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© 2015 American Hospital Association
Facing the Challenge of
Population Health
Small and Rural Hospital ConferenceNovember 10, 2015
John R. Combes, MDChief Medical Officer and Senior Vice President
American Hospital Association
Overview
• Health Care Trends: A Time of Uncertainty
• Health Care Systems in Transition
• Moving Toward Population Health
• Hospitals’ Response to Population Health
• Payment Reform Supporting Population Health
• Achieving the Triple Aim
Health Care Trends: A Time of Uncertainty
Health Care: Time of Uncertainty
• What’s driving uncertainty?– Economic needs
– Demographic shifts
– Purchaser value expectations
• What has the ACA accomplished?₋ Greater focus on coverage and costs, performance-based
payment
₋ Created new insurance market options
₋ Spurred some new delivery/payment model development and experimentation (e.g., ACOs)
4
Healthcare Costs Will Resume their Rise
Sources: Centers for Medicare and Medicaid Services, Office of the Actuary
17.5
18
18.5
19
19.5
20
20.5
1
2
3
4
5
6
2014 2015 2016 2017 2018 2019 2020 2021 2022
Projected % Change in Per Capita Year over Year
National Health Expenditures
Healthcare Spending
Healthcare Spending is projected to grow at an average annual rate
of ~5.35% beyond 2016 due to
improving economic conditions, the Affordable Care Act (ACA) coverage expansions, and the aging of the U.S. population.
Healthcare costs are rising and industry spending is projected to grow at an annual rate of
~5.35% beyond 2016.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1960 1970 1980 1990 2000 2006 2007 2008 2009 2010 2011 2012 2013 2015 2020
U.S. health care spending (in billions of dollars)2013, 2015, 2020 projected
Source: Centers for Medicare and Medicaid Services, July 2014
How Much We Spend in U.S.
6
Forces of Change• Evolution of the payment system:
– Reimbursement based on cost of care to
– Reimbursement based on diagnoses and groups of services to
– Payment system driven by value (quality & cost performance) with prospect of fixed payment based on groups of people (populations)
• Fixed payment systems requires a focus on outcomes, efficient care processes, lower cost treatment options and overall appropriateness of care.
• Fundamental changes in insurance market
– Markets (e.g., public and private exchanges)
– Products (e.g., HDHPs, tiered plans)
– Incentives (e.g., shared risk, capitation)
– Provider sponsored plans
• The rise of:
– Consumerism
– Retail
– New Entrants
Migration of the Site of Care
Evolution of the Delivery Model
1st Stage 2nd Stage 3rd Stage
ModelInstitutional Community Person
Organization
Hospital NetworksSelf-Directed
Virtual
Payor
GovernmentInsurers
ProvidersGovernment
Insurers
GovernmentInsurers/Providers
Patients/Consumers
Patient
PassiveReceiver
ActivatedConsumer
QuantifiedInformedPurchaser
Locus of Control Organizational
RetailersNew Entrants
Individuals
Institutional-based
Community-based
Person-based
Migration of the Source of Care
Predictable Outcomes
• Lower relative and (absolute) costs
• Meaningful clinical integration and coordination
• Continued migration of care to outpatient/ ambulatory settings
• Greater risk associated with performance and populations
Quality and cost performance and transparency
• More patient-oriented and consumer-driven
• Consolidation (read bigger “Health Care Companies”)
• More competition and blurring of lines
• ROI-based technology and capital decisions
11
Health Care Systems in Transition
Strategic Directions
IN 5 YEARS, OVERALL FORECAST
• Movement away from fee-for-
service …toward ‘integration”
• Emphasis on value vs. volume
• Emphasis on quality vs.
quantity
• From illness to health
In 5 years what will the field look like?
