WORKING DRAFT How Are We Going to Get Paid Tomorrow, Draft March 18, 2010, Page 1 How Are We Going to Get Paid Tomorrow? Emerging Models for Health and Behavioral Healthcare Working Draft Dale Jarvis, CPA, MCPP Healthcare Consulting, Seattle, Washington Overview There is clear consensus that health reform efforts at the Federal and State levels will not succeed unless quality is improved and costs are contained. To accomplish these objectives healthcare reform must include simultaneous reengineering of the payment and delivery systems. Within this context, passage of comprehensive federal healthcare reform legislation will usher in an era of unprecedented change in the health and behavioral care systems. We will almost certainly see most uninsured persons with moderate to severe mental health and/or substance use disorders obtaining coverage through Medicaid or the Exchanges. Payment reform and service delivery redesign will trigger dramatic changes in how health and behavioral health services are funded and managed in order to bend the cost curve. Together, these changes will create a tipping point in how healthcare needs of persons with serious mental illness and behavioral healthcare needs of all Americans are addressed. The following diagram illustrates these key shifts. Uninsured Insured Dis-Integration Integration Fee for Service Payment Reform Uncoordinated Providers Accountable Care Orgs BH Disconnect with HC BH is Part of Health This monograph has been written to update my 2009 white paper, Healthcare Payment Reform and the Behavioral Health Safety Net: What’s on the Horizon for the Community Behavioral Healthcare System? In that paper, I explored the following ideas. Healthcare reform efforts are already underway in the public and private sectors. Testing of new methods for organizing and funding care in the areas of chronic medical conditions and potentially avoidable complications provides a window into how general healthcare reform will occur. Medical homes are being piloted to manage the health status of persons with chronic medical conditions, while bundled payment pilots are testing risk and reward arrangements for acute care episodes. Together, these types of efforts are leading to three fundamental system improvements – healthcare will become better coordinated; prevention, early intervention and disease management services will grow with a corresponding decline in secondary and tertiary care; and errors and overuse will be disincentivized by replacing fee for service payments with risk and reward financial arrangements.
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Fee for Service Payment Reform Uncoordinated …...Dis -Integration Integration Fee for Service Payment Reform Uncoordinated Providers Accountable Care Orgs BH Disconnect with HC BH
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WORKING DRAFT How Are We Going to Get Paid Tomorrow, Draft March 18, 2010, Page 1
How Are We Going to Get Paid Tomorrow? Emerging Models for Health and Behavioral Healthcare Working Draft
Dale Jarvis, CPA, MCPP Healthcare Consulting, Seattle, Washington
Overview
There is clear consensus that health reform efforts at the Federal and State levels will not
succeed unless quality is improved and costs are contained. To accomplish these
objectives healthcare reform must include simultaneous reengineering of the payment and
delivery systems.
Within this context, passage of comprehensive federal healthcare reform legislation will
usher in an era of unprecedented change in the health and behavioral care systems. We
will almost certainly see most uninsured persons with moderate to severe mental health
and/or substance use disorders obtaining coverage through Medicaid or the Exchanges.
Payment reform and service delivery redesign will trigger dramatic changes in how
health and behavioral health services are funded and managed in order to bend the cost
curve. Together, these changes will create a tipping point in how healthcare needs of
persons with serious mental illness and behavioral healthcare needs of all Americans are
addressed. The following diagram illustrates these key shifts.
Uninsured Insured
Dis-Integration Integration
Fee for Service Payment Reform
Uncoordinated Providers Accountable Care Orgs
BH Disconnect with HC BH is Part of Health
This monograph has been written to update my 2009 white paper, Healthcare Payment
Reform and the Behavioral Health Safety Net: What’s on the Horizon for the Community
Behavioral Healthcare System? In that paper, I explored the following ideas.
Healthcare reform efforts are already underway in the public and private sectors. Testing
of new methods for organizing and funding care in the areas of chronic medical
conditions and potentially avoidable complications provides a window into how general
healthcare reform will occur. Medical homes are being piloted to manage the health
status of persons with chronic medical conditions, while bundled payment pilots are
testing risk and reward arrangements for acute care episodes. Together, these types of
efforts are leading to three fundamental system improvements – healthcare will become
better coordinated; prevention, early intervention and disease management services will
grow with a corresponding decline in secondary and tertiary care; and errors and overuse
will be disincentivized by replacing fee for service payments with risk and reward
financial arrangements.
WORKING DRAFT How Are We Going to Get Paid Tomorrow, Draft March 18, 2010, Page 2
The “new world” of healthcare will see the implementation of parity, universal coverage,
and Medical Homes accountable for the total healthcare expenditures of their patients,
with associated financial risks and rewards. When this happens, medical practices and
health systems will quickly learn that there are certain populations critical to curtailing
U.S. healthcare expenditures, such as the elderly with multiple medical conditions and
persons with serious mental health and substance use disorders. These populations will be
put under intense scrutiny, which will afford significant opportunities for addressing the
current health disparities for persons with serious mental illness as well as opportunities
and threats to the community behavioral healthcare delivery system. Centers that don’t
become part of the Medical Home structure and/or aren’t able to demonstrate through
measureable results that they are able to provide high quality specialty behavioral
healthcare that manages the total healthcare expenditures of their clients will be at risk.
From this vantage point, let’s explore the world of healthcare payment reform and service
delivery redesign, circa 2010.
Emerging Healthcare Delivery System Models
Goals and Incentives
Most current delivery system design work is grounded in the Institute for Healthcare
Improvement’s Triple Aim.
