Welcome to Implications of Policy, Finance, and Business on Population Health. This is Lecture d. The final lecture in this series, covers the provider delivery system response to population health as well as discusses some of the future population health challenges facing the Health IT industry. The objectives for this lecture of implications of policy, finance, and business on population health are to discuss and interpret the key financial drivers in the US health care system and their implications. Describe the key delivery system and accrediting organization responses. Discuss the key population health and IT policy challenges going forward. In response to the health industry move toward population health and value, there has been a very large wave of delivery system consolidations over the last several years. There was a similar large wave in the early 1990s in response to the growth of managed care. It was quiescent for 15 to 20 years, until now. The reason moves to value based purchasing, beginning in 2009, drove more consolidation because success in this new environment requires much more capital and infrastructure for major initiatives. Such as Electronic Health Records, EHRs., Accountable Care Organizations, ACOs, Patient-Centered Medical Homes, PCMHs and care coordination across the continuum, not to mention, the training required. As the provider systems consolidate in the quest for delivery system integration, there is unfortunately no single agreed upon definition. However, this slide lays out some of the key dimensions of integration. Finance and delivery, a classic integration is between the insurance function and care delivery to facilitate alignment of the financial incentives. For example, Kaiser Permanente guarantees a fixed annual health insurance premium to its customers. The hospital system is on a fixed annual budget and the physicians are on salary. As a result, there is reward for value, not volume. While Kaiser has been very successful, particularly on the West coast, the model has struggled to gain traction elsewhere. One of the reasons is that, most delivery systems do not have the luxury of deriving all of their businesses from prepaid premiums. In fact, most commonly, the vast majority of their patients are insured under Fee-for-service, FFS, contracts. As a result, Kaiser-like alignment of incentives is very difficult to achieve in these mixed models especially when the preponderance of their patients are FFS Between primary and specialty care. Another dimension of integration is between primary and specialty physician groups to form larger multi-specialty physician groups. As we are sure you can readily imagine, there would be benefit to both sides beyond the larger scale. To amortize investments in infrastructure, to support value-based care, e.g. a common EHR. The primary care physicians could refer their patients requiring specialty care to a known cadre of high quality and presumably lower cost specialists. The specialist in turn would have a guaranteed primary care referral base. Both parties could also benefit from more clout in negotiations with hospitals in pairs. Between hospitals and physicians. In just about every healthcare market, there has been more integration between hospitals and physicians. Both parties can benefit from infrastructure scale and clout with payers. In addition, there are more opportunities to align incentives and structures for bundled payments, ACO's and PCNH's. The hospital is also assured of a flow of inpatient referrals to support the acute care side. And physicians can gain access to the greater capital resources usually available at hospitals. As noted in the first lecture in this unit, there has been a secular decline in hospitalizations nationally. As a result, there has been a very expensive, quote, arms race, unquote, in most markets among hospitals to secure their geographic and physician referral base of patients. Across facilities. The drop in demand for acute hospital beds over the last decade has meant many more hospitals are operating at less-than-optimal occupancy rates. Hospitals are high fixed-cost operations, like airlines. It is much more efficient and profitable for airlines to fly their planes full. An airline is going to spend pretty much the same amount of money flying a half-full plane as a full one. That is why, flights are consolidated at airports when airlines merge. In the same way, if there are two hospitals in geographic proximity, major savings can be gained by closing one facility and consolidating the volume into the other. The current wave of hospital consolidations is exactly what you would predict as a consequence of reduced demand and move to value based payment. Across the continuum of care. The benefits of consolidation integration that we have been discussing also apply to the continuum of care. Scale, care coordination and alignment of incentives, will work for home health, skilled nursing facilities, pharmacy, transportation, etc. All of the above. The larger delivery systems integrate across all these dimensions to form integrated delivery systems that can deliver better value and higher quality care. Here is a quick thought exercise for you on this slide. For the average Medicare beneficiary in the US, how many primary care physicians do they have? How many specialists do they have? And across how many sites of care do they seek care? Please, take a few minutes to think about it. Again, the questions are, for the average Medicare beneficiary, how many primary care physicians do they have? How many specialists? And across how many sites? Now that you have had a chance to think about it, here are the actual results. They are from a New England Journal of Medicine article authored by Mai Pham in 2007. As you can see, the average