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Slide not to be share and/or copied without written permission from WM Herman The US Oncology Network is supported by McKesson Specialty Health. © 2015 McKesson Specialty Health. All rights reserved. Slide not to be share and/or copied without written permission from WM Herman Surviving the Evolution/Revolution in Healthcare Reimbursement William (Bill) M. Herman 1
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Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Aug 13, 2020

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Page 1: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

The US Oncology Network is supported by McKesson Specialty Health. © 2015 McKesson Specialty Health. All rights reserved.Slide not to be share and/or copied without written permission from WM Herman

Surviving the Evolution/Revolution in

Healthcare Reimbursement

William (Bill) M. Herman

1

Page 2: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

The Foundation of this Workshop

2

Progress in any human endeavour is a product of a

understanding of the circumstances in play, the tools

available to address the factors, and the resolve to take

actions required.

Page 3: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

This Talk’s

3

Define the current Healthcare “situation”Objectives:

“Tools/initiatives” being utilized to

affect change

Impact of these initiatives

Responses to these initiatives

Page 4: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

This Talk’s

4

Define the current Healthcare “situation”Objectives:

“Tools/initiatives” being utilized to affect

change

Impact of these initiatives

Responses to these initiatives

Page 5: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group

Total health expenditures have increased substantially

over the past several decades

$74.6 Billion

$364.4 BillionIn 2014 Dollars

$3.0 Trillion

$0.0

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Total National Health Expenditures In Constant 2012 Dollars

Total National Health Expenditures, US $ Trillions, 1970-2014

Page 6: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and Medicaid Services,

Office of the Actuary, National Health Statistics Group

Health spending growth has outpaced growth of the

U.S. economy

6.9%

17.5%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1970 1973 1976 1979 1983 1986 1989 1992 1995 1998 2001 2005 2008 2011 2014

Total National Health Expenditures as a Percent of Gross Domestic Product, 1970-2014

Page 7: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Payers have consolidated to survive

7

53M lives

33M lives

46M lives

Page 8: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Performance of providers is becoming public

8

Performance Historical Emerging

Measures Physician productivity Care team productivity

Tests ordered Patient outcomes and experience

Procedures performed Complications encountered

Decreasing unexplained clinical

variation in care

Improvement

OrientationIncreasing revenue/profit Outcomes, eliminating waste

Improving individually oriented

financially grounded metrics

Total cost of care

Defined performance metrics – team

oriented

Measurer Internal External

Page 9: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

This Talk’s

9

Define the current Healthcare “situation”Objectives:

“Tools/initiatives” being utilized to

affect change

Impact of these initiatives

Responses to these initiatives

Page 10: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Factors that create progress in healthcare delivery

Quality

Science

Technology

Application/execution

Effectiveness

Research

Capital

Data

CostsUtilization

Price

Efficiency

Access

Reimbursement

Data

Outcomes

Healthcare Costs

Page 11: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

VALUE

QUALITY

COST

• Achieve better outcomes

• Increase safety

• Improve satisfaction

• Reduce avoidable medical

spending

• Decrease total cost of care

A market shift towards redefining value

Page 12: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

The transition to value-based care is complex and

well underway

Fee for service

P for PGain

ShareShared

RiskBundled

Payments

Episode based

payments

Partial or Full

Cap

Global Budget

12

Payment and administrative complexity grows as risk is sharedPayment

Per unit

Payment for

outcomes

Different Types of Payment Models

Page 13: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Payment model trajectoryCommercial payers leading the way

McKesson Sponsored Research Conducted February 2014 by ORC International with 350 providers and 114 payers participating

13

Page 14: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Setting value-based payment goals — HHS efforts to

improve U.S. Health care*

“Our goal is to have 85% of all Medicare fee-for-

service payments tied to quality or value by 2016, and

90% by 2018. Perhaps even more important, our

target is to have 30% of Medicare payments tied to

quality or value through alternative payment models

by the end of 2016, and 50% of payments by the end

of 2018.”

