CHOICES UNDER MACRA How to Achieve Better Care for Patients, Savings for Payers, and Financially Viable Physician Practices & Hospitals Harold D. Miller President and CEO Center for Healthcare Quality and Payment Reform www.CHQPR.org
CHOICES UNDER MACRAHow to Achieve
Better Care for Patients,Savings for Payers,
and Financially Viable Physician Practices & Hospitals
Harold D. MillerPresident and CEO
Center for Healthcare Quality and Payment Reform
www.CHQPR.org
2Center for Healthcare Quality and Payment Reform www.CHQPR.org
How Do You Control Growing
Healthcare Spending?
TOTALHEALTHCARE
SPENDING
TOTALHEALTHCARE
SPENDING
TOTALHEALTHCARE
SPENDING
TOTALHEALTHCARE
SPENDING
$
TIME
3Center for Healthcare Quality and Payment Reform www.CHQPR.org
TOTALHEALTHCARE
SPENDING
TOTALHEALTHCARE
SPENDING
TOTALHEALTHCARE
SPENDING
TOTALHEALTHCARE
SPENDINGBY
PAYERS
Typical Strategy #1:
Cut Provider Fees for Services
$Cut
Provider Fees
SAVINGS
4Center for Healthcare Quality and Payment Reform www.CHQPR.org
TOTALHEALTHCARE
SPENDING
TOTALHEALTHCARE
SPENDING
TOTALHEALTHCARE
SPENDING
Typical Strategy #2:
Shift Costs to Patients
$
HigherCost-Share &Deductibles
TOTALHEALTHCARE
SPENDINGBY
PAYERS
SAVINGS
5Center for Healthcare Quality and Payment Reform www.CHQPR.org
Results of the Typical Strategies
• Consolidation of providers to resist cuts in fees
• Shifts in care to higher-cost settings
• Increases in utilization to offset losses in revenue
• Patients avoiding necessary care due to high cost-sharing
• Large increases in health insurance premiums
• Inability to afford health insurance
6Center for Healthcare Quality and Payment Reform www.CHQPR.org
Results of the Typical Strategies
• Consolidation of providers to resist cuts in fees
• Shifts in care to higher-cost settings
• Increases in utilization to offset losses in revenue
• Patients avoiding necessary care due to high cost-sharing
• Large increases in health insurance premiums
• Inability to afford health insurance
IS THERE A BETTER WAY?
7Center for Healthcare Quality and Payment Reform www.CHQPR.org
The Right Focus: Spending
That is Unnecessary or Avoidable
AVOIDABLESPENDING
AVOIDABLESPENDING
AVOIDABLESPENDING
NECESSARYSPENDING
AVOIDABLESPENDING
NECESSARYSPENDING
NECESSARYSPENDING
NECESSARYSPENDING
$
TIME
8Center for Healthcare Quality and Payment Reform www.CHQPR.org
Avoidable Spending Occurs
In All Aspects of Healthcare
NECESSARYSPENDING
AVOIDABLESPENDING
$
9Center for Healthcare Quality and Payment Reform www.CHQPR.org
Avoidable Spending Occurs
In All Aspects of Healthcare
NECESSARYSPENDING
AVOIDABLESPENDING
$
CANCER TREATMENT• Use of unnecessarily-expensive drugs• ER visits/hospital stays for dehydration and avoidable complications
• Fruitless treatment at end of life• Late-stage cancers due to poor screening
SURGERY• Unnecessary surgery• Use of unnecessarily-expensive implants• Infections and complications of surgery• Overuse of inpatient rehabilitation
CHEST PAIN DIAGNOSIS/TREATMENT• Overuse of high-tech stress tests/imaging• Overuse of cardiac catheterization• Overuse of PCIs, high-priced stents
CHRONIC DISEASE• ER visits for exacerbations• Hospital admissions and readmissions• Amputations, blindness
10Center for Healthcare Quality and Payment Reform www.CHQPR.org
Cardiologists Agree That Many
Tests/Procedures Are Overused
11Center for Healthcare Quality and Payment Reform www.CHQPR.org
The Right Goal: Less Avoidable $,
NECESSARYSPENDING
AVOIDABLESPENDING
$
TIME
AVOIDABLESPENDING
AVOIDABLESPENDING
AVOIDABLESPENDING
12Center for Healthcare Quality and Payment Reform www.CHQPR.org
The Right Goal: Less Avoidable $,
More Necessary $
NECESSARYSPENDING
AVOIDABLESPENDING
NECESSARYSPENDING
NECESSARYSPENDING
NECESSARYSPENDING
$
TIME
AVOIDABLESPENDING
AVOIDABLESPENDING
AVOIDABLESPENDING
13Center for Healthcare Quality and Payment Reform www.CHQPR.org
Win-Win for Patients & Payers
NECESSARYSPENDING
AVOIDABLESPENDING
