Welcome & Overview - Global Health Care, LLC · Simply put, to reduce the cost of care and increase care quality by changing the delivery model, empowering providers and enabling

1 Confidential | Copyright © 2011 The TriZetto Group, Inc.

Welcome & Overview

Jeff Rideout, MDSVP, Chief Medical Officer, the TriZetto Group

November 3, 2011

Confidential | Copyright © 2011 The TriZetto Group, Inc. 1


Payment Bundling: Research Findings

More than 50% of Providers (75% of large hospitals) and more thMore than 50% of Providers (75% of large hospitals) and more than an 80% of Payers will adopt Payment Bundling by the end of 201280% of Payers will adopt Payment Bundling by the end of 2012

Reasons providers will adopt payment bundling• Government will mandate it (72%)• Would increase quality and coordination of care (46%)• Knowledge that it will be used selectively with predictable costs (38%)

Reasons payers will adopt payment bundling• Drives cost effectiveness and provides stronger outcomes (52%)• Drives ACO model to make providers more accountable for care quality

(40%)• Belief that payment bundle pricing would reduce medical cost (35%)

A Significant majority of Providers (85%) and Payers (63%) see bundled payments as a step to ACO development (vs. an alternate or conflicting strategy)

*2010 Gantry Group quantitative study findings


Payment Bundling: Research FindingsOrthopedic and Cardiac Procedures are the Most Frequently Orthopedic and Cardiac Procedures are the Most Frequently Mentioned Clinical Areas for Bundling; Risk Adjustment and Mentioned Clinical Areas for Bundling; Risk Adjustment and

““StandardStandard”” Definitions are PreferredDefinitions are Preferred

Joint replacement (63%), CABG (57%) and knee surgery (53%) are the most common areas cited by Providers for bundling in the next 24 months

Payers offer a similar list, with joint replacement (68%), CABG (48%) and arthroscopy (42%) the most common

Payers also express interest in chronic conditions(40%)

Providers feel very strongly that all bundling must be risk adjusted (71-88%); Payers are less committed to risk adjustment (28%) but recognize some stratification of cases is needed (56%)

Both Providers and Payers prefer to use “standardized” definitions for the bundles- including those sourced from CMS and IHA





Jury is out on ownership of administration of payment bundling Jury is out on ownership of administration of payment bundling

Payer concerns: 40% Providers do not want to do payment bundling

40% Providers cannot distribute payment bundling

33% No ability to recognize & adjudicate payment bundles

Provider concerns: 52% Puts the provider at risk49% Difficult to determine how to share

gains/losses36% Too difficult to accurately divide or

unbundle each payment



Jury is out on ownership of administration of payment bundling Jury is out on ownership of administration of payment bundling

72% of Physicians are not receptive to Hospitals owning administrative responsibility for payment bundle distribution

78% of Hospitals are not receptive to Physician practices owning administrative responsibility for payment bundle distribution

85% of Providers75% of Payers

Agree that creating the bundle prospectivelyand paying for the bundle at the time of care delivery is the right approach

…but


Three Essential Areas- What Can Be Done Now to Get Started?

Analytics and Opportunity Assessment- making the right decisions, including “no go”

Care Redesign- Minimum Steps to ensure financial and clinical success

Automation and related technology- business flexibility and scaling for business transformation


How to Identify Payment BundlesArie van den AkkerVP Business Development, Elsevier/MEDai


Paradigm Shift Healthcare

CURRENT CARE DELIVERY SYSTEM (U.S.)

TRANSITIONING TO

Volume Based Reimbursement Value Based Payments & Bundling

Claims and Encounter Driven Patient Centric DrivenOperational Reporting Clinical & Performance AnalyticsDisengaged PatientsCommodity, no relationship

Connected Patients Relationship with Physician & Care Team

Revenue Driven Outcomes DrivenDisparate Patient Information Shared Patient Truth

Simply put, to reduce the cost of care and increase care quality by changing the delivery model, empowering providers and enabling a collaborative environment.


Population Health Management

The goal of a population health management program is to maintain and/or improve the physical and psychosocial well-being of individuals through cost-effective and tailored health solutions leading to …


Tenet: Payment on Value Provided

Macro Organizational

Micro Patient Specific


The Challenge

• How to focus on right patients for optimum Population Management

• Provider Attribution

• Measurements of Value in Services Provided

• Case Mix, Severity Adjusted• Outcomes Analysis• Peer Comparisons• Benchmarks


Bundling Analysis – Where to Focus

Usual suspects for bundling are Hip and Knee Replacements

These show little or no return since costs are already below expected benchmarks


Better Opportunity is CABG

CABG – Total Savings Opportunity > $282,000

Cost overage in Management, Surgical, Facility, Ancillary and Pharmacy


Surgical Costs for CABG Vary Widely between Physicians


Cost of Air Transport Varies Widely


CABG Bundles

Cost savings opportunity for CABG with AMI > 150,000 for only 312 EpisodesSurgical Costs vary widely between surgeons from ~$2,000 - $7,000Air transport used in < 9% of the cases, but average cost ranged from $2,700 to over $8,800


Conclusion

Combining opportunities for medical improvement

with financial analytics which identify opportunitiesfor savings………

Result in identification of best models for Payment Bundling



Bundled CareGabrielle White, RNExecutive DirectorPeri Operative ServicesHoag Orthopedic Institute &Orthopedic Surgery Center of Orange County


Background for our experience

Started in 2008 initially with Med travel modelEvolved into contracting with TPA’s working with large employer groupsSlow adoption but the bundled model is proven and has been successful for usProvided the opportunity to participate in the IHA Bundled Payment Pilot Project


KEY ELEMENTS TO A SUCCESFUL BUNDLED MODEL

PROVIDER ALIGNMENT

Collaboration and trust between all parties

Understanding risk sharing between all parties

Successful subcontract negotiations


KEY ELEMENTS TO A SUCCESSFUL BUNDLED MODEL

DEFINING THE SERVICES WITHIN THE BUNDLECPT’S

EOC

Complications Covered/Warranty/Risk Sharing

Patient Selection

What is NOT included in the bundle


CHALLENGES

Alignment

Leadership

Managing patient selection

Administrative

Avoiding a race to the bottom


Questions?