*Sylvia M. Burwell, US Secretary of HHS. N Engl J Med 2015; 372:897-899, March 5, 2015

“Transforming Medicare from a passive payer to an active purchaser of high quality, efficient

healthcare”- CMS

Page 15: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

This Talk’s

15

Define the current Healthcare “situation”Objectives:

“Tools/initiatives” being utilized to affect

change

Impact of these initiatives

Responses to these initiatives

Page 16: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Source: OECD (2013), "OECD Health Data: Health expenditure and financing: Health expenditure indicators", OECD Health Statistics (database).

doi: 10.1787/data-00349-en (Accessed on February 9, 2016).

Health spending growth has slowed, and is now on

pace with economic growth

9.3%

6.9%

4.2%

2.9% 3.1%

12.0%

10.0%

5.3%6.0%

3.2%

0%

2%

4%

6%

8%

10%

12%

14%

1970s 1980s 1990s 2000s 2010-2013

GDP Health Spending

Average annual growth rate of GDP per capita and total national health spending per capita, 1970 - 2013

Page 17: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

3%

6%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Source: Kaiser Family Foundation analysis of National Health Expenditure (NHE) data from Centers for Medicare and

Medicaid Services, Office of the Actuary, National Health Statistics Group

Administrative costs have risen

Net cost of health insurance and administration, as a share of total health expenditures, 1970-2014

Page 18: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

2.1%

3.1%

4.4%

5.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: Kaiser Family Foundation analysis of Consumer Expenditure Survey

On average, larger shares of household budgets are

devoted to health expenses than 10 years ago

Average portion of household budget devoted to health (nonelderly families), 2002-2012

Out-of-pocket costs:

Insurance premiums:

Total health expenses:

Page 19: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

To creation of abundance of quality metrics

CMS uses over 1,700 to measure/pay for quality

National Quality forum – 630

National Committee for Quality Assurance – 81

Joint commission 57 … 31 reported publicly

HHS

‒ 61 metrics for smoking cessation

‒ 113 for HIV

‒ 19 for obesity

‒ 68 for Perinatal health

Estimated to cost to collect = 1% of net patient revenue (Meyer et all., 2012)

Page 20: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

This Talk’s

20

Define the current Healthcare “situation”Objectives:

“Tools/initiatives” being utilized to affect

change

Impact of these initiatives

Responses to these initiatives

Page 21: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Physician-centric PCP ACOs

Value-based Cardiology

Value-basedOncology

Value-based Orthopedic

Shared objectives

Alignment and creating win-win strategies with

payers is paramount

Right time

Right place

Right care

Aligned incentives

Delivering… … …

Page 22: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM HermanSlide not to be share and/or copied without written permission from WM Herman

Oncology Care Example

22

Page 23: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Source: OECD (2013), "OECD Health Data: Health status: Health status indicators", OECD Health Statistics (database).

doi: 10.1787/data-00349-en (Accessed on November 6, 2014). Notes: Break in series in 1987 and 1997 for Switzerland; in 1995 for Switzerland; in 1996 for Netherlands; in 1998 for Australia, Belgium, and Germany; in 1999 for United States; in 2000 for Canada and France; and in 2001 in the United Kingdom. All breaks in series coincide with changes in ICD coding.

Although the mortality rate for cancers has been

falling in the U.S. and across comparable countries

Age-adjusted neoplasms mortality rate per 100,000 population

242

203

262

212

0

50

100

150

200

250

300

1980 1985 1990 1995 2000 2005 2010

Comparable country average

United States

Page 24: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Oncology costs/value is a challenge

Variations in Care

Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health Cost

Guidelines 2009, Fitch K, Iwasaki K, Pyenson B. Cancer Patients Receiving Chemotherapy: Opportunities for Better

Management. March 30th, 2010, Milliman

1000%

900%

800%

700%

600%

500%

400%

300%

200%

100%

0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Cancer Drugs

Cancer Medical

Healthcare

US GDP

Inflation

Rapidly Rising Aggregate Costs

Page 25: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Understanding the cost of cancer care