NECESSARYSPENDING
NECESSARYSPENDING
NECESSARYSPENDING
$
TIME
SAVINGSSAVINGS SAVINGS
AVOIDABLESPENDING
AVOIDABLESPENDING
AVOIDABLESPENDING
14Center for Healthcare Quality and Payment Reform www.CHQPR.org
Barriers in the Payment System
Create a Win-Lose for Providers
NECESSARYSPENDING
AVOIDABLESPENDING
$
BARRIERSIN THE
CURRENTPAYMENTSYSTEM NECESSARY
SPENDING
SAVINGS
AVOIDABLESPENDING
15Center for Healthcare Quality and Payment Reform www.CHQPR.org
Barrier #1: No $ or Inadequate $
for High-Value Services
NECESSARYSPENDING
AVOIDABLESPENDING
UNPAIDSERVICES
$No Payment or
Inadequate Payment for:
• Services deliveredoutside of face-to-facevisits with clinicians, e.g.,phone calls, e-mails, etc.
• Services delivered bynon-clinicians, e.g., nurses, community healthworkers, etc.
• Non-medical services,e.g., transportation
• Additional time or costfor patients with higher intensity needs
• Services not covered bybenefit restrictions
16Center for Healthcare Quality and Payment Reform www.CHQPR.org
Barrier #2: Avoidable Spending
May Be Revenue for Providers…
NECESSARYSPENDING
AVOIDABLESPENDING
$
COSTOF
SERVICEDELIVERY
MARGIN
PROVIDERREVENUE
17Center for Healthcare Quality and Payment Reform www.CHQPR.org
…And When Avoidable Services
Aren’t Delivered…
NECESSARYSPENDING
AVOIDABLESPENDING
$
NECESSARYSPENDING
AVOIDABLESPENDING
COSTOF
SERVICEDELIVERY
MARGIN
PROVIDERREVENUE
18Center for Healthcare Quality and Payment Reform www.CHQPR.org
…Providers’ Revenue
May Decrease…
NECESSARYSPENDING
AVOIDABLESPENDING
$
NECESSARYSPENDING
AVOIDABLESPENDING
COSTOF
SERVICEDELIVERY
MARGIN
PROVIDERREVENUE
PROVIDERREVENUE
19Center for Healthcare Quality and Payment Reform www.CHQPR.org
…But Providers’ Fixed Costs
Don’t Disappear…
NECESSARYSPENDING
AVOIDABLESPENDING
$
NECESSARYSPENDING
AVOIDABLESPENDING
COSTOF
SERVICEDELIVERY
MARGIN
PROVIDERREVENUE
COSTOF
SERVICEDELIVERY
PROVIDERREVENUE
Many Fixed Costs of ServicesRemain When Volume Decreases
20Center for Healthcare Quality and Payment Reform www.CHQPR.org
…Leaving Providers With Losses
(or Bigger Losses Than Today)
NECESSARYSPENDING
AVOIDABLESPENDING
$
NECESSARYSPENDING
AVOIDABLESPENDING
COSTOF
SERVICEDELIVERY
MARGIN
LOSS
PROVIDERREVENUE
COSTOF
SERVICEDELIVERY
PROVIDERREVENUE
Many Fixed Costs of ServicesRemain When Volume Decreases
Potentially Causing Financial Losses
21Center for Healthcare Quality and Payment Reform www.CHQPR.org
A Payment Change isn’t Reform
Unless It Removes the BarriersBARRIER #1
BARRIER #2
22Center for Healthcare Quality and Payment Reform www.CHQPR.org
Three Payment Reform Options
Under MACRA
MACRA
OPTION #1
OPTION #2
OPTION #3
23Center for Healthcare Quality and Payment Reform www.CHQPR.org
Payer-Designed
Payment Reforms
MACRA
CMS-DESIGNEDPAY FOR PERFORMANCE
(MIPS)
CMS-DESIGNEDALTERNATIVE PAYMENT
MODELS (APMs)
OPTION #3
24Center for Healthcare Quality and Payment Reform www.CHQPR.org
Physician-Designed
Payment Reforms
MACRA
CMS-DESIGNEDPAY FOR PERFORMANCE
(MIPS)
CMS-DESIGNEDALTERNATIVE PAYMENT
MODELS (APMs)
PHYSICIAN-DESIGNEDALTERNATIVE PAYMENT
MODELS (APMs)
25Center for Healthcare Quality and Payment Reform www.CHQPR.org
MIPS Adds Bonuses/Penalties
With No Change to Existing FFS
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
P4P
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
MIPS “Merit Based Incentive Payment System”
26Center for Healthcare Quality and Payment Reform www.CHQPR.org
Patient Care Will Be Driven By
Dozens of Narrow Quality Measures
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
P4P
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
MIPS “Merit Based Incentive Payment System”
27Center for Healthcare Quality and Payment Reform www.CHQPR.org
Over-Emphasis on Narrow Quality
Measures Can Harm Patients
Hypoglycemia
1 Yr Mortality: 19.9%
30 Day Readmits: 16.3%
Hyperglycemia
1 Yr Mortality: 17.1%
30 Day Readmits: 15.3%
