Session 5 - Resource Management

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  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery January 2010June 2008 Critical Decision Making for Medical Executives: Keys to Improving Healthcare Delivery
  • Session 5 - Resource Management

    1. 1. DoD Resource Management Walt W. Tinling, FACHE, CDFM-A Assistant Vice President for Resource Management Assistant Professor, Preventive Medicine and Biometrics, Uniformed Services University wtinling@usuhs.mil 5-1
    2. 2. Learning Objectives• Describe the Military Health System, Services, and Medical Treatment Facility budget process• Identify the incentives inside the financial model for the TRICARE contracts and how they interact with the direct care system• Describe the Prospective Payment System (PPS) and its implications for resource management 5-2
    3. 3. 5-3
    4. 4. The Resource Management Process• Planning• Programming• Budgeting• Accounting• Analysis and Reporting 5-4
    5. 5. Planning• Mission, Vision, Organization Goals• Strategic Planning• Financial Planning• Operational Planning 5-5
    6. 6. DoD Priorities for 2012• Prevail in today’s wars• Prevent and deter conflict• Prepare for a wide range of contingencies• Preserve and enhance the All- Volunteer Force 5-6
    7. 7. DoD Resource Planning• Planning, Programming, and Budgeting System (PPBS) • Created under the Kennedy Administration • Robert McNamara and the “Whiz Kids”• Sometimes called PPBES • E for Execution • Robert Hale OSD Comptroller “lets put the big E back into PPBES” 5-7
    8. 8. DoD PPBES• A rigorous process to: • Allocate resources -- among competing programs -- while considering perceived threats• Apparently cumbersome process ensures due process • Direct logic path from war plans to execution of programs in the field • Multiple forums and hearings prior to final decision • Requirements Driven 5-8
    9. 9. PPBES FY BUDGET MTF/ DTF PLANNING PROGRAMMING BUDGETING NATIONAL E ASSESSMENTS BUDGET PRESIDENT’SSECURITY STRATEGY DHP MPG PREPARATION/ BUDGET X REVIEW CINCs JOINT DECISIONS E AGENCIES SERVICES STRATEGY REVIEW C PROGRAM OBJECTIVES OSD/OMB BUDGET CONGRESS U NATIONAL WORLD SITUATION MILITARY MEMORANDUM (POM) SUBMIT T STRATEGY E OSD/OMB OSD REVIEW REVIEW OSD PLANNING APPROPRIATION DEFENSE PROGRAM RESOURCE PLANNING DECISION MANAGEMENT JOINT STAFF MEMORANDUM DECISION GUIDANCE (DPG)ASSESSMENTS & (PDM) (RMD) FISCAL GUIDANCE Future Strategy $ 2-7 yrs in $ 2-3 yrs in future Today future 5-9
    10. 10. PPBES Timeline FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Execution POM 13 Budget Programming years Future Years Defense Plan (FYDP) 5-10
    11. 11. “The POM” 5-11
    12. 12. POM Wisdom• “Most educated people know that the worst potential competition for any young organisms can come from its own kind.”• “They have the same requirements.” • Frank Herbert Dune 5-12
    13. 13. POM Wisdom (cont)You can’t win and you can’t not playYou can’t consult enoughIf you aren’t dressed and on the bench the coach can’t put you inAnd “get a helmet on and get in the game” 5-13
    14. 14. POM Consequences To many the glass is half empty…to others it is half full To a POM mechanic you have twice as much glass as you need 5-14
    15. 15. Creating the President’s Budget• Administration provides guidelines (targets, limits) to federal agencies• Agencies prepare budget requests• OMB review and consolidation 5-15
    16. 16. Total Federal Revenues 5-16
    17. 17. Total Federal Outlays 5-17
    18. 18. Congressional Committees of Interest• Budget• Revenue • Ways and Means (House) • Finance (Senate)• Appropriations• Armed services (Authorizations)• VA• Health 5-18
    19. 19. Congressional Legislative FrameworkU.S. Constitution - Article 1 • Section 8: The Congress shall have power to…provide for the common defense and general welfare... • Section 9: ...No money shall be drawn from the treasury, but in consequence of appropriations made by law... 5-19