Medicare beneficiary sees two primary care physicians. What is significant about this finding is, that we suspect neither primary care physician suspects that his or her patient sees another primary care physician which raises the obvious issues of care coordination. You can also see that the average Medicare enrollee sees five different specialists. So on average, there are seven physician relationships that must be coordinated. It is highly likely that the quote, left hand does not know what the right hand is doing, unquote. With the attendant increased risk that some important care might quote, fall through the cracks, unquote. Finally, patients very commonly will seek care across delivery sites and systems. If you have a medical record in one site that is not inter-operable with another site, then obvious significant issues of care coordination arise. Which, in turn, reduces the value of an electronic medical record in care coordination. Given this reality, many delivery systems have responded by creating new teams to coordinate care. But when there are two primary care physicians, and across multiple sites, very few delivery systems have the ability, really, to keep track of this. Rather than try to coordinate care solely through an IT infrastructure, delivery systems have invested in the creation of Patient-Centered Medical Homes. The concept is that these medical homes provide such good and accessible care that a patient will decide to have all of his or her primary care there, instead of splitting it between two primary care physicians. To borrow an Internet term, the idea is to create more quote, stickiness, unquote, so that the patient will have little or no incentive to seek care elsewhere. One of the key elements of this Patient-Centered Medical Home is embodied in its name. These structures are meant to be patient-centric, versus provider-centric. As you all know the current delivery system gives lip service to patient-centricity, but in reality it is more provider-centric, in that the patients need to come to us, need to wait for our services, need to coordinate their own care etc. The Patient Centered Medical Home provides care that is more comprehensive and easier to obtain than in the typical primary care practice by deploying more resources and employing a team approach. The quote, Marcus Welby, unquote approach of yesteryear will not work. For those of you old enough to remember, Dr. Welby was a fictional primary care physician on TV. Who took care of all the needs of his patients out of an office in his house and with housecalls. With the modern more complicated healthcare system and technologies, we need a team to provide the level of comprehensive and coordinated care that patients expect. In surveys of patient satisfaction, problems with access on the telephone, and waiting times for an appointment, and in the waiting room, are commonly sited as sources of dissatisfaction. With a team approach, a PCMH can provide speedier access on the phone, provide same day access, and speed work flows in the office. Patient centered care also means practicing based on evidence, and on continuous improvement of the practice. Teams can keep up with evolving practice guidelines and brainstorm improvements far better than an individual physician can. All of these elements are dependent upon an effective IT infrastructure and staff to coordinate care and measure performance against the guidelines, as required by the Medicate And CHIP Reauthorization Act, MACRA regulations. This infrastructure is more than the typical primary care practice can afford. As a result, physicians, in particular, have been partnering with hospitals to gain enough critical mass to support this IT infrastructure. Training staff for this infrastructure is one of the key reasons that this population health IT curriculum was created. In the belief that PCMHs will improve quality and reduce costs, Medicare and private payers have provided extra payments to primary care physicians to fund the care coordination, quality measurement, and IT infrastructure. These payments are in form of a per member per month, pm/pm payment. As we referenced in an earlier lecture, this addition payment can be as much as $40 pm/pm. For example, a typical adult primary care internal medicine practice might care for 2,000 patients. If a quarter of them are Medicare, and are in the PCMH, then the payment could be $240,000 annually. 500 members, times 12 months, times $40 to help fund the infrastructure. In return for the increased funding, providers are expected to achieve and report on specific quality targets and to reduce costs by changing referral patterns and improving quality. In addition to this care coordination fee, participation in a PCMH could also qualify the primary care physician for the APM payment model and associated bonuses. If they elect to stay in the FFS system, under the merit-based incentive payment system, then participating in a Patient Centered Medical Home could entitle a primary care provider to receive full credit for 15% of the score allocated for the clinical practice improvement activities. As a result, we believe that PCMH will be a key building block for any of the kinds of delivery system integration that we will see in the future. There are a couple of national accrediting organizations that you should know about. One is the National Quality Forum or NQF. NQF was created in 1999 in response to a report by President Clinton's Advisory Commission on Consumer Protection and Quality in the Health Care Industry. It is a not-for-profit private and public collaboration, and its purpose is to endorse the standards used to measure and improve health care. Although it derives most of its funding from the US Department of Health and Human Services, it also receives