Source: National Trends in US Hospital Admissions for Hyperglycemia and HypoglycemiaAmong Medicare Beneficiaries, 1999 to 2011 JAMA Internal Medicine May 17, 2014
28Center for Healthcare Quality and Payment Reform www.CHQPR.org
Physician Payments Will Depend
On Spending They Can’t Control
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
P4P
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
MIPS “Merit Based Incentive Payment System”
29Center for Healthcare Quality and Payment Reform www.CHQPR.org
Providers Will Be Penalized for
Having Patients With Higher Needs
JAMA Intern Med. Published online September 14, 2015. doi:10.1001/jamainternmed.2015.4660
30Center for Healthcare Quality and Payment Reform www.CHQPR.org
CMS APMs Use “Shared Savings”
With No Change to Existing FFS
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
P4P
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
“Shared Savings”
MIPS CMSAPMs
• Accountable CareOrganizations (ACOs)
• End Stage RenalDisease CareOrganizations (ESCOs)
• ComprehensivePrimary CareInitiative (CPCI)
• Oncology Care Model(OCM)
• Comprehensive Carefor Joint Replacement(CJR)
31Center for Healthcare Quality and Payment Reform www.CHQPR.org
Medicare ACOs Aren’t Succeeding
Due to Flaws in Payment Model
2013 Results for Medicare Shared Savings ACOs
• 46% of ACOs (102/220) increased Medicare spending
• Only one-fourth (52/220) received shared savings payments
• After making shared savings payments,
Medicare spent more than it saved
2014 Results for Medicare Shared Savings ACOs
• 45% of ACOs (152/333) increased Medicare spending
• Only one-fourth (86/333) received shared savings payments
• After making shared savings payments,
Medicare spent more than it saved
32Center for Healthcare Quality and Payment Reform www.CHQPR.org
Problems With “Shared Savings”
• Conservative and effective physicians receive little or no additional revenue and may be forced out of business
• Physicians who have been practicing inefficiently or inappropriately are paid more than conservative physicians
• Physicians could be rewarded for denying needed care as well as by reducing overuse
• Physicians are placed at risk for costs they cannot control and random variation in spending
• Shared savings bonuses are temporary and when there are no more savings to be generated, physicians are underpaid
33Center for Healthcare Quality and Payment Reform www.CHQPR.org
MIPS and CMS APMs Don’t Fix
the Barriers in Current PaymentsBARRIER #1
BARRIER #2
34Center for Healthcare Quality and Payment Reform www.CHQPR.org
A Better Way: Physician-Focused
Alternative Payment Models
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
P4P
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
FFS•No payment for services that will benefit patients
•Lower revenues from reducing avoidable costs
“Shared Savings”
MIPS CMSAPMs
Physician-Focused
AlternativePaymentModels
•Flexibility to deliver services patients need
•Adequate payment for high-quality carebased on patient needs
•Accountability for costs and quality the physician can control
Physician-FocusedAPMs
35Center for Healthcare Quality and Payment Reform www.CHQPR.org
There are Many Ways to Create
Better Physician-Focused APMs
APM #1: Payment for a High-Value Service
APM #2: Condition-Based Payment for a Physician’s Services
APM #3: Multi-Physician Bundled Payment
APM #4: Physician-Facility Procedure Bundle
APM #5: Warrantied Payment for Physician Services
APM #6: Episode Payment for a Procedure
APM #7: Condition-Based Payment
36Center for Healthcare Quality and Payment Reform www.CHQPR.org
FFSPayments to
PhysicianPractice
OPPORTUNITIES TO REDUCE SPENDING
• Reduce Avoidable Hospital Admissions
• Reduce Unnecessary Tests and Treatments
• Use Lower-Cost Tests and Treatments
• Deliver Services More Efficiently
• Use Lower-Cost Sites of Service
• Reduce Preventable Complications
• Prevent Serious Conditions From Occurring
$
PhysicianPracticeRevenue
Avoidable Spending
