. Stremikis, C. Schoen, and A.-K. Fryer, A Call for Change: The Commonwealth Fund 2011 Survey of Public Views of the U.S. Health System (New York: The Commonwealth Fund, April 2011).

support for doctors working in teams and groups to improve patient care
Support for Doctors Working inTeams and Groups to Improve Patient Care

Percent reporting it is very important/important for improving patient care

86

65

Note: Subgroups may not sum to total because of rounding.

Source: K. Stremikis, C. Schoen, and A.-K. Fryer, A Call for Change: The 2011 Commonwealth Fund Survey of Public Views of the U.S. Health System (New York: The Commonwealth Fund, April 2011).

slide27

System Improvement Provisions in the

Affordable Care Act of 2010

Note: ACO = accountable care organization; PCP = primary care physician; AHRQ = Agency for Healthcare Research and Quality. HHS = Department of Health and Human Services

Source: Commonwealth Fund analysis.

slide28

Uninsured Nonelderly Under Baseline and the Affordable Care Act in 2022, by State

Baseline

Affordable Care Act

NH

VT

NH

WA

ME

VT

WA

ME

MT

ND

MT

ND

MN

OR

MN

NY

MA

WI

NY

OR

SD

ID

MA

WI

ID

MI

SD

RI

WY

MI

RI

PA

WY

NJ

CT

IA

PA

NJ

CT

IA

NE

OH

DE

NE

OH

IN

NV

IL

DE

WV

MD

IN

NV

IL

UT

VA

MD

CO

DC

WV

UT

VA

MO

KY

KS

CO

CA

DC

MO

KS

KY

CA

NC

NC

TN

TN

SC

OK

AR

AZ

OK

SC

NM

AZ

AR

GA

NM

AL

MS

GA

AL

MS

LA

TX

LA

TX

FL

FL

4%–<10%

20%–<25%

AK

AK

HI

HI

10%–<15%

25%–<30%

15%–<20%

30%–<35%

10% of nonelderly uninsured

22% of nonelderly uninsured

Note: Baseline scenario is if the Affordable Care Act had not been enacted in 2010; Affordable Care Act is full implementation of the law; Romney plan includes full repeal of the Affordable Care Act and replacement with state block grants for the Medicaid program and equalization of the tax treatment of individually purchased health plans and employer plans.

Source: S.R. Collins, S. Guterman, R. Nuzum, M.A. Zezza, T. Garber, and J. Smith. Health Care in the 2012 Presidential Election: How the Obama and Romney Plans Stack Up (New York: The Commonwealth Fund, October 2012).

the affordable care act and vulnerable populations
The Affordable Care Act and Vulnerable Populations

“How effective do you feel the Affordable Care Act will be in addressing the following issues for vulnerable populations?”

Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, Aug. 2011.

impact of health reform on national health expenditures
Impact of Health Reform on National Health Expenditures

NHE in trillions

6.3% annual growth

$4.6

$4.3

5.7% annual growth

$2.5

Total savings = $1.0 Trillion

Notes: * Estimate of pre-reform national health spending when corrected to reflect underutilization of services by previously uninsured.

Source: D. M. Cutler, K. Davis, and K. Stremikis, The Impact of Health Reform on Health System Spending, (Washington and New York: Center for American Progress and The Commonwealth Fund, May 2010).