funding from private foundations and from membership dues. Membership is open to anyone or any organization who wants a voice in the endorsement of these standards. As you might imagine, all the stakeholders in healthcare are represented on this forum as it provides a national seal of approval for quality measurements. The National Committee for Quality Assurance, NCQA, is a not-for-profit organization that was founded in 1990 with funding from the Robert Wood Johnson Foundation. And for managed care plans in order to measure and report on the quality of health plans on behalf of purchasers, particularly employers. Many employers and patients were concerned that while the prepayment model of managed care plans reduced incentives for volume, it potentially created a new incentive to skimp on quality and withhold care. As a result, there was a desire to develop measurements to ensure that the appropriate care was provided to members of these prepaid managed care plans. The initial set of measurements were based on the HMO employer data information set, otherwise known as HEDIS. An acronym that many of you may have heard before. It has since been renamed the Healthcare Effectiveness Data Information Set. And utilizes claims-based information, not EHR-based information, to come up with the measurements of quality for these healthcare plans. These measurements and others are used by NCQA to accredit the health plans. NCQA accreditation activities have been expanded to include accreditation of disease management companies, accountable care organizations, patient centered medical homes. Again, it is important to note that all of these measurements are based on claims and self reported data with the inherent limitations associated with those data sources. Other accrediting organizations include the not-for-profit Joint Commission founded jointly in 1951 by the American Medical Association, American Hospital Association, American College of Physicians, American College of Surgeons, and the Canadian Medical Association. It's core business has been accrediting hospitals but with increasing delivery system integration, it's accrediting activities have broadened. Another entity is the Utilization Review Accreditation Commission (URAC), founded in 1990, as a not-for-profit that also accredits utilization review disease management companies. Patient centered medical homes and ACOs. In terms of issues associated with accreditation, everyone is struggling to define value in the area of MACRA and then how to measure it. In particular, current quality measures are mainly process measures. With value based payment, we now need outcome measures, especially from the emerging field of patient reported outcomes. As part of the MACRA legislation, $100 billion was allocated to the Centers for Medicare and Medicaid Services, CMS. To foster development of new patient reported outcome measures. The second issue is the dependence on claims data which have been all we have had until now. However, with the wide spread of option of electronic medical records, there is an opportunity to mind the clinical text and objective results in the medical record. Such as blood pressure measurements, laboratory results, radiology reports. For new quote, E measures, unquote. Another shortcoming of claims based data is that it covers what is billed. Therefore, non billable information like health status, and other patient self reported data are absent. Some information about social determinants of care, like where a patient lives, can be derived from claims. But many others like adequate housing, availability of healthy food, and education are not available. Also the impact of novel community initiatives is not captures in the current, claims-based system. Like the one mentioned in a previous lecture, where a hospital made an investment in a school based clinic, to improve asthma care. The next generation of measures might start incorporating novel data bases, such as your geological data from your smartphone, reports from the social service. And community health agencies and perhaps even from the justice system in order to get a full picture of the health of a population. Due to the projected impact of the value based purchasing initiatives that we have discussed throughout these lectures. The Congressional Budget Office, CBO, has lowered the ten year medicare spending projections by a trillion dollars. Highlighted by the difference between the 2009 projection in the dashed line and the 2014 projection in the solid line. At least according to the CBO, value based payment has already produced results with more to come. One of the major current and future challenges for population health information technology is the lack of interoperability. We have touched on this issue several times in the course of these lectures. We know that patients seek and receive care from multiple providers and across different health systems. Silos of information inhibit the ability to develop a holistic view of the health of a population of patients. There are some promising initiatives occurring among state level health information exchanges to link information across EHRs. Like the Chesapeake Regional Information System for Patients, CRISP in Maryland, Delaware, and Washington DC. A second major challenge is patient-reported outcome measures. We mentioned earlier in this lecture that this field is still in the nascent stage. We cannot easily incorporate what patients say are the most important outcomes for them. If we defined value as outcome over cost then the point of view of the ultimate consumer of that service, which is the patient, needs to be incorporated into the equation. The third challenge is, even if we are able to come up with patient reported outcome measures, we do not currently have easy ways