Payments toOther
Providersfor
RelatedServices
Step 1: Identify Opportunities to
Reduce Related SpendingFee-for-ServicePayment (FFS)
TotalSpendingRelevant
to thePhysician’s
Services
37Center for Healthcare Quality and Payment Reform www.CHQPR.org
Unpaid Services
FFSPayments to
PhysicianPractice
OPPORTUNITIES TO REDUCE SPENDING
• Reduce Avoidable Hospital Admissions
• Reduce Unnecessary Tests and Treatments
• Use Lower-Cost Tests and Treatments
• Deliver Services More Efficiently
• Use Lower-Cost Sites of Service
• Reduce Preventable Complications
• Prevent Serious Conditions From Occurring
BARRIERS IN CURRENT FFS SYSTEM• No Payment for Many High-Value Services
• Insufficient Revenue to Cover Costs WhenUsing Fewer or Lower-Cost Services
$
PhysicianPracticeRevenue
Avoidable Spending
Payments toOther
Providersfor
RelatedServices
Step 2: Identify Barriers in Current
Payments That Need to Be FixedFee-for-ServicePayment (FFS)
TotalSpendingRelevant
to thePhysician’s
Services
38Center for Healthcare Quality and Payment Reform www.CHQPR.org
Fee-for-ServicePayment (FFS)
Physician-FocusedAlternative
Payment Model
Flexible,Adequate
Payment forPhysician’s
Services
$
PhysicianPracticeRevenue
Step 3: Design an APM That
Removes the Payment Barriers
Unpaid Services
FFSPayments to
PhysicianPractice
Avoidable Spending
Payments toOther
Providersfor
RelatedServices
TotalSpendingRelevant
to thePhysician’s
Services
39Center for Healthcare Quality and Payment Reform www.CHQPR.org
Fee-for-ServicePayment (FFS)
Physician-FocusedAlternative
Payment Model
Savings
Flexible,Adequate
Payment forPhysician’s
Services
AvoidableSpending
Payments toOther
Providersfor
RelatedServices
Accountabilityfor
ControllingAvoidableSpending
$
PhysicianPracticeRevenue
Step 4: Include Provisions to
Assure Control of Cost & Quality
Unpaid Services
FFSPayments to
PhysicianPractice
Avoidable Spending
Payments toOther
Providersfor
RelatedServices
TotalSpendingRelevant
to thePhysician’s
Services
40Center for Healthcare Quality and Payment Reform www.CHQPR.org
Fee-for-ServicePayment (FFS)
Physician-FocusedAlternative
Payment Model
Savings
Flexible,Adequate
Payment forPhysician’s
Services
AvoidableSpending
Payments toOther
Providersfor
RelatedServices
$
PhysicianPracticeRevenue
“Alternative Payment Models”
Can Be Win-Win-Wins
Unpaid Services
FFSPayments to
PhysicianPractice
Avoidable Spending
Payments toOther
Providersfor
RelatedServices
TotalSpendingRelevant
to thePhysician’s
Services
Win for Payer:
Lower Total Spending
Win for Patient:
Better Care Without
Unnecessary Services
Win for Physician: Adequate
Payment forHigh-Value Services
41Center for Healthcare Quality and Payment Reform www.CHQPR.org
Many Ways Cardiologists Can
Reduce Costs Without Rationing
• Use of lower-cost medications• Avoiding unnecessary medications
• Better post-discharge care management• Fewer complications from procedures
• Less use of expensive inpatient rehab• More in-home services
• Fewer unnecessary procedures• Reducing the cost of procedures• More procedures in outpatient settings• Fewer ER visits for chronic disease• Fewer admissions for chronic disease• Z• Fewer unnecessary procedures• Use of lower-cost procedures• Reducing the cost of procedures• Use of lower-cost facilities
• Fewer unnecessary tests• Use of lower-cost tests• Use of lower cost testing facilities
Cardiologist SalaryPractice Expenses
Outpatient Procedures
Inpatient Procedures
and Admissions of
Chronic Disease
Patients
Post-Acute Care
Medications
Tests and Imaging
Readmissions
SPENDING ON CARDIOLOGY PATIENTS
42Center for Healthcare Quality and Payment Reform www.CHQPR.org
Cardiologists Have Recognized
Overuse of Tests & Interventions
43Center for Healthcare Quality and Payment Reform www.CHQPR.org
Cardiologists Have Recognized
Overuse of Tests & Interventions
HOW CAN YOU DO FEWER TESTS AND PROCEDURES
AND KEEPA CARDIOLOGY PRACTICE
FINANCIALLY VIABLE?
