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  1. Understanding Accountable Care Organizations Timothy J. Fisher, MD, MS, FACOG July 10, 2014

  2. How My Brain Works VALUE= QUALITY/COST

  3. TRANSFORMING MATERNITY CAREHow Payment Reform Can HelpImprove Quality and Lower Costs Harold D. MillerPresident and CEOCenter for Healthcare Quality and Payment Reformwww.CHQPR.org

  4. Big Opportunity for Commercial Payers & Medicaid is Maternity Medical Expenditure Panel Survey, 2006

  5. Can We Reduce Maternity Care Costs Without Rationing? PregnantWoman

  6. Reducing Costs Without Rationing:Better Pregnancy Management PregnantWoman UncomplicatedPregnancy Complicated Pregnancy

  7. Reducing Costs Without Rationing:Better Choices About Delivery PregnantWoman UncomplicatedPregnancy Term Vaginal Delivery Complicated Pregnancy Pre-Term,C-Section

  8. Reducing Costs Without Rationing:Better Management of Delivery PregnantWoman UncomplicatedPregnancy Term Vaginal Delivery Complicated Pregnancy Efficient Successful Delivery Pre-Term,C-Section High-CostSuccessfulDelivery MaternalComplications,Readmissions Infants with Low Birth Weight, Injuries, Etc.

  9. Better for Moms and BabiesAs Well as Payers Better Outcomes/Lower Cost PregnantWoman UncomplicatedPregnancy Term Vaginal Delivery Complicated Pregnancy Efficient Successful Delivery Pre-Term,C-Section High-CostSuccessfulDelivery MaternalComplications,Readmissions Infants with Low Birth Weight, Injuries, Etc.

  10. Current Payment Systems Reward Bad Outcomes PregnantWoman UncomplicatedPregnancy Term Vaginal Delivery Complicated Pregnancy Efficient Successful Delivery Pre-Term,C-Section $ High-CostSuccessfulDelivery MaternalComplications,Readmissions Infants with Low Birth Weight, Injuries, Etc.

  11. How Payment Systems ImpedeBetter Maternity Care

  12. How Payment Systems ImpedeBetter Maternity Care

  13. How Payment Systems ImpedeBetter Maternity Care

  14. Accountable Payment ModelsProvide Flexibility + Accountability

  15. Accountable Payment ModelsAllow Win-Win-Win Approaches

  16. Improving Payment for Maternity Care: Part 1

  17. Normal Pregnancy, Term Delivery, No Complications VaginalDelivery in Hospital NormalPregnancy Term Deliveryw/ No CCs C-Sectionin Hospital

  18. Today: Higher Payment for C-Sections, Regardless of Need Lower Payment HEALTHPLAN VaginalDelivery in Hospital NormalPregnancy Term Deliveryw/ No CCs C-Sectionin Hospital Higher Payment

  19. Condition-Based PaymentEncourages Lower-Cost Care Condition-Specific Payment HEALTHPLAN VaginalDelivery in Hospital SinglePayment NormalPregnancy Term Deliveryw/ No CCs C-Sectionin Hospital

  20. Payment Would Vary Basedon Patient Conditions/Needs Delivery w/o Complications LowerPayment Term Deliveryw/ No CCs VaginalDelivery in Hospital VaginalDelivery in Hospital HEALTHPLAN NormalPregnancy C-Sectionin Hospital C-Sectionin Hospital Delivery with Complications Term Deliveryw/ CCs HigherPayment

  21. Condition-Based Payment AlsoEncourages Lower-Cost Locations Condition-Specific Payment VaginalDelivery inBirth Center HEALTHPLAN VaginalDelivery in Hospital SinglePayment NormalPregnancy Term Deliveryw/ No CCs C-Sectionin Hospital

  22. Improving Payment for Maternity Care: Part 2

  23. Accountable Payment ModelsAllow Win-Win-Win Approaches

  24. Yes, a Health Care ProviderCan Offer a Warranty Geisinger Health System ProvenCareSM • A single payment for an ENTIRE 90 day period including: • ALL related pre-admission care • ALL inpatient physician and hospital services • ALL related post-acute care • ALL care for any related complications or readmissions • Types of conditions/treatments currently offered: • Cardiac Bypass Surgery • Cardiac Stents • Cataract Surgery • Total Hip Replacement • Bariatric Surgery • Perinatal Care • Low Back Pain • Treatment of Chronic Kidney Disease

  25. Major Improvements in Outcomes, and Quickly

  26. Geisinger Perinatal ProvenCare • 103 discrete evidence-based elements of care are incorporated, measured and tracked for compliance • Redesign, from the ground up, all aspects of provider workflow • Drive fundamental efficiency improvements • Increase patient safety and process reliability • Reduce/eliminate documentation redundancy • Streamline patient education and cut costs • Seek observable reductions in C-section rates and premature births • Enhance management of comorbid conditions • Improve fetal/child health and wellness

  27. Results of Geisinger Perinatal ProvenCare • 26% Reduction in Cesarean Sections • 68% Reduction in Birth Trauma • 23% Reduction in NICU Use Berry SA, et al, “ProvenCare Perinatal: A Model for Delivering Evidence/Guideline-Based Care for Perinatal Populations,” Joint Commission Journal on Quality and Safety, May 2011

  28. A Warranty is Not an Outcome Guarantee • Offering a warranty on care does not imply that you are guaranteeing a cure or a good outcome • It merely means that you are agreeing to correct avoidable problems at no (additional) charge • Most warranties are “limited warranties,” in the sense that they agree to pay to correct some problems, but not all

  29. Prices for Warranted Care Will Likely Be Higher • Q: “Why should we pay more to get good-quality care??” • A: In most industries, warrantied products cost more, but they’re desirable because TOTAL spending on the product (repairs & replacement) is lower than without the warranty

