New Horizons HSi S6W2 Ey Health Care Industry Report 2014

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Health Care Industry Report 2014
New horizons
Voyage to value
Featuring exclusive interviews with
the International Consortium for Health Outcomes Measurement,
the Center for Healthcare Quality and Payment Reform
and the Robert Wood Johnson Foundation
To our clients
and other friends
Jonathan G. Weaver
EY Americas Health Care Sector Leader
Jim Costanzo
National Practice Leader
EY Health Care Advisory Services
A profound tidal shift is under way in the
US health care system. In the wake of
uneven quality and unsustainable spending,
the old volume-driven model is being
jettisoned. A new tide is rolling in to
transform how care is delivered and paid
for, rewarding those who improve patient
outcomes and do so at lower costs. The
ultimate destination is a more efcient,
higher-quality, consumer-focused health
care system — one rmly anchored in value.
“Like sailboats at sea, health
care organizations will need
to steer condently through
the shifting winds and changing
currents that continue to
challenge their course.
The journey forward is an arduous one.
Ongoing implementation of the Affordable
Care Act, emerging health insurance
exchanges, mounting pressures for price
transparency, a heightened focus on
population health, massive investments
in health information technology,
an increased impetus to gain scale and
market share, a growing call to engage
patients in their care — these are among
the converging forces the industry must
deftly navigate.
And they are only the beginning. In the
years ahead, health care providers and
payers can expect rising pressures from
every direction. Like sailboats at sea, they
will need to steer condently through the
shifting winds and changing currents that
continue to challenge their course.
This edition of New horizons is focused
on how health care organizations can
best nd their way on the voyage to
value. Along with an overview of recent
industry developments, we include brief
proles of several organizations and
programs that are in the vanguard of value
creation. Questions are also provided to
serve as a gauge of today’s initiatives — and
tomorrow’s imperatives.
As your organization sails toward the
new horizon, we hope this report will help
inform your discussions and enrich your
decisions. If you have any questions about
the issues explored in New horizons, please
contact your local EY executive.
i
1
Prelude
Value and viability
Setting sail
Feature
Value-based health care:
measuring outcomes that
matter to patients
A conversation with
Jens Deerberg‑Wittram, MD,
President, the International
Consortium for Health
Outcomes Measurement
31
Chapter 2
Value in delivery
Changing tack
43
Chapter 3
Value in information
technology
Supporting the journey
Feature
The move to meaningful
use and ICD-10: finding
the bearings
A roundtable discussion with
EY Health Care Advisory
Services leaders
71
Chapter 5
Value in transactions
Gaining the wind
59
Chapter 4
Value in compliance
Heeding the warnings
11
Chapter 1
Value in payment
Making headway
Feature
Accountable payment
models: paying to support
higher-quality, lower-cost
health care
A conversation with
Harold D. Miller, President
and CEO, the Center for
Healthcare Quality and
Payment Reform
Contents
ii New horizons: voyage to value
93
Postscript
Value in leadership
Taking the helm
Feature
Leadership in transformative
times: navigating the
changing tides
A conversation with
Risa Lavizzo‑Mourey, MD, MBA,
President and CEO, the Robert
Wood Johnson Foundation
83
Chapter 6
Value in measurement
Sounding the depth
107
EY thought leadership
publications
99
Appendix
Value in government
initiatives
Reading the forecast
106
Frequently used
acronyms
108
Acknowledgments
iii
{ }
“To reach a port we must set sail — sail, not tie
at anchor; sail, not drift.
Franklin D. Roosevelt, 32nd US President
Prelude
Value and viability
Setting sail
The demand to derive greater value from health care, producing the best patient outcomes
at the lowest cost, is pervasive and urgent. Compared with the rest of the world, the US
spends the most money for health care. Yet our overall health is not improving, especially
within the most costly patient populations — those with chronic diseases.
Value Outcomes
Cost
To close the value gap, the health care industry today has set sail on a new course.
Since passage in 2010 of the Patient Protection and Affordable Care Act (ACA),
where the term “value” appears prominently, the pursuit of value-based care has rapidly
emerged in industry and policy discussions. The ultimate goal on the “voyage to value” is
to create an economically sustainable approach to how care is delivered and how it is paid
for. Advocates maintain that costs can best be controlled by re-engineering care delivery
and rewarding improved value: keeping people healthy, using medical interventions
appropriately, and preventing and managing the chronic illnesses that consume a large
part of our health care dollars.
“Value is the only goal that unites the interests of all the parties in the
healthcare system.
