LOOKING AHEAD: Insights from the Reform Debate

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LOOKING AHEAD: Insights from the Reform Debate

  1. 1. LOOKING AHEAD: Insights from the Reform Debate Annual Meeting South Carolina Hospital Association February 11, 2010 James Bentley, Ph.D. Silver Spring, Maryland
  2. 2. Presentation Overview <ul><li>Legislation Status </li></ul><ul><li>Reform Benefits </li></ul><ul><li>Strategic directions from the reform debate </li></ul><ul><ul><li>Cost containment </li></ul></ul><ul><ul><li>Integration/coordination </li></ul></ul><ul><ul><li>Financial Risk </li></ul></ul>
  3. 3. Health Reform Legislation <ul><li>U.S. House--Passed 220-215 </li></ul><ul><li>U.S. Senate--Passed 60-39 </li></ul><ul><ul><li>Now only 59 Democrats </li></ul></ul><ul><li>Challenges to creating a final bill </li></ul><ul><ul><li>Policy Issues --Political </li></ul></ul><ul><ul><ul><li>Abortion House v. Senate </li></ul></ul></ul><ul><ul><ul><li>Public plan option Loss of Senate seat </li></ul></ul></ul><ul><ul><ul><li>Illegal immigrants </li></ul></ul></ul><ul><ul><ul><li>Tax revenues </li></ul></ul></ul>
  4. 4. Health Reform Benefits for Hospitals--1 <ul><li>Fewer Uninsured </li></ul><ul><ul><li>Estimated reduction: 31-36 million fewer </li></ul></ul><ul><ul><ul><li>From uninsured to Medicaid </li></ul></ul></ul><ul><ul><ul><li>From uninsured to private insurance </li></ul></ul></ul><ul><li>Simplified claims processes </li></ul><ul><li>Gainsharing demonstration projects extended </li></ul><ul><li>Medicare payment extenders </li></ul><ul><li>Repeal of the 45% Medicare “trigger” </li></ul>
  5. 5. Health Reform Benefits for Hospitals--2 <ul><li>Clearer Roadmap for hospital and health system strategic planning </li></ul><ul><ul><li>Constrained Payment </li></ul></ul><ul><ul><li>Increased Clinical Coordination </li></ul></ul><ul><ul><li>Increased Financial Risk </li></ul></ul>
  6. 6. Health Reform Benefits for Hospitals--3 <ul><li>Clearer Roadmap for Associations </li></ul><ul><ul><li>Shape the state roles in insurance market and regulation </li></ul></ul><ul><ul><ul><li>Exchange design and regulation </li></ul></ul></ul><ul><ul><li>Shape Medicaid expansions </li></ul></ul><ul><ul><ul><li>FMAP </li></ul></ul></ul><ul><ul><ul><li>DSH allotments </li></ul></ul></ul><ul><ul><ul><li>Payments to MDs and hospitals </li></ul></ul></ul><ul><ul><li>Focus member services </li></ul></ul><ul><ul><ul><ul><li>Collaborations to identify next steps for members </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Sharing lessons learned: to do and to avoid </li></ul></ul></ul></ul>
  7. 7. Cost Containment <ul><li>THE PUBLIC POLICY CHALLENGE : </li></ul><ul><ul><li>Slow the growth in spending while expanding coverage </li></ul></ul><ul><li>Drivers </li></ul><ul><ul><li>Public unhappiness with costs </li></ul></ul><ul><ul><li>Health care growing faster than GDP </li></ul></ul><ul><ul><li>Federal deficits growing </li></ul></ul><ul><ul><li>Higher costs mean higher subsidies </li></ul></ul>
  8. 8. Cost Containment Examples in Legislation <ul><li>Medicare’s annual updates reduced </li></ul><ul><li>DSH payments reduced </li></ul><ul><ul><li>Payment follows person not program </li></ul></ul><ul><li>Increased payment penalties </li></ul><ul><ul><li>Hospital acquired conditions </li></ul></ul><ul><ul><li>“ Excessive” readmissions </li></ul></ul><ul><li>Increased private insurance price competition (the non-enrollment role for the insurance exchange) </li></ul>