44Center for Healthcare Quality and Payment Reform www.CHQPR.org
A Simplified Example:
Reducing Avoidable PCIsTODAY
$/Patient # Pts Total $
Physician Svcs
Evaluations $100 300 $30,000
300 Patientswith Stable Angina
• Physician evaluates allpatients
• Up to 10% of proceduresmay be avoidablethrough patient choiceor alternative treatment
45Center for Healthcare Quality and Payment Reform www.CHQPR.org
A Simplified Example:
Reducing Avoidable PCIsTODAY
$/Patient # Pts Total $
Physician Svcs
Evaluations $100 300 $30,000
Procedures $600 200 $120,000
Subtotal $150,000
Hospital Pmt $10,000 200 $2,000,000
Total Pmt/Cost 300 $2,150,000
300 Patientswith Stable Angina
• Physician evaluates allpatients
• Physician performsprocedure on 2/3 ofevaluated patients
• Up to 10% of proceduresmay be avoidablethrough patient choiceor alternative treatment
46Center for Healthcare Quality and Payment Reform www.CHQPR.org
A Simplified Example:
Reducing Avoidable PCIsTODAY
$/Patient # Pts Total $
Physician Svcs
Evaluations $100 300 $30,000
Procedures $600 200 $120,000
Subtotal $150,000
Hospital Pmt $10,000 200 $2,000,000
Total Pmt/Cost 300 $2,150,000
300 Patientswith Stable Angina
• Physician evaluates allpatients
• Physician performsprocedure on 2/3 ofevaluated patients
• Up to 10% of proceduresmay be avoidablethrough patient choiceor alternative treatment
47Center for Healthcare Quality and Payment Reform www.CHQPR.org
Most of the Money
Isn’t Going to the PhysicianTODAY
$/Patient # Pts Total $
Physician Svcs
Evaluations $100 300 $30,000
Procedures $600 200 $120,000
Subtotal $150,000
Hospital Pmt $10,000 200 $2,000,000
Total Pmt/Cost 300 $2,150,000
Physician is OnlyReceiving 7% ofTotal Spending
48Center for Healthcare Quality and Payment Reform www.CHQPR.org
What Happens If You Reduce
the Number of PCIs?TODAY w/ UTILIZATION CTRL
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000
Procedures $600 200 $120,000 180
Subtotal $150,000
Hospital Pmt $10,000 200 $2,000,000 180
Total Pmt/Cost 300 $2,150,000
49Center for Healthcare Quality and Payment Reform www.CHQPR.org
Under FFS, Payer Wins,
Physicians and Hospitals LoseTODAY w/ UTILIZATION CTRL
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $100 300 $30,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $138,000 -8%
Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%
Total Pmt/Cost 300 $2,150,000 300 $1,938,000 -10%
50Center for Healthcare Quality and Payment Reform www.CHQPR.org
Will a 4% MIPS Bonus for Low
Resource Use Offset the Loss?TODAY MIPS Bonus
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $104
Procedures $600 200 $120,000 $624
Subtotal $150,000
Hospital Pmt $10,000 200 $2,000,000 $10,000
Total Pmt/Cost 300 $2,150,000 300 $1,938,000 -10%
51Center for Healthcare Quality and Payment Reform www.CHQPR.org
No – MIPS Is Still a Win-Lose
Proposition for PhysiciansTODAY MIPS Bonus
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $104 300 $31,200
Procedures $600 200 $120,000 $624 180 $112,320
Subtotal $150,000 $143,520 -4%
Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%
Total Pmt/Cost 300 $2,150,000 300 $1,943,520 -10%
52Center for Healthcare Quality and Payment Reform www.CHQPR.org
MIPS Will Penalize Doctors for
High Resource Use…TODAY MIPS Penalty
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $96
Procedures $600 200 $120,000 $576
Subtotal $150,000
Hospital Pmt $10,000 200 $2,000,000
Total Pmt/Cost 300 $2,150,000 300 $2,150,000 -0%
53Center for Healthcare Quality and Payment Reform www.CHQPR.org
Same Impact on Physicians, No
Impact on Hospitals, No SavingsTODAY w/ UTILIZATION CTRL
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $96 300 $28,800
Procedures $600 200 $120,000 $576 200 $115,200
Subtotal $150,000 $144,000 -4%
Hospital Pmt $10,000 200 $2,000,000 $10,000 200 $2,000,000 0%
Total Pmt/Cost 300 $2,150,000 300 $2,144,000 -0%
54Center for Healthcare Quality and Payment Reform www.CHQPR.org
Is There a Better Way?
TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 ? ? ?
Procedures $600 200 $120,000 ? ? ?
Subtotal $150,000 ?
? ? ?
Hospital Pmt $10,000 200 $2,000,000 ? ? ?
Total Pmt/Cost 300 $2,150,000 ? ? ?
55Center for Healthcare Quality and Payment Reform www.CHQPR.org
Pay More to Manage Patient Care,
Not Just to Do ProceduresTODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200
Procedures $600 200 $120,000 $600
Subtotal $150,000
Hospital Pmt $10,000 200 $2,000,000 $10,000
Total Pmt/Cost 300 $2,150,000
Better Payment for Condition Management• Physician paid adequately to engage in
shared decision making process with patients and given the decision support tools to ensure quality
56Center for Healthcare Quality and Payment Reform www.CHQPR.org
Physicians Could Be Paid More
While Still Reducing Total $TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%
Total Pmt/Cost 300 $2,150,000 300 $1,968,000 -8%
Better Payment for Condition Management• Physician paid adequately to engage in
shared decision making process with patients and given the decision support tools to ensure quality
57Center for Healthcare Quality and Payment Reform www.CHQPR.org
Win-Win-Win for
Patients, Physicians, and PayersTODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%
Total Pmt/Cost 300 $2,150,000 300 $1,968,000 -8%
Physician Wins
Payer Wins
Patient Wins
58Center for Healthcare Quality and Payment Reform www.CHQPR.org
Do Hospitals Have to Lose In Order
for Physicians & Payers to Win?TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%
Total Pmt/Cost 300 $2,150,000 300 $1,968,000 -8%
Physician Wins
Payer Wins
Hospital Loses
59Center for Healthcare Quality and Payment Reform www.CHQPR.org
Do Hospitals Have to Lose In Order
for Physicians & Payers to Win?TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt $10,000 200 $2,000,000 $10,000 180 $1,800,000 -10%
Total Pmt/Cost 300 $2,150,000 300 $1,968,000 -8%
What should matter to hospitals is their margin,
not their revenue (volume)
60Center for Healthcare Quality and Payment Reform www.CHQPR.org
We Need to Understand the
Hospital’s Cost StructureTODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000
Variable Costs $4,500 45% $900,000
Margin $500 5% $100,000
Subtotal $10,000 200 $2,000,000
Total Pmt/Cost 300 $2,150,000
61Center for Healthcare Quality and Payment Reform www.CHQPR.org
Now, if the Number of Procedures
is Reduced…TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000
Variable Costs $4,500 45% $900,000
Margin $500 5% $100,000
Subtotal $10,000 200 $2,000,000 180
Total Pmt/Cost 300 $2,150,000
62Center for Healthcare Quality and Payment Reform www.CHQPR.org
…Fixed Costs Will Remain the
Same (in the Short Run)…TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000
Margin $500 5% $100,000
Subtotal $10,000 200 $2,000,000 180
Total Pmt/Cost 300 $2,150,000
63Center for Healthcare Quality and Payment Reform www.CHQPR.org
…Variable Costs Will Go Down in
Proportion to Procedures…TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%
Margin $500 5% $100,000
Subtotal $10,000 200 $2,000,000 180
Total Pmt/Cost 300 $2,150,000
64Center for Healthcare Quality and Payment Reform www.CHQPR.org
…And Even With a Higher Margin
for the Hospital…TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%
Margin $500 5% $100,000 $110,000 +10%
Subtotal $10,000 200 $2,000,000 180
Total Pmt/Cost 300 $2,150,000
65Center for Healthcare Quality and Payment Reform www.CHQPR.org
…The Hospital Gets Less Revenue,
But a Higher Margin…TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%
Margin $500 5% $100,000 $110,000 +10%
Subtotal $10,000 200 $2,000,000 180 $1,920,000 -4%
Total Pmt/Cost 300 $2,150,000
66Center for Healthcare Quality and Payment Reform www.CHQPR.org