Michael E. Porter, PhD
Bishop William Lawrence University Professor
The Institute for Strategy and Competitiveness
Harvard Business School
1
In the consumer world, value is a familiar
concept. Consumers tend to equate
good value with products of the highest
quality for the lowest price. When applied
to health care, however, value is more
complex, as the consumer — from patients
and providers to payers and purchasers,
and the product — patient outcomes, can
vary widely. According to the Institute of
Medicine (IOM), an organization that has
studied the issue closely, value is in the
eye of the beholder, representing different
things to different stakeholders.
Value for health care providers, for
example, hinges on making decisions
based on appropriateness of care.
For payers, it means using evidence-
based interventions and paying based on
outcomes. For employers, value is keeping
workers and their families healthy and more
productive at lower costs. And for patients,
value is having a high-quality relationship
with care providers, meeting personal
health goals and being assured that out-
of-pocket payments are targeted to these
goals. Reconciling stakeholder perspectives
in a way that creates value for all is a
challenge requiring thoughtful discussion,
diligent focus and unied action.
Driven by the value challenge, industry
stakeholders are pursuing a variety of
strategies. Health care providers are
embracing payer incentives to deliver
high-value care through such models as
pay-for-performance, bundled-payment,
global budgets and nancial-risk-sharing
within accountable care organizations
(ACOs). Payers are nding new ways to
partner with providers to add value to the
patient experience. Employers are striving
to rein in rising health care premiums while
pursuing affordable, high-value products
and services that enhance employee health
and productivity. Product manufacturers
are investing in innovations that deliver
value by improving quality of life. Patients
are looking to access tools and transparent
information that help them make the most
informed value-based decisions.
In this edition of New horizons, we look at
the voyage to value in health care and the
course ahead in delivering on the value
promise. Throughout, “Value vignettes”
prole real-world examples of how payers,
providers and industry groups are pursuing
value. “Viewnder” questions at the end of
each chapter offer considerations for your
board and leadership team as you pursue
value initiatives within your organizations
and with partners across the continuum
of care.
Our launching point is a conversation
with Dr. Jens Deerberg-Wittram, who
leads the International Consortium for
Health Outcomes Measurement. His
organization has been instrumental in
dening and driving the adoption of a
global set of outcome measures for a full
range of medical conditions. In focusing
on the outcomes that matter most to
patients the center of the health care
universe — these efforts are helping the
industry set sail toward the full potential
of value-based care.
2New horizons: voyage to value
3
Feature
Value-based health
care: measuring
outcomes that
matter to patients
A conversation with
Jens Deerberg‑Wittram, MD,
President, the International
Consortium for Health Outcomes
Measurement (ICHOM)
(www.ichom.org)
Dr. DeerbergWittram leads ICHOM,
a global organization cofounded
by Professor Michael Porter of
the Institute for Strategy and
Competitiveness at Harvard Business
School, the Karolinska Institute in
Sweden and the Boston Consulting
Group to help advance value
based health care. We talked with
Dr. DeerbergWittram about the
concept of value and the importance
of measuring outcomes that matter
to patients.
You’ve observed health care systems
around the world. What does value
mean, from your perspective? Why
has it been so difficult to consistently
deliver health care value — and
measure it?
The term “value” was best dened for
health care by Professor Michael Porter of
the Harvard Business School: the outcomes
we achieve for the money we spend. The
term “outcome” hasn’t been clearly dened
in the past. If we look at different sources
that deal with outcome measurement,
what is called an outcome is really an
output. An outcome from our perspective
is only one thing: the results that matter
to a patient after a care delivery process.
It’s an exciting formula because it offers a
new perspective on value with a different
measure of success.
An outcome from our perspective
is only one thing: the results that
matter to a patient after a care
delivery process.
Although physicians are striving to improve
patients’ health, historically, the more
broad measures of health care system
outcomes have not been aligned with
specic patient health outcomes. In an
outcomes-based world focused on patients
health, we say: “Let’s do this differently.
Lets move away from volume and measure
value based on the results that matter to
patients. To what extent can we achieve
these results? And how much money do
we need to get there?”
Lets look at an example. If you have a
patient who is suffering from prostate
cancer, and you ask physicians what kind of
outcomes they are measuring, they will tell
you that they measure a lot of things — for
example, length of stay, appropriate MRI
scans, PSA level, number of procedures
and patient satisfaction. All these kinds
of measures may be interesting, but
not relevant. They are not what matter
to patients.
If you ask patients their denition of an
outcome, they will tell you clearly and
consistently. Michael Porter has rendered
these responses as an outcome measures
hierarchy (see diagram on the next page).
The rst tier is the health status achieved
or retained. Do I survive as a patient who
is suffering from cancer? What will be
the status of my health or degree of my
recovery? Will my quality of life be good?
Will I be in pain? Will I be able to sleep?
What about anxiety?