ACA or Not: Needs and Trends Continue
More INTEGRATIONacross the “silos”
More AT-RISK FUNDING
More PUBLIC ACCOUNTABILITY and
reporting
Increased coverage
Delivery system reforms
Payment reforms
Increased transparency
Adoption of health IT
Physicians Hospitals Insurance Plans
Primary
Mission
Manage patient care Accommodate medical needs of
the community
Manage cost, hold providers
accountable
View of the
Other
‘Hospitals are our
lab’;
‘Plans are a
nuisance, adding no
value’
‘Physicians are central to care
and our natural partners’
‘Plans are a nuisance and add
limited value’
‘Physicians are important
but need discipline, tools
and sensitivity to costs’
‘Hospitals are inefficient,
non-transparent and the
root cause of high costs’
Major Concern Protection of clinical
autonomy, patient trust
& economic security
Sustainability: protection of
operating margin as bad debt
and operating costs increase
and plans negotiate more
aggressively
Capital: to transition from acute
to population-health focus
Protection of role as
organizer of health services,
driver of cost accountability
Key Asset 1) Patient Trust
2) Clinical Knowledge
Local reputation
Technology
Access to Capital (declining)
1) Data (clinical, financial)
2) Capital
3) Relationships with group
purchasers
Key
Vulnerabilities
1) Data
2) Leadership
3) Capital
4) Scale
1) Cost structure
2) Transparency
3) Physician resistance to change
1) Trust
2) Differentiation
Source: Paul H. Keckley, PhD; Navigant Healthcare Insights, August 2014
Leverage: Physicians, Hospitals, and Insurers
Path to the Second Curve
16
What paths are hospitals/systems pursuing?
33%
29%
19%
14%5%
PARTNER EXPERIMENT INTEGRATE REDEFINE SPECIALIZE
Clinical
Patient management
Institutional management
Administrative
Care System of the Future
Clinical
Patient management
Institutional management
Environmental Pressures
Environmental Pressures
Transformed Vision
Clinical Management
Population management
Administrative
Vision of Transformation
• Providers taking responsibility for populations
• Better coordination across care settings and providers
• More effective management of chronic disease by both providers and patients
• Greater role for primary care
• Support from both provider and payer leadership
Greater Integration
Moving Toward Population Health
Source: Milliman USA Healthcare Cost Guidelines, 2001 Claims
Probability Distribution, non-KP.
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
% of Membership
% of Costs
0% total
cost
10% total cost
30% total cost
% of People
1% of people
70% of people20% of people
% of
Healthcare
Expenditures
Health Care Cost Continuum
23
ABCDs of chronic disease . . .
• Asthma
• Blood pressure control (hypertension)
• Coronary artery disease / Congestive heart failure
• Diabetes
• DepressionModifiable risk factors:
All heavily impacted by weight,
diet, smoking, adherence to
treatment plans, and physical
activity.
America’s Big Cost Drivers in Health Care
24
Defining Population HealthWhat is population health?Population health is the health outcomes of a defined group of people, including the distribution of such outcomes within the group.
What is population health management?Population health management is a strategic, clinical approach to improve outcomes by managing the health of a defined group of people while also reducing costs.
What is population health improvement?Population health improvement is a strategy to improve the health outcomes of and to eliminate health inequities among a defined group of people.
Implementing Population Health
What processes should be considered when implementing a population health improvement strategy?
Population health improvement is achieved through a focus on three interrelated processes:
1. Identify and analyze the distribution of specific health statuses and outcomes;
2. Evaluate the clinical, social, behavioral and environmental factors associated with the outcomes; and
3. Implement a broad scope of interventions to modify the correlates of health outcomes.
26
Primary Population Health GoalsWhat are the primary goals hospitals and care systems should include in their population health improvement strategies?
Hospitals and care systems should include these four distinct goals in their population health improvement strategies:
1. Coordinate hospital-based interventions with community stakeholders and other key partners through mature collaborations;
2. Increase preventive health services through coordinated care across the health care continuum;
3. Provide culturally and linguistically appropriate care;4. Promote healthy behaviors; and5. Track population health metrics against dashboard
targets.
Source: Minnesota Dept. of Public Health
http://www.health.state.mn.us/divs/opi/gov/chsadmin/intro.html
Creating Health
28
Source: Dahlgren, G. and Whitehead, M. (1993) Tackling inequalities in health: what can
we learn from what has been tried? Via http://www.kingsfund.org.uk/time-to-think-
differently/trends/broader-determinants-health ?
Social Determinants of Health
29
Impacting Health
Hospitals’ efforts to impact health can be categorized at three levels:
1.Individual
2.Defined population
3.Geographic populationDefined Population
Individual
Geographic Population
30
Hospitals’ Response to Population Health
Survey Overview• Mailed to 6,365 hospitals.
• In the field from January to May 2015.
• N = 1,418
• Response rate = 22%
• Sample population:– Midwest overrepresented, Southeast and Southwest
underrepresented.
– Large hospitals and teaching hospitals overrepresented.
– Not-for-profit hospitals overrepresented.