…And The Payer
Still Saves MoneyTODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%
Margin $500 5% $100,000 $110,000 +10%
Subtotal $10,000 200 $2,000,000 180 $1,920,000 -4%
Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%
67Center for Healthcare Quality and Payment Reform www.CHQPR.org
I.e., Win-Win-Win for
Physician, Hospital, and PayerTODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%
Margin $500 5% $100,000 $110,000 +10%
Subtotal $10,000 200 $2,000,000 180 $1,920,000 -4%
Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%
Physician Wins
Payer Wins
Hospital Wins
68Center for Healthcare Quality and Payment Reform www.CHQPR.org
What Payment Model Supports
This Win-Win-Win Approach?TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%
Margin $500 5% $100,000 $110,000 +10%
Subtotal $10,000 200 $2,000,000 180 $1,920,000 -4%
Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%
69Center for Healthcare Quality and Payment Reform www.CHQPR.org
It’s Impractical to Renegotiate
Fees for Individual ServicesTODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $810,000 -10%
Margin $500 5% $100,000 $110,000 +10%
Subtotal $10,000 200 $2,000,000 $10,666 180 $1,920,000 -4%
Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%
70Center for Healthcare Quality and Payment Reform www.CHQPR.org
…What Assures The Payer That
There Will Be Fewer Procedures?TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $810,000 -10%
Margin $500 5% $100,000 $110,000 +10%
Subtotal $10,000 200 $2,000,000 $10,666 180 $1,920,000 -4%
Total Pmt/Cost 300 $2,150,000 300 $2,088,000 -3%
?
71Center for Healthcare Quality and Payment Reform www.CHQPR.org
Pay Based on the Patient’s
Condition, Not on the ProcedureTODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $150 300 $45,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $153,000 +2%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $700,000 -0%
Variable Costs $4,500 45% $900,000 $567,000 -10%
Margin $500 5% $100,000 $71,400 +2%
Subtotal $10,000 200 $2,000,000 $7,436 180 $1,338,400 -4%
Total Pmt/Cost $7,167 300 $2,150,000 $1,491,400 -4%
72Center for Healthcare Quality and Payment Reform www.CHQPR.org
Plan to Offer Care of the Condition
at a Lower Cost Per Patient…TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000
Procedures $600 200 $120,000
Subtotal $150,000
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000
Variable Costs $4,500 45% $900,000
Margin $500 5% $100,000
Subtotal $10,000 200 $2,000,000
Total Pmt/Cost $7,167 300 $2,150,000 $6,933 300 -3%
73Center for Healthcare Quality and Payment Reform www.CHQPR.org
Use the Payment as a Budget to
Redesign Care…TODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000
Procedures $600 200 $120,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000
Variable Costs $4,500 45% $900,000
Margin $500 5% $100,000
Subtotal $10,000 200 $2,000,000 180 $1,912,000 -4%
Total Pmt/Cost $7,167 300 $2,150,000 $6,933 300 $2,080,000 -3%
74Center for Healthcare Quality and Payment Reform www.CHQPR.org
…And Let the Docs & Hospital
Decide How They Should Be PaidTODAY TOMORROW
$/Patient # Pts Total $ $/Patient # Pts Total $ Chg
Physician Svcs
Evaluations $100 300 $30,000 $200 300 $60,000
Procedures $600 200 $120,000 $600 180 $108,000
Subtotal $150,000 $168,000 +12%
Hospital Pmt
Fixed Costs $5,000 50% $1,000,000 $1,000,000 -0%
Variable Costs $4,500 45% $900,000 $4,500 $810,000 -10%
Margin $500 5% $100,000 $102,000 +2%
Subtotal $10,000 200 $2,000,000 180 $1,912,000 -4%
Total Pmt/Cost $7,167 300 $2,150,000 $6,933 300 $2,080,000 -3%
75Center for Healthcare Quality and Payment Reform www.CHQPR.org
APM #7:
(Full) Condition-Based Payment
76Center for Healthcare Quality and Payment Reform www.CHQPR.org
ACC SMARTCare Project