The second tier is the process of recovery.
How much time will it take to return to
normal activities? What difculties and
complications might I face in my care
or treatment?
The third tier is health sustainability. Will my
illness recur? Will my treatment have any
long-term consequences? For example,
apatient with cancer treated with beam
radiotherapy may see great results for a
year, but two or three years later may be
complaining about complications caused
by the treatment.
We believe that if you want to determine
value, you need to measure the outcome
of every medical condition from the patient
perspective. Standardized outcomes can
help clinicians decide on treatments that
improve patients’ quality of life.
4New horizons: voyage to value
What is the process for obtaining these
outcomes that matter to patients?
Measuring outcomes systematically
requires having the right data sources.
Some outcomes can be determined
only by asking the patient directly — for
example, “Do you have pain?” and “How
would you rate your quality of life?” We call
these “patient-reported outcomes,” and
they are an essential part of outcomes
measurement. Yet patients can’t report
on a number of other outcomes that
matter to them, such as complications
that happen during surgery. You have
to ask the physician about that, because
the patient doesn’t know. These are
“physician-reported outcomes.” One of
the most difcult outcomes to measure
is mortality a patient with cancer who
dies two years after treatment, for instance.
The patient by denition is not able to
report. In this case it might be helpful to
get access to the national death registry,
if it is available.
At ICHOM, in dening health outcomes,
we directly involve patients in the process.
All of our patient representatives have been
treated for the condition being evaluated.
We also bring together leading physicians
from across the globe who specialize in
treating this condition. As patients and
physicians discuss and reach consensus
on the outcomes that matter most to them,
the ICHOM team serves as facilitator.
What role does technology play
in this process?
We’re looking more and more at technology
solutions to collect meaningful outcomes
data. For example, a key resource is mobile
devices. If you want to measure the mobility
of a patient after orthopedic surgery,
Tier 1
Health status
achieved or
retained
The outcome measures hierarchy
Survival
Degree of health or recovery
Tier 2
Process
of recovery
Time to recovery and time to return
to normal activities
Difficulty of care or treatment process (e.g.,
diagnostic errors, ineffective care, treatment-
related discomfort, complications, adverse effects)
Tier 3
Sustainability
of health
Sustainability of health or recovery
and nature of recurrences
Source: Professor Michael Porter, “What is value in health care?”
New England Journal of Medicine, December 23, 2010. Used with permission.
Recurrences
Care-induced
illnesses
Long-term consequences of therapy
(e.g., care-induced illnesses)
5
it’s probably much easier to look at GPS
data on his or her mobile phone than to ask
how many miles or meters were walked this
week. This new measuring and reporting
capability is a huge step forward and one
that will help greatly in collecting more
relevant data on outcomes.
However, in the outcome measurement
eld today, weve found that large
information technology vendors are not
the drivers of innovation. Numerous smaller
companies are making the greatest strides
in this space, developing ready-to-use
plug-and-play apps for outcomes collection.
The challenge will be to integrate their
solutions into larger systems.
Tell us more about the mission of
ICHOM. How did your organization
come together? What are your plans
for the future?
In the early ’90s, Michael Porter began
writing the rst paper about creating
value-based competition in health care.
In 2006, he published a book on this topic,
Redening Health Care. It provides the
argument for using health outcomes data
to redene the nature of competition in the
industry. Over the past eight years, we have
offered many courses at Harvard and other
institutions worldwide where we teach
the value concept to providers, payers,
pharmaceutical companies and medical
technology companies.
People quickly “got it.” They agreed
we needed to move to value as the
new denition of success in health care.
Further discussions led to the idea of
standardization. It doesn’t make sense
to tell surgeons around the world that
they should measure incontinence, for
example and then nd years later they’re
all measuring it in a different way. We would
have no chance to compare outcomes.
We concluded we needed a standard set
of measures ready to use, simple to handle
and comprehensive enough to cover the
relevant aspects of a patient’s condition
from a patient’s perspective — but not
too complex to overstretch organizations.
And, we needed to offer these measures for
free. In the summer of 2012, we launched
ICHOM as a nonprot organization and
started our work.
Our rst goal was to show that its possible
to dene meaningful patient outcome
standards and test them in the eld.
We agreed to begin with four medical
conditions, and for these reasons:
1. Coronary artery disease, which is the
number one cause of death globally and
also one of the most costly conditions to
treat. But it’s also preventable through
patients’ lifestyle changes.
2. Localized prostate cancer, one of
the most common types of cancer
in men. It has different ways of being
treated — from active surveillance
to radical prostatectomy — and can
produce wide variations in outcomes
that matter to patients. For example,
the average incontinence level
one year after prostate surgery in
Germany and Sweden is around 50%,
while organizations performing best
in this procedure worldwide show
a post-surgery incontinence level
of 5% a tenfold difference.