• Areas Covered– Population Health Structure
– Partnerships
– CHNAs
85.4 percent are committed a population health plan
Population Health Structure
3.4%
11.1% 23.6% 30.8% 31.0%
COMMITMENT TO POPULATION HEALTHNo commitment Some commitment Reflected in vision statement
Strong commitment Total commitment
Population Health Structure
69.7% 68.7%59.2%
47.4%
10.5%
Individuals usingthe hospital or
health caresystem
Individuals in aspecified
geographic areaor community
Individualsexperiencing a
certain disease orcondition
Individuals forwhom the
hospital hasfinancial risk
Other
"POPULATION" DESCRIPTION
Population Health Structure
0% 20% 40% 60% 80% 100%
Population health aligned with mission
Strong collaborations with community organizations
Population health aligned with clinical integration strategy
Focus on a broad range of population health issues
Priorities aligned with public health department's priorities
Financial resources available for population health initiatives
Programs address socioeconomic determinants of health
POPULATION HEALTH ALIGNMENT
Strongly disagree Disagree Neutral Agree Strongly agree
Population Health Structure
Rank Most Needed Skills or Backgrounds
1 Physicians
2 Nurses
3 Behavioral health
4 Needs assessment/strategic planning
5 Clinicians (not nurses or physicians)
6 Change management
7 Community health/organizing
8 Public health
Partnerships
12.8%
0.4%
23.0% 43.5% 20.3%
PARTNERSHIPS WITH OTHER HOSPITALS
Not involved Funding Networking Collaboration Alliance
Partnerships
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
FQHC, community health center, etc.
Health insurance companies
Postsecondary education (colleges, universities)
Healthy communities coalitions
School districts
Retail clinics
Faith-based organizations
Chamber of commerce
Federal government programs (e.g., nutrition)
United Way
Local businesses
YMCA/YWCA
National health associations
Early childhood education
Service leagues
Neighborhood organizations
PARTNERSHIPS WITH OTHER AGENCIES
Not involved Funding Networking Collaboration Alliance
Partnerships
Yes69%
No31%
PARTICIPATION IN REGIONAL HEALTH PROMOTION COLLABORATIVE
CHNAs
33%
23%
17%
17%
11%
Outside resource contributed to someaspects of the assessment (e.g., data
analysis, community engagement)
Partnered with other hospitals ororganizations (e.g., health departments,
public health institutes, etc.) for the…
An outside resource exclusively developedand executed the assessment
Organization conducted the assessmentindependently
The assessment was developed and executedas a community collaboration
CHNA CREATION APPROACH
CHNAs
Rank Most Important Uses for CHNA
1 Integrate population health into the hospital’s strategic or operational plan
2 Target programs or services to improve population health
3 Increase collaboration with community partnerships to address identified needs
4 Target programs or services to improve population health in collaboration with local public health departments
5 Assess the impact of hospital resources and community readiness to address health needs
6 Use baseline data to inform future assessments
Key Findings• 85% of hospitals reported strong or total commitment to
population health or have population health in their vision statement.
• 87% of hospitals reported having some degree of working relationship with other local hospitals.
• The most common partnerships were with public health departments, chambers of commerce, health insurance companies and FQHCs/community clinics.
– Housing/community development and transportation authorities were the least likely partners.
• 23% of hospitals partnered with an outside organization (e.g., other hospital, public health department) for the CHNA.
– 17% of hospitals conducted their CHNAs independently.