    20. 20. 5-20
    21. 21. Defense Related Appropriations andAuthorizations • HAC • HASC • Defense • Milcon • SASC • VA • SAC • Health • Defense • Energy and Water • HHS • VA 5-21
    22. 22. NEW A RK Hac ke ns ack 5-22
    23. 23. Federal Budget Process• Budget Formulation• Congressional Action• Budget Execution• Review and Audit 5-23
    24. 24. Congressional Actions• Budget Resolution • Conference• Committee hearings • Passage (On or before• Floor Actions 1 Oct) • Continuing Resolutions –• House Senate debate temporary appropriations amendments • President• House Senate versions signature/veto 5-24
    25. 25. Process Review• Appropriation• Apportionment• Allotment• Commitment• Obligation• Expense (outlay) 5-25
    26. 26. Appropriations• Operations and Maintenance (O&M)• Research Development Test and Evaluation (RDT&E)• Procurement• Military Construction• Military Pay 5-26
    27. 27. Budget Activity Groups (BAGs)• Bag 1: Direct Care• Bag 2: Private Sector Care• Bag 3: Consolidated Health• Bag 4: IM/IT• Bag 5: Management Headquarters• Bag 6: Education and Training• Bag 7: Base Operations/Communications 5-27
    28. 28. Commodities• Personnel• Travel• Transportation• Communication/Utilities/Rent• Printing• Other Services (Contracts)• Supplies and Material• Equipment• Stipends/Grants 5-28
    29. 29. Status• Commitment • Plan to spend• Obligation • Contract, Purchase Order, Civilian Hire• Expense • Goods received – services rendered, valid invoice and purchase order (three way match)• Available • Funds that are not committed, obligated, or expensed 5-29
    30. 30. FY10 DHP by Appropriation FY12 $52.5B$31.5B Not included in the $31.5B, Medical MILCON, MILPERS, or BRAC 5-30
    31. 31. Defense Health ProgramFY10 $31.5B As Secretary Gates stated in his May 2010 speech on defense spending, “Health care costs are eating the Defense Department alive.” 5-31
    32. 32. Defense Health O&M ProgramFY10 $27.8B 5-32
    33. 33. 5-33
    34. 34. TRICARE Contracts• National Quality Monitoring• Global Remote• Health Care and Support Services (HCSS)• Retail Pharmacy 5-34
    35. 35. TRICARE Contracts (cont)• Mail Order Pharmacy• TRICARE Dual Eligible Fiscal Intermediary• Marketing and Education• TRICARE Retiree Dental• Puerto Rico 5-35
    36. 36. Financial Objectives of T-Now• ASD HA charged design group to: • Promote quality and customer satisfaction • Better align incentives • Improve operating efficiencies and cost predictability • Build on TRICARE successes 5-36
    37. 37. Financing Overview• Administrative costs • Health care costs • Claims processing • MTF Enrollee care in the network (underwritten) • Disease • Non-MTF Enrollee care management (underwritten) programs • Underwriting Fee/Risk • Administrative Sharing payment Services • Some reimbursable healthcare costs (not • Award Fee underwritten) 5-37
    38. 38. Incentives Overview• Performance Guarantee• Award Fee for customer satisfaction• Underwriting Fee 5-38
    39. 39. Award Fee• Customer Satisfaction Award Fee• Subjective, based on surveys of: • Beneficiaries • Regional Directors • MTF providers • Network providers• Amount available equal to amount bid for Performance Guarantee • Minimum of 3% of the administrative price to a • Maximum of 10% of the administrative price 5-39
    40. 40. Underwriting Fee• Government and Contractor will share the risk for underwritten healthcare costs• The risk sharing arrangement is fixed • 80% for the Government • 20% for the contractor 5-40
    41. 41. Performance Guarantee• Funded by the Contractor• Minimum of 3% of the Administrative Price per Period of Performance• Objective measurable standards set at industry benchmarks e.g., • Phone response standards • Claims processing standards 5-41