3. Cataracts, a health issue found in
patients around the globe. Cost for
treatment shows wide variations.
In India, for example, the cost is 1% of
what it is in the most expensive centers
in the US.
4. Low back pain, a condition that is
one of the greatest causes of sick
leave in the workforce and has a
huge impact on global economies.
It is also a condition involving
different medical specialties and many
different treatments. We need to
better understand which options offer
patients the best long-term outcomes.
“Our ve-year goal is to cover 50
medical conditions that represent
about 70% of the disease burden
in industrialized countries.
Within a year, we completed four Standard
Sets of outcomes for our rst four medical
conditions. In November 2013, we unveiled
these at a Harvard conference drawing
health care leaders from more than 20
countries. These standards have also been
submitted to leading journals and are in
the process of being published. In 2014,
we’re studying more medical conditions
6New horizons: voyage to value
and plan to have Standard Sets for 12 more
conditions by the end of the year. Our ve-
year goal is to cover 50 medical conditions
that represent about 70% of the disease
burden in industrialized countries.
You’ve had the opportunity to observe
health care value in many countries
around the world. How does the US
measure up?
I would say the US has a long way to go
but is denitely on its way. Historically, it’s
been a nation willing to try new approaches.
We see lots of interest and energy to move
forward and improve. The momentum
is coming from providers — from small
organizations that want to begin measuring
value, to well-known leaders that have the
bandwidth and funding for pilot testing.
It’s also coming from payer organizations
that want to reimburse based on outcomes,
and from the ACA itself, which has opened
many opportunities to measure and pay
for outcomes.
You’ve had considerable experience
as a hospital executive and
understand the unique challenges
faced by C-suites and board members.
How can executive leadership best
support outcomes measurement in
their own organizations?
Perhaps my personal experience can shed
some light. For eight years, I ran a 4,800-
bed for-prot system and was also a health
care consultant. I saw rsthand the impact
outcomes can have on managing health
care costs, and I came to believe that health
care should be organized around improving
outcomes and value.
Before this realization, I tried everything
I could to change clinician behavior in a
systematic way, from clinical pathways
to lean management. But it didn’t work.
If you tell a physician, “The antibiotics
you use cost 25% more than those of your
colleagues,” they may not care. If you
say, “I have a clinical pathway in my
computer that tells me what to do,” they
may not take it. They’ll say, “I’m not a
technician. I’m a physician.
“I have found the only thing that
works — and drives organizational
change — is providing outcomes
information.
I have found that the only thing that works
and drives organizational change — is
providing outcomes information. This is
something you must believe or experience
as a health care executive. Then you will
take the right steps.
The rst step is to commit yourself
to outcomes measurement. Walk the
walk. Tell your people, “I want you to
measure outcomes. I want you to know
how to do this, and I want to discuss
with you how we can do better from a
patient perspective.”
Second, don’t wait for a big-bang
information technology x. It isn’t coming.
Third, try to nd payer partners who
are ready to tie money to outcomes.
The ACA gives most organizations room
to do just that.
Last, seek out the “evangelists” in your
organization who are already measuring
outcomes. Give them the bandwidth,
support and funds to run pilots. Celebrate
their successes. In the new world of value-
based health care systems, one successful
pilot can position your organization for
lasting leadership.
7
8New horizons: voyage to value
Viewfinders
Considerations for your board and executive leaders
Is value the “wind in the sails” of your
organization’s mission and leadership?
Have you dened your organizations
core value proposition and
overarching strategy to succeed
in avalue-based world?
How are you building your reputation in
the community as a provider of value?
Have you developed a culture of
collaboration and accountability to
support value-based approaches?
In what ways are your employees at
every level empowered to deliver value
in their daily work?
What tools have you built into your
processes for continuous feedback
and action to support the voyage from
volume to value?
How do you know you are delivering the
outcomes that matter to patients?
9
{ }
“Price is what you pay. Value is what you get.“
Warren Buffett, 20thcentury American investment entrepreneur
Chapter 1
Value in payment
Making headway
Voyage to value
In pursuing value-based health care, payers are partnering with
providers to create high-value payment systems that reward quality over
quantity. Varied routes are being tried to shape the payment model of
the future, from changing payment incentives to adopting performance
measurements. Value-based payments can spur the health care system
to make delivery more efcient, steer clear of waste and reward
providers for helping patients stay healthy.
Meanwhile, with mounting nancial pressures, health care organizations
are “battening down the hatches” through a range of methods designed
to streamline operations and better manage their bottom lines. This dual
focus — looking externally to leverage new payment opportunities and
internally to curtail costs — is a promising approach in making headway
toward the value destination.