THANK YOU!


How to Administer Payment BundlesJay SultanAssoc. Vice President, Product Manager for Value-Based ReimbursementThe TriZetto Group


Alternate Payment Methodologies (VBR) A Continuum of Provider Risk

Fee for Service

Fee for Service Plus P4P or Shared Savings

Episode of Care / Payment Bundling

Partial Capitation

Global Capitation


CMS Disclaimer

The statements contained in this document are solely those of the authors and do not necessarily reflect the views or policies of CMS. The authors assume responsibility for the accuracy and completeness of the information contained in this document.


Payment Bundling: Why Now?

It may be the answer to “What do we do to reduce medical expense?”

It may be the answer to “How do we start operating as an Accountable Care Organization?”

It may be an ideal way to shift risk from payers to providers inan intelligent manner

It is one of very few “win-win-win-win” opportunities for payers, providers, and clients

The government may require it

The technology is developing to administer it on a wide scale

The industry is heading this way


Acute Care Episode Demonstration Project: Design Lessons

Work with well-defined bundle definitions

Defined population – Excluded Medicare Advantage and dual eligibles

Focus on quality

First-mover advantage

Start with a limited program that can be scaled up

What is the physician group?

Establish risk within group

Know what you intend to fix

Payer LessonsPayer Lessons Provider Group LessonsProvider Group Lessons


Acute Care Episode Demonstration Project: Operational Lessons

ProviderProvider

Administrative IssuesCost accounting challenges

Discrete implant tracking by patientPharmacy tracking by patient

Claims ProcessingClaim volume is cost prohibitive in typical health plan claims processing operationTechnology solution needs to be scalable in anticipation of additional bundled services or expanded product lines

Data collectionProcessing and distributing payments


Distributing Accountable Care Payments

Utilization/volume: source is payer dataPerformance: source is provider dataFormula should be based upon the alignment needed to accomplish the clinical transformation

Whether global case rates or shared savings, payers make payments that must be distributed among providers

Distribution is typically based on two things:

Making such payments has been a Payer function

Provider administrative systems poorly suited to automate thisPayers may offer to be a fiscal intermediaryProviders can contract with a third party


Payment Bundling Claims Processing

Work with existing provider / payer processes, including

authorizations, existing provider payment claims

stream, and benefits processing

Support different models of payment bundling

payment

Support numerous and different definitions

of payment bundles

Tightly integrate into the payer’s core

administration system


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NetworX Payment Bundling Administration

NetworX Payment Bundling Administration Features:

Automates episode of care paymentCreates bundles from existing fee-for-service claimsProcesses claim adjudication through claim repricingPotentially integrates with any claims adjudication systemContains powerful rules engine for automating bundle definitionsHandles pre-admission, post-discharge services and warranty care

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Non Bundled

Bundled Claims

Business LogicPayment Bundling Content

Provider Provider GroupGroup

Single Bundled Payment

Episodes are created and paid prospectively,

at the time of care delivery

Related Services

CoreCore AdministrationAdministration

SystemSystem

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PBAPBA

Repriced Claims


Realtime Claims Processing Challenges

Claims may arrive in any order

Cannot unduly slow down claim processing

Must prevent reversals when possible

Automate the correction of mistakes


When to Bundle and When to Make Payments?

Pre-adjudication repricingPros: Does not require core integration,can be done by providerCons: Limited functionality due to lack of integration; cannot find/fix first-pass errors

Prospective episode creation during adjudication

Pros: Tight integration, greatest functionality,most “permanent” solutionCons: Requires core integration

Post-adjudication, pre-payment episode creation

Pros: Reduces level of core integrationCons: Limits functionality, core is unawareof bolt-on activity

RetrospectivePros: Does not require core integrationCons: Will not support prospective payment, less effective in impacting clinical transformation, delay in feedback to providers

Retrospectively, 3-12 months after careThis is a supplement or an adjustment made to fee-for-service (FFS)Typically a population-based payment

Prospectively, at the time the careis delivered

This replaces the individual fee-for-service payments made to all the providersTypically, a payment for an individual patientThis method is preferred by providers (85%) and payers (74%)Better associates the incentive directlyto providers in order to change provider (physician) behavior

Processing ModeProcessing Mode Payment TimingPayment Timing


Considerable disagreement between Prospective and Retrospective

Both have their place in payment bundling programs

Power of Prospective Payments


Start with the Business Integration

Product developmentActuary/UnderwritingBenefit designASO considerationsSeepageProvider contracting/contract managementProvider relations/communicationsUM/QualityMember communicationsSpecialty plans

Payment Bundling can impact a large number of payer business

areas and processes

These problems must be addressed as part of a payment bundling pilot


What are the Biggest Barriers?

Contracting is easier than clinical transformationAccepting risk is easierthan managing riskFinding an interested / capable payerAdministration requirements/changes

Your IT Departmentis too busyRecontracting with providers (and eventually purchasers) is difficultRequires senior leadershipAdministration requirements/changes

ProvidersProviders PayersPayers


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Welcome & Overview - Global Health Care, LLC · Simply put, to reduce the cost of care and increase care quality by changing the delivery model, empowering providers and enabling