Working on an APM
• APM for Ischemic Heart Disease (SMARTCare)
– ACC received a $16 million grant from the CMS Innovation Center
in 2014 to implement ACC appropriate use criteria for testing and
interventions for stable angina
– Initial work has been done to develop an Alternative Payment Model to
continue the project after funding ends and to adequately support the
costs of cardiac testing and interventions for appropriate patients
77Center for Healthcare Quality and Payment Reform www.CHQPR.org
Fewer Unnecessary Procedures Is
Just One Way to Reduce Spending
• Use of lower-cost medications• Avoiding unnecessary medications
• Better post-discharge care management• Fewer complications from procedures
• Less use of expensive inpatient rehab• More in-home services
• Fewer unnecessary procedures• Reducing the cost of procedures• More procedures in outpatient settings• Fewer ER visits for chronic disease• Fewer admissions for chronic disease• Z• Fewer unnecessary procedures• Use of lower-cost procedures• Reducing the cost of procedures• Use of lower-cost facilities
• Fewer unnecessary tests• Use of lower-cost tests• Use of lower cost testing facilities
Cardiologist SalaryPractice Expenses
Outpatient Procedures
Inpatient Procedures
and Admissions of
Chronic Disease
Patients
Post-Acute Care
Medications
Tests and Imaging
Readmissions
SPENDING ON CARDIOLOGY PATIENTS
78Center for Healthcare Quality and Payment Reform www.CHQPR.org
There are Many Ways to Create
Physician-Focused APMs
APM #1: Payment for a High-Value Service
APM #2: Condition-Based Payment for a Physician’s Services
APM #3: Multi-Physician Bundled Payment
APM #4: Physician-Facility Procedure Bundle
APM #5: Warrantied Payment for Physician Services
APM #6: Episode Payment for a Procedure
APM #7: Condition-Based Payment
www.PaymentReform.org
79Center for Healthcare Quality and Payment Reform www.CHQPR.org
MACRA Enables Fixing Problems
With Current Claims-Based APMs• PROBLEM TODAY: “Attribution” models that assign patients
to physicians after care is already delivered
SOLUTION IN MACRA: New Patient Relationship Categories will be created so physicians can say who their patients are
• PROBLEM TODAY: Poor risk adjustment systems that fail to recognize patients who need more time and resources
SOLUTION IN MACRA: New Patient Condition Groups will be created so physicians can identify which patients are complex
• PROBLEM TODAY: Spending measures that hold physicians responsible for services unrelated to their care
SOLUTION IN MACRA: New Patient Episode Groups that allow physicians to designate the purposes of services
80Center for Healthcare Quality and Payment Reform www.CHQPR.org
More Detail on Opportunities to
Improve Resource Use Measures
www.PaymentReform.org
81Center for Healthcare Quality and Payment Reform www.CHQPR.org
Three Choices Under MACRA
MACRA
MIPSHarm to Patients,
Physicians, and Hospitals, Little Savings to Medicare
CMS APMsHarm to Patients,
Physicians, and Hospitals, Little Savings to Medicare
PHYSICIAN-FOCUSED APMsWin-Win-Win for Patients,
Physicians, Hospitals & CMS
82Center for Healthcare Quality and Payment Reform www.CHQPR.org
Leadership by Physicians & ACC
Needed to Ensure Good Choice
MACRA
MIPSHarm to Patients,
Physicians, and Hospitals, Little Savings to Medicare
CMS APMsHarm to Patients,
Physicians, and Hospitals, Little Savings to Medicare
PHYSICIAN-FOCUSED APMsWin-Win-Win for Patients,
Physicians, Hospitals & CMS
83Center for Healthcare Quality and Payment Reform www.CHQPR.org
Learn More About Win-Win-Win
Payment and Delivery Reformwww.PaymentReform.org
For More Information:
Harold D. MillerPresident and CEO
Center for Healthcare Quality and Payment Reform
(412) 803-3650
www.CHQPR.org
www.PaymentReform.org