11
Government and market forces are propelling the health
care industry in a new direction — one that moves away
from paying for volume and toward paying for value.
In these deep currents of change, health care providers
and payers must pilot a variety of nancial decisions, new
business processes and strategic opportunities. In this
chapter, we look at payment systems driven by policy and
by the market. We also explore several approaches health
care organizations are taking to lower their costs in a
world of reduced margins and value-driven operations.
Value-based payment models:
considering the options
The move toward value-based payment,
in motion for many years, has been
accelerated by the Affordable Care Act.
The law includes several nancial incentives
for providers to better coordinate
health care delivery. Different payment
methodologies have been proposed as
the prime solution for stimulating delivery
system change. A range of government
initiatives are in play to improve quality
through payment models (see Exhibit 1-1
on page 13). Commercial payers, too, are
pairing payment incentives with changes
aimed at producing better-coordinated,
higher-quality and more-efcient care.
According to Catalyst for Payment Reform,
a national organization for health care
purchasers, 10.9% of commercial payments
today are value-oriented, designed to
either improve performance or cut waste.
This marks a signicant leap from 2010,
when 1%–3% of payments were value-based.
Exhibit 1-2 on page 14 illustrates the
continuum of value-based payment models,
from lowest to highest risk, accompanied by
a discussion of how these models are being
pursued today.
Fee-for-service (FFS)
Paying health care providers on an FFS
basis has been cited as a key contributor
to the nation’s cost and quality challenges.
In the FFS system, each procedure or
service is billed and paid for separately.
These payments may encourage the use
of more, and more expensive, services and
fail to reward high-quality care. FFS also
makes coordination of care across multiple
providers and varied settings difcult and
burdensome for patients, as they receive
different bills from different clinicians and
may not have a designated care manager
to help them with treatment decisions.
Pay-for-performance (P4P)
The P4P model typically pays fees for
individual services, with some form of a
nancial incentive payment to physicians
based on their performance compared with
a set of performance metrics. While early
P4P programs used quality and access
measures to determine incentive awards,
current models often include measures of
physician practice efciency, such as use
of lower-cost generic pharmaceuticals.
In the government sector, the P4P
model is implemented through hospital
value-based purchasing, penalties for
readmissions and penalties for hospital-
acquired infections (see Exhibit 1-1 on
page 13). In the private payer sector, P4P
is evident in a wide range of quality-based
commercial contracts.
“The way we price health care
cannot be understood by a human
being of average intelligence and
limited patience.
Michael Leavitt
Former Secretary
US Department of Health and Human
Services (HHS)
Care management fees
In this model, health plans pay providers,
typically organized as patient-centered
medical homes, for better care coordination.
Payments are intended to provide an
investment in practice functions that
traditionally have not been reimbursed,
such as educating patients in self-
management.
12 New horizons: voyage to value
Exhibit 1-1. Government initiatives in the shift from volume-driven to value-driven payment
Bundled Payment for Care Initiative
(BPCI). A total of 299 hospitals and
166 post-acute care organizations are
part of BPCI, a Medicare pilot program.
Providers are reimbursed for certain
care episodes through single case rates
and can participate in gainsharing.
Comprehensive Primary Care
Initiative (CPCI). A four-year public-
private partnership, CPCI is designed
to test a model of improved access
to quality health care at lower cost.
Atotal of 500 primary care practices
in eight states are participating.
CMS is paying primary care practices
a care management fee to coordinate
services for Medicare fee-for-service
beneciaries.
Hospital Acquired Condition (HAC)
Reduction Program. Beginning
October 1, 2014, the HAC Reduction
Program, mandated by the ACA,
requires the Centers for Medicare &
Medicaid Services (CMS) to reduce
hospital payments by 1% for hospitals
that rank among the lowest-
performing 25% in HACs.
Hospital Value-Based Purchasing
(HVBP) Program. Created under the
ACA and launched in October 2012,
the HVBP Program lays the groundwork
for Medicare to become a value-based
purchaser of health care services.
Payment adjustments, up or down
by as much as 1.25%, are based on
hospital performance across two dozen
measures of clinical processes, patient
satisfaction and outcomes.
Medicare Hospital Readmissions
Reduction Program. Under this
program, the government is looking
at the number of heart attack, heart
failure and pneumonia patients who
return to the hospital within 30 days
of discharge. The program will be
expanded in October 2014 to add
two additional conditions, elective
hip or knee replacements and chronic
obstructive pulmonary disease.
Hospitals with more readmissions than
Medicare expected given their mix of
patients were penalized by losing up
to 1% of their regular payments during
the program’s rst year, scal 2013.