  9. 9. Cost Containment if Reform Shrinks, Stalls or Stops <ul><li>THE PUBLIC POLICY CHALLENGE </li></ul><ul><ul><li>Deficit reduction </li></ul></ul><ul><ul><ul><li>Lower payments reduce deficit rather than increase coverage </li></ul></ul></ul><ul><ul><li>Likely sources of proposals </li></ul></ul><ul><ul><ul><li>MedPAC recommendations </li></ul></ul></ul><ul><ul><ul><li>Private Debt Reduction Task Force </li></ul></ul></ul><ul><ul><ul><ul><li>Pete Domenici--former Senate budget chair </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Alice Rivlin--former CBO and OMB director </li></ul></ul></ul></ul><ul><ul><ul><li>Presidential Debt Reduction Task Force </li></ul></ul></ul>
  10. 10. Payment Implications <ul><li>THE OPERATIONAL CHALLENGES </li></ul><ul><ul><li>Lower hospital’s cost structure </li></ul></ul><ul><ul><ul><li>Project multi-year trend lines </li></ul></ul></ul><ul><ul><ul><li>Stretch goal: Breakeven at Medicare’s price </li></ul></ul></ul><ul><ul><li>Review charity care policies </li></ul></ul><ul><ul><ul><li>From eligibility based on low income to uninsured </li></ul></ul></ul><ul><ul><li>Create primary care alternatives to ED </li></ul></ul><ul><ul><ul><li>Primary care networks </li></ul></ul></ul><ul><ul><ul><li>Federally qualified health centers </li></ul></ul></ul><ul><ul><ul><li>Urgent care option within the hospital </li></ul></ul></ul>
  11. 11. Integration/Coordination <ul><li>THE PUBLIC POLICY CHALLENGE </li></ul><ul><ul><li>Create a system that meets the IOM six aims for high quality care </li></ul></ul><ul><ul><ul><li>Safe </li></ul></ul></ul><ul><ul><ul><li>Effective </li></ul></ul></ul><ul><ul><ul><li>Patient-centered </li></ul></ul></ul><ul><ul><ul><li>Timely </li></ul></ul></ul><ul><ul><ul><li>Efficient </li></ul></ul></ul><ul><ul><ul><li>Equitable </li></ul></ul></ul><ul><li>THE OPERATIONAL CHALLENGE </li></ul><ul><ul><ul><li>Develop integrated/coordinated care </li></ul></ul></ul>
  12. 12. Coordination Examples in Legislation <ul><li>Readmission penalties as a first step </li></ul><ul><li>Payment incentive pilots: </li></ul><ul><ul><li>Bundled payments for a whole episode </li></ul></ul><ul><ul><ul><li>Based on an inpatient episode </li></ul></ul></ul><ul><ul><li>Accountable care organizations (ACO) </li></ul></ul><ul><ul><ul><li>Based on a population of patients </li></ul></ul></ul><ul><ul><ul><li>Ambulatory and inpatient care </li></ul></ul></ul>
  13. 13. Coordination Implication #1 <ul><li>Where should hospitals start? </li></ul><ul><ul><li>Most patient care is ambulatory and acute which matches an ACO </li></ul></ul><ul><ul><li>Most expenses involve hospitalized patients and chronic conditions which matches bundled payments </li></ul></ul>
  14. 14. Coordination Implication #2 <ul><li>“ Engineer” the whole case </li></ul><ul><ul><li>Who are your clinical partners? </li></ul></ul><ul><ul><ul><li>Referral networks </li></ul></ul></ul><ul><ul><ul><ul><li>Assess existing relationship and components </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Explore new relationships and components </li></ul></ul></ul></ul><ul><ul><li>Assess partners’ performance </li></ul></ul><ul><ul><ul><li>Clinically </li></ul></ul></ul><ul><ul><ul><li>Resources used (financially) </li></ul></ul></ul><ul><ul><li>Change operational mindset and language </li></ul></ul><ul><ul><ul><li>From dischargers to TRANSFERS </li></ul></ul></ul><ul><ul><ul><li>From handoffs to HANDOVERS </li></ul></ul></ul>
  15. 15. Coordination Implication #3 <ul><li>Make evidence-based practice routine </li></ul><ul><ul><li>Create the essential infrastructure </li></ul></ul><ul><ul><ul><li>Selection process for protocols/guidelines </li></ul></ul></ul><ul><ul><ul><li>Updating process for protocols/guidelines </li></ul></ul></ul><ul><ul><ul><li>Routine communication of protocols/guidelines </li></ul></ul></ul><ul><ul><li>Create a process for the “off-protocol case” </li></ul></ul><ul><ul><ul><li>What documentation for atypical patient? </li></ul></ul></ul><ul><ul><ul><li>How to best share learning? </li></ul></ul></ul>