slide32
The Problem: Fragmented Health Care Delivery and Financing, Inconsistent Incentives That Often Punish Efforts to Provide Better Care
  • The Diagnosis: The U.S. health system has multiple co-morbidities, but one of the fundamental problems for patients is fragmentation of providers and fragmentation of care delivery
    • Poor care coordination and care transitions
    • Sub-optimal quality and efficiency
  • The Treatment: Policies that change the way health care is organized, delivered, and paid for, to elicit and reward better results
    • Foundation of patient-centered primary care
    • Coordination of care among multiple providers and care settings
    • Accountability for the total care of a patient
    • Payment reform
    • Optimal use of health information technology
    • Continuous quality and efficiency improvement
what provider delivery system and payment reforms are being tested implemented
What Provider Delivery System and Payment Reforms are Being Tested/Implemented?
  • Accountable Care Organizations
    • Shared savings
    • Shared savings and shared risk
    • Global payment -- partial or full capitation
  • Patient-Centered Medical Homes
    • Blended fee for service, care management fee, bonuses for quality
  • Bundled payment for acute hospital episodes
    • Inpatient hospital care and inpatient physician services
    • Inpatient hospital care, inpatient physician services, post-acute care services
  • Value-Based Purchasing
  • Tools, infrastructure support
    • Enhanced care coordination/chronic disease management
    • Health information technology
    • Beacon communities; health information exchanges
  • Combination strategy in innovator communities
high performance health system criteria for developing options to stabilize spending growth
High Performance Health System Criteria for Developing Options to Stabilize Spending Growth
a synergistic strategy for improving system performance
A Synergistic Strategy for Improving System Performance

Notes: SGR = sustainable growth rate formula; GDP = gross domestic product.

* Malpractice policy savings included with provider payment policies.

** Target policy was not scored.

projected national health expenditures nhe 2013 2023 potential impact of synergistic strategy
Projected National Health Expenditures (NHE), 2013–2023: Potential Impact of Synergistic Strategy

NHE in $ trillions

Note: GDP = gross domestic product.

Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. Current baseline projection assumes that the cuts to Medicare physician fees under the sustainable growth rate (SGR) formula are repealed and basic physician fees are instead increased by 1% in 2013 and held constant from 2014 through 2023.

impact of synergistic strategy on projected annual hospital and physician spending 2013 2023
Impact of Synergistic Strategy on Projected Annual Hospital and Physician Spending, 2013–2023

Spending in $ billions

  • Projected growth of hospital spending, 2013–2023:
  • Baseline projection: 82% (6.2% annual)
  • Net of policy impact: 67% (5.3% annual)
  • Projected growth of physician spending, 2013–2023:
  • Baseline projection: 88% (6.5% annual)
  • Net of policy impact: 77% (5.9% annual)

Source: Estimates by Actuarial Research Corporation for The Commonwealth Fund. Current baseline projection assumes that the cuts to Medicare physician fees under the sustainable growth rate (SGR) formula are repealed and basic physician fees are instead increased by 1% in 2013 and held constant from 2014 through 2023.

slide39
There Are Hopeful Signs: The Health System Already is Responding to the Challenge to Provide Better Care
  • Meaningful use of health IT –
    • physicians with Electronic Health Records doubled from 17 to 34 percent in last there years
    • half of all hospitals have registered for a Medicare or Medicaid EHR Incentive Payment; $2.5 billion in EHR incentive payments
    • 50,000 health IT-related jobs created since the enactment of the HITECH Act (BLS)
  • Hospitals/physicians are participating in care transformation collaboratives
  • 32 Pioneer ACOs – committed to moving faster toward accountability
  • Primary care and Medical homes – Comprehensive Primary Care Initiative; 41 state Medicaid programs supporting initiatives
  • Bundled payment – Acute Care Episode demonstration, CMS bundled payment initiative
  • Community-based Transitions Program – 7 communities in Arizona; Atlanta; Akron; Merrimack Valley (MA), Southern Maine, and Chicago selected as of January 2012; aims to improve post-hospital discharge care transitions and reduce hospital readmissions
  • Partnership for Patients -- 6,900 hospitals and organizations pledged their commitment to a national campaign to improve the safety and coordination of care
slide40

Thank You!

David Blumenthal, M.D.

President

Chair, Commission on a High Performance Health System

db@cmwf.org

Cathy Schoen

Senior Vice President, Research & Evaluation

sxg@cmwf.org

The Commonwealth Fund Commission on a High Performance Health System

Sara Collins

Vice President,

Affordable Health insurance

src@cmwf.org

Melinda Abrams

Vice President,

Patient-Centered Coordinated Care

mka@cmwf.org

Mark Zezza

Senior Program Officer, Payment & System Reform

maz@cmwf.org

For more information, please visit: www.commonwealthfund.org