The maximum penalty ramped up to
2% beginning October 2013 and is 3%
beginning October 2014 — rising to 8%
in 2017.
Medicare Shared Savings Program
(MSSP) ACOs. In December 2013,
CMS named 123 new ACOs as
members of its MSSP, the largest
group announced since the program
started in 2012. These ACOs will cover
1.5 million Medicare beneciaries.
CMS will begin accepting applications
for its 2015 class of MSSP participants
in the summer of 2014.
Pioneer ACOs. In July 2013, CMS
released the rst-year results from
the Pioneer program, sponsored by
the Center for Medicare & Medicaid
Innovation. All 32 Pioneer ACOs
improved quality, but only 13 were able
to save enough money to share in the
savings with Medicare. In the wake of
these results, nine Pioneers announced
they were dropping out of the program.
Seven of those ACOs planned to
transition to the lower-risk MSSP, while
two left the sea of Medicare ACOs
entirely. CMS is considering opening
the application process to allow more
organizations to join the program.
Value-Based Physician Payment
Modier (VBPPM). Applied by CMS
to physician performance, the VBPPM
is a method for paying physicians
differentially based on the quality and
cost of their care, as reported through
Medicare’s Physician Quality Reporting
System. Using quality and cost
data reported for 2013, differential
payment is scheduled to begin in 2015
for large group practices and in 2017
will be applied to most or all physicians
who submit claims under the Medicare
physician fee schedule.
Source: CMS, 2014.
13
Since mid-2011, when the Obama
Administration began promoting the
medical home model, the number of
medical home practices has been growing
rapidly (see Chapter 2, page 34). According
to Modern Healthcare, Medicare and
43 other payers, including commercial
plans and state Medicaid programs, are
supporting 500 medical home practices
with per-member, per-month, care
management fees.
Bundled payments
Under the bundled payment model,
sometimes referred to as an “episode
of care” payment, instead of being paid
separately for each individual service,
providers receive one payment for all
services delivered to a patient during a
single episode of care — for example, a hip
replacement or a coronary artery bypass
graft. The payment is made for all services
that the patient is expected to use, from
physician and hospital services to post-
discharge services such as home health
and rehabilitation. Bundled payments
are also applied to treating such chronic
conditions as diabetes, with payments
made in anticipation of all services to be
received in treating the condition over a
dened timeframe.
If the costs of care are less than the
bundled payment amount, participating
providers keep the difference. If costs
exceed payment, they absorb the loss.
Bundled payments give participating
providers an incentive to coordinate their
activities, eliminate unnecessary services
and avoid complications that require
additional services.
In the government payer sector, CMS
has piloted bundled payments through
its Acute Care Episode Demonstration
project and Bundled Payment for Care
Initiative (see Exhibit 1-1 on page 13).
In 2012, bundled payments made their
way into the state-driven Medicaid sector
with the Arkansas Health Care Payment
Improvement Initiative. Currently the
country’s only Medicaid bundled payment
model, it is mandated for state providers
within ve episodes of care.
Exhibit 1-2. Spectrum of payment models
Providers are paid
Fee-for-service Pay-for-
performance
Care
management
fees
Bundled
payments
Shared savings
and shared loss
Global
payments
Provider-
sponsored
health plans
A specic price
for each service
rendered
Fee-for-service
payments
plus incentive
payments for
quality and
efciency
Per-member,
per-month
fees — typically
for providers
organized
as patient-
centered
medical homes
to fund
investments
in care
coordination
One lump sum
for all services
rendered to a
patient during a
hospitalization
or episode
of care — or
to treat a
particular
disease for a
dened time
period
Payments
closely tied to
controlling the
overall cost of
the care that
patients receive
while achieving
quality targets
sharing in
savings if
costs are less
than target
and sharing in
losses if costs
are greater than
target
A xed dollar
amount, usually
prepaid monthly,
designed to
account for
most or all of
the expected
cost of care
for a group of
patients for a
dened time
period; may be
supplemented
with incentive
payments
for achieving
quality goals
Through
ownership of
the providers
own health plan,
assuming 100%
of the nancial
risk for insuring
a patient
population
Less risk, less value More risk, more value
Source: EY analysis, 2014.
14 New horizons: voyage to value
The private payer sector also reects a
wide range of bundled payment initiatives.
For example:
Geisinger Health System in Danville, PA,
developed its ProvenCare as a bundled
payment model for coronary artery
bypass graft surgery and has since added
additional bundles.
Horizon Healthcare Services, Inc.,
New Jersey’s oldest and largest health
insurer, started its bundled payment
program with total joint replacements
and has expanded to include such
episodes of care as pregnancy and
adjuvant breast cancer treatment.