  16. 16. Coordination Implication #4 <ul><li>Options for managing coordination </li></ul><ul><ul><li>Structural integration </li></ul></ul><ul><ul><ul><li>Geisinger, Billings Clinic, Mary Imogene Bassett, Cleveland Clinic, Mayo </li></ul></ul></ul><ul><ul><li>Partnerships of multi-specialty group practice and hospitals </li></ul></ul><ul><ul><li>Virtual integration </li></ul></ul><ul><ul><ul><li>Components independent but shared information system </li></ul></ul></ul><ul><ul><li>Pluralistic medical staff with multiple practice models </li></ul></ul><ul><li>Key Question: </li></ul><ul><ul><ul><li>Which models perform as well as structural integration? </li></ul></ul></ul>
  17. 17. Managing Financial Risk <ul><li>THE PUBLIC POLICY CHALLENGE </li></ul><ul><ul><li>Shift risk and preserve financial viability </li></ul></ul><ul><ul><ul><li>Insurance Risk: Incidence of illness </li></ul></ul></ul><ul><ul><ul><li>Production risk: Efficiency of care </li></ul></ul></ul><ul><li>THE OPERATIONAL CHALLENGES : </li></ul><ul><ul><li>Provide high quality care </li></ul></ul><ul><ul><ul><li>Performance information will be public </li></ul></ul></ul><ul><ul><li>Cover costs </li></ul></ul><ul><ul><li>Create capital (earn a margin) </li></ul></ul>
  18. 18. Shifting Financial Risk Examples in Legislation <ul><li>Payment increases below cost increases </li></ul><ul><ul><li>Update reduced by productivity </li></ul></ul><ul><li>DSH payment reductions </li></ul><ul><ul><li>Revenue follows patient choice </li></ul></ul><ul><li>Studies of variation in utilization and price </li></ul><ul><ul><ul><li>(The Dartmouth Atlas questions) </li></ul></ul></ul>
  19. 19. Shifting Financial Risk without Legislation <ul><li>Increased uninsured </li></ul><ul><li>Constrained revenues </li></ul><ul><ul><li>Increased public program enrollment </li></ul></ul><ul><ul><ul><li>Medicare as a result of retiring baby boomers </li></ul></ul></ul><ul><ul><ul><li>Medicaid as the only policy lever to expand coverage </li></ul></ul></ul><ul><ul><li>Balanced Budget Act #2? </li></ul></ul><ul><ul><li>Cost pressures on private insurers </li></ul></ul>
  20. 20. Financial Risk Implications <ul><li>Identify trusted partners </li></ul><ul><ul><li>Everyone can’t maximize revenue </li></ul></ul><ul><ul><li>Who holds the trusted purse? </li></ul></ul><ul><li>Share revenues (where legally permitted) </li></ul><ul><ul><li>Good practices by A may reduce the financial stability of B: A subsidizes B </li></ul></ul><ul><ul><li>Will bundled payments and ACOs provide mechanisms for sharing revenues? </li></ul></ul><ul><li>Key Question: </li></ul><ul><ul><li>Do practitioners and providers need identical incentives or compatible incentives? </li></ul></ul>
  21. 21. Some Common Ingredients for Coordination and Financial Risk <ul><li>Increased physician leadership </li></ul><ul><li>Robust conflict resolution </li></ul><ul><ul><li>Conflict: the “partner(s)” no one wants </li></ul></ul><ul><ul><ul><li>Consistently off protocol </li></ul></ul></ul><ul><ul><ul><li>Uses “excessive” resources </li></ul></ul></ul><ul><ul><li>Conflict: excess provider capacity </li></ul></ul><ul><li>Candid communications to reduce stress </li></ul><ul><ul><li>Internal to everyone in network: transparency </li></ul></ul><ul><ul><li>External to community: education </li></ul></ul>
  22. 22. <ul><li>Questions and Discussion </li></ul>

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