Payment Reform Supporting Population
Health
HHS Announcement • Triple Aim:
– Better Care
– Smarter Spending
– Healthier People
• Moving from volume to value
– Pay-for-performance initiatives
– Alternative payment models
Target percentage of payments in ‘FFS linked to quality’ and ‘alternative payment models’ by
2016 and 2018
CMS Framework
Traditional FFS
Value-Based(Link to Quality)
• Hospital VBP• Physician VM• Readmissions• HACs• Quality Reporting
Alternative
Delivery
Models
• ACOs• Medical homes• Bundled payment• Comprehensive
Primary Care initiative
• Comprehensive ESRD
Population
Health/
At Risk
• Eligible Pioneer ACOs in years 3-5
• Maryland hospitals
Volume Value
New: Payment Provisions
2015 2016 202017 18 19
0% .5% .5% annually
MIPS APM
-21%
2422 2321 25 2026
MIPS: 0.25%
APM: 0.75%
0% annually
APM: Bonus of 5% of PFS payments annually
Merit-based Incentive Payment System
• Default payment system
• MIPS unless
– Qualified APM participants
– Low-volume threshold
• Composite Score of 0 to 100 based on:
– Quality measures
– Resource Use measures
– Clinical Practice Improvement activities
– Meaningful Use of EHRs
Payment Under MIPS
MIPS: Bonus for high performers (<10%)
2019 2020 2021 20252022 2023 2024
0.5%
2026
0.0% annually
+4 +5 +7 +9
MIPS Composite Score WeightingCategory CY 2019 CY 2020 CY 2021 and
beyond
Quality 50% 45 % 30%
Resource Use 10% 15 % 30%
Clinical Practice Improvement
15 % 15 % 15 %
Meaningful Use 25 % 25 % 25 %
• CMS can vary the percentages based on factors like EHR adoption, or lack of appropriate measures or activities
• Providers failing to report required data receive zero pointsfor the applicable category
Translating the MIPS Composite into Incentives and Penalties
Performance Threshold (Determined annually)
Positive adjustment on
sliding scale
Negative adjustment on
sliding scale
Exceptional performance threshold (2019 – 2024 only)
25 percent of performance threshold Maximum
Negative Adjustment
Exceptional performance bonus (up
to 1 percent)
MIPS Composite Score
0
100
Alternative Payment Models
An eligible APM entity must:
• Require use of certified EHR technology
• Bear financial risk or be a medical home
• Link payment to quality
APMs are defined as:
• A model tested by the CMMI
• An ACO under the Medicare Shared Savings Program
• Certain other demonstrations
Comprehensive Care for Joint Replacement
• Final Rule Nov 1, start January 1
• IPPS hospitals are responsible
• Required of hospitals in 75 markets
• Includes both elective and traumatic hip and knee patients
• 90-day episode
• Includes all related Part A & B care
• Retrospective methodology
NEW: Bundled Payment Example
Comprehensive Care for Joint Replacement
• Retrospective payment methodology
FFS payments continue
Settle up to 2-percent discount
Quality measure requirements
Proposed Rule: Hip & Knee Bundled Payment
Payment Under CCJR
Quality performance?
&Less than 98% of what otherwise would have paid?
Yes = CMS to pay hospital savings; might be able to share with partners
No = CMS to collect excess from hospitals
CMS$
$
$
Comprehensive Care for Joint Replacement
Proposed Rule: Hip & Knee Bundled Payment
Waived Not Waived
Physician “incident to” rule Stark
SNF 3-day rule ** Anti-kickback
Telehealth 60% Rule/3-hour Rule
HH homebound rule
Patient steering
CMS Bundling Initiative
• BPCI program began in 2013
– Model 1: Acute care hospital/gainsharing
– Model 2: Acute care hospital + MD + PAC
– Model 3: PAC only
– Model 4: Acute care hospital + MD
105
Participants
360
Participants
JulyMarch
Achieving the Triple Aim
The Target: The Triple Aim
Triple Aim
Improved Health
Spending per Capita
Experience of Care
58
Better Health
• Extent of commitment
• Leadership vs. participation vs. facilitator/convener
• Understanding and planning for community health needs
• Health Improvement measuring and monitoring
• Strategic collaboration/partnerships
• Population health infrastructure
– Expertise
– Data analytics
– Community-based interventions
59
Better Health Care
• Patient and family engagement
– System design
– Safety analysis
– Self-care
• Harm free environments
• Convenient access
• Customer vs. patient
– Consumer strategy
– Retail strategy
– Patient and provider strategy
60
Lower Costs
• Lean processes
• Eliminating non value-added care
• Eliminating HACs
• Reducing readmissions
• Transparent pricing
• Total cost of care metrics
61
Issues to Consider in a Rapidly Changing Environment
Managing variation in the pace of change
Adapting to new payment and delivery system models with little
experience and knowledge about intended and unintended
consequences
Confronting the challenge of disruptive innovators who offer
convenience and reduced complexity for the consumer
Managing new and sometimes difficult partnerships where cultures
clash and missions don’t align
Ensuring sustainability in an evolving business model
Assembling and developing the right talent in both the hospital and
community
Assuring diversity of age, gender, race and ethnicity at all levels of the
organization from the board to management to frontlines staff that
reflects the community
Developing a deep understanding of the community’s level of health and
wellness, their burden of disease and their needs to achieve the health
status they deserve18
Focus Today Future
Board Fiduciary Generative
Leadership Hospital Health across continuum
Operations Procedure-based Outcome-based
Physicians Productivity Quality
Risk Conservative Proactive
Accountability Assumed Transparent to public
The Changing Nature of the Health System
63
Questions/Comments
John R. Combes, MDChief Medical Officer and Senior Vice President
American Hospital AssociationChicago, IL
www.aha.orgwww.ahaphysicianforum.org