    42. 42. Intended Benefits of Underwriting• Shared risk promotes Government/contractor partnership to control purchased care costs• Annual determination of target cost minimizes contractor’s long term risk • Reduces “risk premium” and potential for disputes• Lack of adjustment for MTF usage creates strong incentive to maximize use of the MTF • More MTF care means less purchased care, more realized fee for the contractor and less cost for the Government• Paying healthcare costs in real time improves budget execution and predictability 5-42
    43. 43. Underwriting Fee Continuum Assuming $800M Target Cost and $25M Underwriting Fee 10% Max $85 $65 $45 Underwriting Fee ($25M) $25 $5-$15 -4% Min-$35 $525 (Max Fee) $800 (Target Cost) $1,085 (Min Fee) Actual Costs (Millions) 5-43
    44. 44. Points of Emphasis• Financial structure • Financing mechanisms promotes joint are much simpler than management and under the current control of underwritten contracts and should health care costs provide more budget• Both parties have predictability strong incentives to • Government retains the maximize the use of lion’s share of the risk MTFs and minimize the use/costs of purchased care 5-44
    45. 45. Status of T-3• T-3 currently under multiple protest• T-4 Working groups meeting now led by Dr. Clifton (USU IPA) 5-45
    46. 46. PPS Value of Care• Value of MTF Workload • Fee for Service rate for workload produced• Rates based on price at which care can be purchased discounted for Military Labor • TMAC rates • Not MTF costs• Computed at MTF level but allocated to the Services 5-46
    47. 47. Prospective Payment System• Prospective Payment System (PPS) • PPS is a main resource allocation mechanism in the MHS • Redistributes funds between the Services by comparing actual work to planned work• PPS is retrospective not prospective 5-47
    48. 48. Current PPS Workload• Inpatient – MEPRS A Work centers • Non-Mental Health - Relative Weighted Products (RWPs) • Mental Health - Bed Days• Outpatient – MEPRS B Work centers • Simple (Work) Relative Value Units (RVUs)• In the Direct Care System ~70 cents of every dollar goes to labor; Military, civilian, and contract 5-48
    49. 49. Valuing Business Plans• Value per RWP • Average amount allowed • Including institutional and professional fees • Excluding MH/SA • Adjusted for local Wage index• Value per Mental Health Beddays • Average amount allowed • Including institutional and professional fees • Adjusted for local Wage index• Value per RVU • Average amount allowed • Segmented by Specialty • Excluding Ancillary, Home Health, Facility Charges (except ER) • Adjusted for local Wage index 5-49
    50. 50. MHS Mantra or Why Recapture?“The incremental cost of the next thing in the MHS is always less than the average cost of that same thing in the network” 5-50
    51. 51. MENBA Pilot Project• QDR: “Capture the quantity, value, and expense of readiness and military-unique services provided by MHS activities”• Identify and List all Mission Essential/Non-Benefit Activities (MENBA) performed in the MHS• On-site visits • 6 MTFs (1 small & 1 Large from each Service) • MTF Participation: • Coordinate Schedule • Provide limited Documents (e.g., Committees List, Additional Duties Rosters, etc.) • Be Part of the Team, Part of the Project!• Work with MENBA WG to “sort out”, classify & develop Taxonomy for activities 5-51
    52. 52. Next Steps• Ancillary• Pharmacy• Utilization Management/Capitation• Industry Standard Workload• Dental• Mission Essential Non-Benefit Activities• Paying for Quality 5-52
    53. 53. PPS Roadmap Institutional Inpatient Satisfaction ORYX Professional HEDIS Outpatient Institutional ProfessionalData Workload Capitation PerformanceWeights AncillaryRatesData Pharmacy RiskRates Adjusters Other Data Reinsurance Benefit Weights Plan (HCPCs) Rates Minimum Dental Enrollment Data Weights Rates Mission Essential Data Weights Rates 5-53
    54. 54. Influencing theCost of Military Medicine Force Structure Benefit Population Mission 5-54

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