Page 26: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman26

Pathways /

Care MgmtEpisodes

Oncology

Medical Home

▪ Pre-defined, evidence-based

recommendations for

delivering care specific to

patient presentations

▪ Reimbursement dependent

on adherence to pathway

▪ Single upfront payment for

each episode

▪ Drugs reimbursed at

ASP+0%

▪ Episode payment can

increase if outcomes

improve or total cost of

care decreases

▪ Comprehensive program

of payment reform, care

redesign, and measurement

▪ Reimbursement may include

care management fee, drug

costs, infrastructure

payments, enhanced service

fees, and shared savings

Examples: Example: Example:

Resulting in new oncology payment models that

emphasis value and shift risk

Page 27: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

27

Customers/patient expectations rising

27

Gap=.25

Treatment Experience … 60% driver of Loyalty

• Care provided by physician and nurse

• Courteousness of physician

• Explanation of diagnosis and treatment plan by physician

• Understanding of financial responsibility

Market Perceptions … 24%

Conducts clinical trial research

Has high quality nurses and support staff

Practice Administration … 17%

Responsiveness to concerns/complaints

Courteousness/helpfulness of receptionist

Time between appointment scheduling and actual visit

Loyalty Score*

* Statistical results from over 7,500 patient survey

Page 28: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Requiring a comprehensive oncology toolkit

Clinical

Quality

Benchmarking

Advance Care

Planning

Level I

Pathways

Program

Lean Six Sigma

Process

Improvement

Research

Trials

Patient

Support

Services

Loyalty

Surveys

Peer Review

Tool Kit

Culture of

Continuous

Improvement

Clinically AND

Financially Strong

Page 29: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

That provide solutions to manage outcomes and costs

Pathways SurvivorshipValue Based

Palliative Care

Page 30: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Market a value oriented oncology program to

payers and customers

Diagnosis Prescription Treatment Follow-Up

Specialized Pathology /tissue registry

Specific reference lab for advance

hematology and oncology needs

Diagnostic image read by

Radiologists who specialize in

oncology

Tumor board participation

Assess to expansive research trials

Evidence based Care Paths … capsulizing

IOM’s

Proactive Patient Surveillance Program

– Symptom management

– 24/7 proactive patient management

Tiered drug pricing program

Correct Diagnosis = Correct Treatment Evidenced Based Treatment Respecting The

Patient’s Wishes

Patient Value based end

of life program

Survivorship program

Genetics programs

Community

Practice

Pathways endorsed by NCCN for

outcomes & cost effectiveness

Hospital

Community Practice95%

5%

Page 31: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

IOM grounded treatment plan

31

Page 32: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Objectives:

- Lower patient

anxiety

- Care team

coordination

- Cost management

Key Tools/Best Practices - Patient check in process

- Follow-up protocol & scripts

- High risk patient screen

- Pain mgmt protocol

Key IT Needs- Call and tracking log

- Communication

Who- Delivery: Clinical Team

- Outbound Calls: RN/MA

- Follow-up visits: APP

Key Data Elements- Number of ED visits

- Reconcile medication

- ESAS status updates

Critical Success Factors

- Clarity and acceptance to roles

and responsibility

- Execution discipline

- Forum for feedback and

improvement

Centralization

Opports.- All outbound calls

Detail processes: patient surveillance example

32

Page 33: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

To get favorable contracting results

Metric based P4P program

Episodes of care rates

Case rates/bundled payments

Oncology medical home

ACO partnerships tied to

managing “total cost of care”

Preferred status

No pre-authorizations

Bonus

Fee per member per month

Exclusivity

Value Based Contracting Structures …

… Actual Wins

Page 34: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM Herman

Recapping progress in healthcare

Patients: are now consumers and more engaged in their care

Legacy fee for service is fading away

The value based shift emphasizes quality and cost over volume

Alignment is required among payers and providers of resources and

information around populations

Focused on full continuum of care versus episodes

34

Better Health, Better Care, Reduced Cost

Page 35: Surviving the Evolution/Revolution in Healthcare Reimbursement · Milliman Analysis of Medstat 2007, 14 million commercially insured lives, 104,473 cancer patients, Milliman Health

Slide not to be share and/or copied without written permission from WM HermanSlide not to be share and/or copied without written permission from WM Herman

Thoughts?

35