  30. Prices for Warranted Care May Be Higher, But Spending Lower • Q: “Why should we pay more to get good-quality care??” • A: In most industries, warrantied products cost more, but they’re desirable because TOTAL spending on the product (repairs & replacement) is lower than without the warranty • In healthcare, a procedure with a warranty would need to have a higher payment rate than the equivalent non-warrantied procedure, but the higher price would be offset by fewer costs of complications, outlier payments, and readmissions

  31. Example: $6,000 Cost of Delivery

  32. Actual Average Payment is Higher Due to NICU Use

  33. How Much Should be Charged for Delivery With a Warranty?

  34. Starting Point for Warranty Price:Actual Current Average Payment

  35. Limited Warranty Gives Financial Incentive to Improve Quality ReducingAdverseEvents… ...ReducesCosts... …ImprovesThe Bottom Line

  36. Higher-Quality Provider Can Charge Less, Attract More Patients EnablesLowerPrices

  37. A Virtuous Cycle of QualityImprovement & Cost Reduction ReducingAdverseEvents… ...ReducesCosts... …ImprovesThe Bottom Line

  38. Win-Win-Win for Patients, Payers, and Providers Quality is Better... ...Spending is Lower... ...Providers More Profitable

  39. To Make It Work:Shared, Trusted Data for Pricing • Physician/Hospital needs to know their current rates of utilization and how many are preventable to know whether the warranty price will cover its costs of delivering care • Purchaser/Payer needs to know its current rates of utilization to know whether the warranty price is a better deal than they have today • Both sets of data have to match in order for both providers and payers to agree!

  40. Many Potential Opportunities for Warranties in Maternity Care • Maternal injuries, infections, complications • Birth injuries, infections, complications • Neonatal problems (e.g., respiratory distress syndrome) after induced birth • Readmissions (both maternal and infant)

  41. Many Variations of Payment Reform No Complications VaginalDelivery in Hospital OB/CNM $ Hospital $$ Complications NormalPregnancy Term Deliveryw/ No CCs No Complications C-Sectionin Hospital OB/CNM $ Hospital $$$ Complications

  42. Bundled Payments Bundled Payment No Complications VaginalDelivery in Hospital OB/CNM $ Hospital $$ Complications NormalPregnancy Term Deliveryw/ No CCs Bundled Payment No Complications C-Sectionin Hospital OB/CNM $ Hospital $$$ Complications

  43. Payments with Warranties Bundled Payment with Warranty No Complications VaginalDelivery in Hospital OB/CNM $ Hospital $$ Complications NormalPregnancy Term Deliveryw/ No CCs Bundled Payment with Warranty No Complications C-Sectionin Hospital OB/CNM $ Hospital $$$ Complications

  44. Condition-Based Payment Condition-Based Bundled Payment with Warranty No Complications VaginalDelivery in Hospital OB/CNM $ Hospital $$ Complications NormalPregnancy Term Deliveryw/ No CCs No Complications C-Sectionin Hospital OB/CNM $ Hospital $$$ Complications

  45. Authorizing/Enabling Use ofAlternative Delivery Sites Condition-Based Bundled Payment with Warranty No Complications VaginalDelivery in Hospital OB/CNM $ Hospital $$ Complications No Complications NormalPregnancy Term Deliveryw/ No CCs Deliveryin Birth Center OB/CNM $ Birth Ctr $ Complications No Complications C-Sectionin Hospital OB/CNM $ Hospital $$$ Complications

  46. Moving Upstream to Broader Range of Conditions Broader Condition-Based Bundled Payment with Warranty No Complications VaginalDelivery in Hospital OB/CNM $ Hospital $$ Complications No Complications NormalPregnancy Term Deliveryw/ No CCs Deliveryin Birth Center OB/CNM $ Birth Ctr $ Complications No Complications Pre-Term ElectiveInduction C-Sectionin Hospital OB/CNM $ Hospital $$$ Complications

  47. A Maternity Care ACO Bundled Condition-Based Payment with Warranty No Complications VaginalDelivery in Hospital OB/CNM $ Hospital $$ Complications No Complications NormalPregnancy Term Deliveryw/ No CCs Deliveryin Birth Center OB/CNM $ Birth Ctr $ Complications No Complications High-RiskPregnancy Pre-Term ElectiveInduction C-Sectionin Hospital OB/CNM $ Hospital $$$ Complications Payment rates would still be adjusted based on maternal risk factors at the beginning of pregnancy and unpreventable factors that occur during pregnancy, but not for preventable complications or discretionary choice of delivery timing, method, or site

  48. Four Things Needed For Win-Win-Win Solutions • Defining the Change in Care Delivery • How can the physician, hospital, or other provider change the way care is delivered to reduce costs without harming patients?

  49. Four Things Needed For Win-Win-Win Solutions • Defining the Change in Care Delivery • How can the physician, hospital, or other provider change the way care is delivered to reduce costs without harming patients? • Analyzing Expected Costs and Savings • What will there be less of, and how much does that save? • What will there be more of, and how much does that cost? • Will the savings offset the costs on average? • How much variation in costs and savings is likely?

  50. Four Things Needed For Win-Win-Win Solutions • Defining the Change in Care Delivery • How can the physician, hospital, or other provider change the way care is delivered to reduce costs without harming patients? • Analyzing Expected Costs and Savings • What will there be less of, and how much does that save? • What will there be more of, and how much does that cost? • Will the savings offset the costs on average? • How much variation in costs and savings is likely? • Designing a Payment Model To Support Change • Flexibility to change the way care is delivered • Accountability for costs and quality related to care • Adequate payment to cover lowest-achievable costs • Protection for the provider from insurance risk