Institute for Healthcare Improvement Triple Aim
- Improve the Health of the Population
- Enhance Patient Experience (quality, access,
reliability)
- Reduce (or at least) Control Costs
Delivery system redesigners have an obligation to address all three aims in any change
project, rather than focusing on one or two. In addition, redesign should focus on one or
more of the following objectives in order to improve quality and bend the cost curve.
Increase Preventive Care
Promote Early Intervention
Improve the
Coordination of Care
Expand the use of
Evidence-Informed Care
Decrease Overuse and
Underuse of Services
Reduce Error Rates
As planners and researchers examine existing models that achieve these aims and
objectives, Kaiser, Group Health and Intermountain always enter the conversation. The
common denominator is that each is an integrated health system that is a combined health
plan and service delivery system with a large number of employed clinicians.
WORKING DRAFT How Are We Going to Get Paid Tomorrow, Draft March 18, 2010, Page 3
This model removes the disincentives and incentive barriers in the current, mostly fee for
service healthcare system that are considered by most health economists as a major
barrier to healthcare reform. The following diagram illustrates an integrated healthcare
system.
Integrated Health Care System
Person
Centered
HC
Homes
High
performing
HospitalsPerson
Centered
HC
Homes
Food Mart
High Performing
Specialty Clinics
Food Mart
High Performing
Specialty Clinics
Person
Centered
HC
Homes
High
performing
Hospitals
Clinic
Clinic
Supportive Health Plan
Care Models
An integrated healthcare system can develop and fund robust person centered healthcare
homes to provide prevention, early intervention, and robust chronic care management
following the principles developed by the American Academy of Family Physicians,
American Academy of Pediatrics, American College of Physicians, and American
Osteopathic Association in 2007.
The principles include having an ongoing relationship with a PCP who is working inside
a team that collectively takes responsibility for patients, including ensuring that patients
are referred to high quality specialists and hospitals, and their care is well coordinated
with a focus on quality and safety. The practice has extended hours including 24 hour
coverage.
One illustrative example of person centered healthcare homes within integrated
healthcare systems is Group Health Cooperative in Seattle. Between 2002 and 2006,
Group Health implemented a series of reforms to improve efficiency and access,
including same-day appointment scheduling, direct access to some specialists, and a
patient Web portal to enable patients to email their doctors and do online medication
refills. What they found was that patient access and satisfaction increased, but physician
workload increased and this was accompanied by provider fatigue, lower work
satisfaction and reductions in nationally reported quality-of care indicators.
To address these problems they began a Patient Centered Medical Home pilot at one of
their clinics with 9,200 adult patients. During this pilot they increased visit length to 30
minutes, reassigned 25% of patients to other doctors and hired 59% more PCPs and
WORKING DRAFT How Are We Going to Get Paid Tomorrow, Draft March 18, 2010, Page 4
significantly more nurses and support staff in order to provide more time to accomplish
the objectives of a healthcare home.
After 12 months they found significant improvements in patients’ and providers’
experiences and the quality of clinical care and despite the significant monetary
investment in the redesign, the costs were recouped within the first year. In year two
(2008), they found that for every one dollar invested in the health care home, inpatient
costs fell by four dollars. In mid-2009, Group Health announced they were moving their
entire system to the healthcare home model.
They were able to pursue the pilot and then spread the design because they know that if
they saved money on inpatient services they could reinvest those monies further
upstream, inside their system or reduce the growth in insurance premiums. Most
healthcare delivery organizations don’t have this flexibility, as illustrated by the
following graphic of funding flows in a fee for service system.
Primary
Care
Clinic
Hospitals
Primary
Care
Clinic
Food Mart
Specialty Clinics
Food Mart
Specialty Clinics
Primary
Care
Clinic
Hospitals
Clinic
Clinic
Health Plan
Alignment of Goals, Incentives and Care Models
In a fee for service, non-integrated model the payor capitates a health plan to ensure that
needed care is provided to the enrolled population. Health plans typically have separate
relationships with primary care providers, specialty providers, and acute care facilities.
(For purposes of this monograph, long term care services are not addressed; they are part
of the equation but require a separate conversation.) This model contains many
disincentives that lead to overuse, misuse, and underuse of clinical services. It has been
estimated that by correcting these problems, as much as 30 percent of health care costs,
or approximately $700 billion, could be eliminated without reducing quality.
In the Group Health setting, clinicians and managers can continue to focus on improving
their specialty and acute care systems with the knowledge that over time, as their
prevention, early intervention, and chronic are management systems continue to evolve,
they will need fewer and fewer specialists and hospital beds.
WORKING DRAFT How Are We Going to Get Paid Tomorrow, Draft March 18, 2010, Page 5
Emerging Behavioral Healthcare Delivery System Models
The Business Case
There has been a great deal of discussion about the bi-directional person-centered
healthcare home as a clinical model for integrating behavioral health into primary care
and primary care into behavioral health. Behavioral healthcare organizations that wish to
participate in these healthcare homes through merger, partnership and linkage, have a
great deal to offer in helping bend the cost curve.
There is a growing array of data being published about the dramatic total healthcare cost
difference between persons with mental health and substance use disorders and those
without such disorders. The follow table summarizes research JEN Associates recently
completed for the California Medi-Cal system.
Medi-Cal FFS
Total
Medi-Cal FFS
SMI
Medi-Cal FFS Enrollees 1,580,440 166,786 11% SMI % of Total
Medi-Cal FFS Costs $6,186,331,620 $2,395,938,298 39% SMI % of Total