The PROMETHEUS Payment model,
launched in 2006 with the support of the
Robert Wood Johnson Foundation, now
includes 21 bundles with the potential
to affect payment for almost 30% of the
insured adult population.
Several major national employers
have started their own bundled
payment arrangements with hospitals
(see Value vignette above).
Shared savings and shared loss
In the shared savings and shared loss
model — the payment strategy for such
structures as ACOs — providers are paid
based on achieving dened performance
goals. Those that meet or exceed certain
quality and cost performance benchmarks
can share in any resulting cost savings.
Those that do not meet goals will share
in losses.
Value vignette
Employers Centers of Excellence Network: bundling payments for value
Beginning January 1, 2014, a
rst-of-its-kind coalition of large US
employersincluding Lowe’s and
Walmart — began offering knee- and
hip-replacement surgeries to more
than 1.5 million employees and their
dependents. The companies joined
the Pacic Business Group on Health
(PBGH) Negotiating Alliance to create
the Employers Centers of Excellence
Network (ECEN).
According to PBGH, these elective
surgeries represent a growing portion of
employer health care spending. Prices can
vary between $15k and $125k, without
correlation to quality. As of early 2014,
the network is offering these procedures
at four US health care systems:
Johns Hopkins Bayview Medical Center
in Baltimore, MD
Kaiser Permanente Orange County-
Irvine Medical Center in Irvine, CA
Mercy Hospital in Springeld, MO
Virginia Mason Medical Center in
Seattle, WA
ECEN assists members that want their
employees to have high-quality elective
surgical care by providing information on
which surgeons perform best on these
procedures. The network evaluates and
selects centers of excellence (COEs),
negotiates bundled payments and
encourages member organizations to
promote use of these COEs to their
employees. According to ECEN, each
COE is committed to the highest-quality
standards and has performed far better
than national norms for complications,
reoperations and patient experience.
In addition to total hip and knee
replacements, other elective surgeries
such as spine/low back and cardiac
surgeries will be added. Participating
employers receive discounted rates
for care.
For employees, participation in ECEN is
voluntary. Those who take part receive
100% coverage for their surgical care,
with no deductibles or co-pays, as well as
travel, lodging and living expenses for the
patient and a caregiver. Each employee
is assigned to a patient advocate, who
schedules the surgery and selects the
center. After surgery, the same advocate
assists with insurance claims, as well as
the transition back to the patient’s home
physician. The COE also assigns a patient
navigator to guide the patient while he or
she is on-site.
“[ECEN] is designed to serve as a
model for delivering high-quality
health care with transparent and
predictable costs.
David Lansky
PBGH President and CEO
Lowes and Walmart have tested the
waters before with bundled payments.
Lowes entered into a bundled-payment
agreement with Cleveland Clinic for
cardiac surgery, and Walmart and six
hospitals, including Cleveland Clinic and
Mayo Clinic, have launched bundled
payments for workers’ cardiac and
spinal surgeries.
Sources: PBGH website; Walmart website; “WalMart, Lowe’s, PBGH form network for ‘nocost’ knee/hip replacements,” San Francisco Business Times,
October 8, 2013, via The Business Journals, www.bizjournal.com; “WalMart, Lowes to offer employees leg up on knee and hip work — at certain systems,”
Modern Healthcare, October 8, 2013.
15
The concept behind ACOs is that by linking
provider payment to cost and quality
outcomes, the provision of unnecessary
treatments and services is discouraged
while prevention, care coordination, quality
and value are emphasized.
Along with the Medicare Shared Savings
Program and Pioneer ACO program in
the public sector, several commercial
ACO contracts have emerged. Current
estimates (Leavitt Partners, May 2014)
put the number of ACOs in the US at
626; 329 have government contracts,
210 have commercial contracts
and 74 have both government and
commercial contracts. The remaining
13 ACOs have not yet made specic
announcements about their contracts or
are still in the process of nalizing them.
Among recent developments:
Anthem Blue Cross and Blue Shield plans
to form an ACO with Franciscan Alliance,
a Catholic health care system in Indiana.
Memorial Healthcare and Florida Blue
have formed a new ACO, Memorial
Health Networks. The ACO marks the
tenth accountable care arrangement
between Florida Blue and hospital
systems throughout the state — and the
fth in south Florida.
UnitedHealthcare, the Minnetonka,
MN–based health insurer subsidiary
of UnitedHealth Group, plans to more
than double its accountable care
health plan contracts with hospitals
and physicians over the next four
years. UnitedHealthcare currently ties
$20 billion of its contract payments to
quality and cost efciency, and plans
to allocate $50 billion by 2017.