to incorporate this information into the electronic health record. Current EHRs are designed to capture information important to the provider, in order to facilitate care, and are not as well designed to capture patient reported information. It may turn out that some other solution above or outside the EHR will have to emerge. Another major issue is attribution under global payment models. How do you know when a patient belongs to you and you are responsible for their care coordination, costs and quality? As you know in the current ACO model, the patient is not locked in. And attribution is retroactive. So it can be challenging to know which patients are yours. There is more accountability in the patient centered medical home. In the epicenter of global hospital budgeting in Maryland, one of the major next steps is to come up with an attribution methodology. Their initial step was to cap the budget for a hospital at the prior years budget. That works well in a rural area where there might be only one hospital in the region. But in an urban setting, where there are multiple hospitals within proximity to each other, how does one determine which patient belongs to which hospitals budget? Especially, when we know they seek care from multiple hospitals. Also a global budget introduces incentives to send sicker patients to other facilities. So what metrics need to be in place to ensure that there are no inappropriate referrals and that the receiving hospitals are paid appropriately? As mentioned earlier in the discussion about MACRA, the MIPS payments system consolidates many current physician reporting measures. But it will also require a host of new measures. Macra directs CMS, to come up with the particular measurements and payment methodologies. As a result, a lot of work needs to be completed in this area between now and implementation in 2018. That date is not very far away. Finally, a major barrier in determining value is that we do not have sophisticated ways of defining the true costs of the services we deliver in contrast to the charges that we input into the claim systems. One of the key costs is the time doctors, nurses, and staff members spend on caring for a particular patient over the course of an episode of care. That time needs to be ascribed to that particular patient. Another term that is used in other industries is activity-based costing. However, we do not have robust processes or health IT systems that can track and report that kind of information by activity by patient. You may have heard from doctors and nurses that they are busier than ever inputting information into the EHR. They would view the additional reporting burden associated with this costing as particularly onerous which could lead to a mass revolt. This concludes Lecture d of implications of policy, finance, and business on population health. In this lecture you have learned about provider system consolidation in the quest of delivery system integration. Key dimensions include integration between finance and delivery, primary and specialty care, hospitals and physicians, across facilities, across the continuum of care, and between all of these entities. The creation of patient centered medical homes, PCMH, their goals and the needed support of an effective IT infrastructure to national accrediting organizations. The National Quality Forum, NQF and The National Community for Quality Assurance, NCQA and the challenges faced with accreditation. Current and future challenges for population health information technology including lack of interoperability, patient reported outcome measures, and how patient reported outcome measures could be incorporated into the electronic health record. Attribution under global payment models. How do you know when a patient belongs to you? And lastly, lack of sophisticated ways to define true costs of the services delivered. In summary, this unit can be summed up in the three main bullets in this slide. Key financial and regulatory drivers. There is enormous financial waste in the US healthcare system. Anywhere from 20 to 50% of $3. With this amount of waste, there is a tremendous opportunity to achieve the triple aim, better health, better patient experience, and better costs. To seize this opportunity, the federal government launched value based purchasing initiatives beginning in 2003, ACOs in 2010, the High Tech Act in 2011. And culminating in the passage of the Medicare and CHIP Reauthorization Act in 2015. The latter legislation will tie 90% of all Medicare physician payments into a value based framework by 2018. These federal initiatives are supported by complementary state-based payment reforms, such as the Global Budget Revenue Waiver that was granted to Maryland by CMS. Key stakeholder responses. Employers have responded to the enormous increases in health care costs by investing in disease management programs with mixed results. Providers have responded by exploring a myriad of delivery system integration models and care management models, such as patient-centered medical homes. Accrediting organizations will need to develop new quality metrics to meet the challenges posed by value based reimbursement. Key IT challenges. As we discussed at the end of this lecture, there is a need to address interoperability of the EHRs in order to coordinate care because patients clearly use multiple health systems and doctors. Since value is defined by the ones using the service, there is a need to develop new patient reported outcome and quality measures. Finally, new payment methodologies will require new methodologies to attribute revenue and to understand true costs of care delivery versus merely charges. All these challenges will provide many opportunities for all of you to contribute to the improvement of the health care system.