Global payments
A comprehensive payment to a group of
providers, global payments are meant to
account for most or all of the expected cost
of care for a group of patients for a dened
timeframe. These agreements pay on a
per-member, per-month basis. The model
offers providers incentives to keep their
patient populations healthy and maintain
low utilization of clinical services.
While generally synonymous with the term
capitation,” the term “global payment” is
preferred by advocates to distinguish it
from early capitation models, under which
some providers suffered nancial losses.
Today, global payments have evolved
considerably compared with earlier
efforts. For example, some payers are
using risk-adjustment methods to account
for the relative illness burden of the
population and risk sharing to protect
the provider if costs are higher than
anticipated. This way, providers are not
facing potential catastrophic nancial
losses — or an incentive to curtail care,
acommon concern with early versions
of capitation arrangements. A leading
example of a global payment model is the
Alternative Quality Contract (AQC) from
Blue Cross Blue Shield of Massachusetts
(see Value vignette below).
“Ending fee-for-service payment
in favor of accountable care
organizations and bundled payment
once and for all is unlikely to be
feasible for quite some time, but
gradually increasing disincentives for
providers that do not participate in
reformed payment approaches is a
practical way to move forward.
Paul B. Ginsburg
President
Center for Studying Health System Change
Achieving health care cost containment through
provider payment reform that engages patients
and providers”
Health Affairs, May 2013
Value vignette
The Alternative Quality Contract: increasing value through accountability
The Alternative Quality Contract,
apayment model from Blue Cross
Blue Shield of Massachusetts (BCBSMA),
illustrates current trends in payer-
provider cost-saving initiatives. Launched
in 2009, the AQC is one of the largest
commercial payment reform initiatives
in the US. It includes more than three-
quarters of BCBSMA’s overall network
of contracted primary care providers and
specialists who care for nearly 700,000
BCBS members. BCBSMA notes that
the AQC arrangement is a ve-year
agreement that encourages providers
to invest in long-term initiatives
signicantly longer than BCBSMAs
traditional contracts, which are typically
three years for hospitals and one year
for physicians.
The model combines a per-patient global
budget with signicant performance
incentives based on nationally endorsed
quality measures. BCBSMA links its
contracts with providers to dozens
of quality metrics that track whether
patients get the right screenings
and exams, whether physicians and
hospitals prescribe the correct drug and
whether patients are satised with their
care. A study nds that this approach
improved quality of care while cutting
costs as much as 10% below their fee-for-
service level.
Source: BCBSMA, http://www.bluecrossma.com/visitor/aboutus/affordabilityquality/aqc.html
16 New horizons: voyage to value
Provider-sponsored health plans
As many health care providers are
assuming risk through new contracts with
payers, others are taking risk-bearing
to a higher level by becoming provider-
sponsored health plans. Financial pressures,
the wave of new entrants in the insurance
market and the move toward population
health have spurred several health systems
to launch their own health insurance plans.
Now isn’t the rst time providers have
taken on the payer side of business.
The most notable example of provider
initiatives in the payer space is California’s
Kaiser Permanente, which started as
a hospital in the 1930s and has since
grown to nearly 8.9 million health plan
members — making it the largest US health
plan by medical enrollment. Today’s four
largest provider-sponsored health plans
after Kaiser, according to data from AIS’s
Directory of Health Plans: 2013, were also
early risk-bearing pioneers: University of
Pittsburgh Medical Center (UPMC) Health
Plan (founded 1998), Healthrst (founded
1993), Henry Ford Health System’s
Health Alliance Plan (founded 1960) and
Spectrum’s Priority Health (founded 1992).
Since the shift to value-based care, the
concept is again attractive to many
providers, who are nding that creating
and offering their own health plans is a
route to achieving competitive advantage.
According to the American Hospital
Association, about one in eight hospitals —
primarily not-for-prot health systems and
nonacademic systems — operated health
plans in 2011.
Recent activity reects the growing trend.
For example:
In Massachusetts, Partners Healthcare
in Boston, the state’s largest hospital
and physician organization, acquired
Neighborhood Health Plan, a nonprot
organization insuring more than
240,000 mostly low-income residents
across the state.
In New York, North Shore–Long Island
Jewish Health System — with 16
hospitals and more than 300 outpatient
centers — has launched its own health
plan, CareConnect, on the state health
insurance exchange (HIX).
In Ohio, Cincinnati-based Catholic Health
Partners is selling health plans through
its subsidiary, HealthSpan, on the
Ohio exchange.
In Texas, Baylor Scott & White recently
expanded the nonprot Scott & White
Health Plan to portions of Baylor’s
market area, covering more than
240,000 members across 71 counties
in the central part of the state.
In Virginia, Falls Church–based Inova
Health System has partnered with
Aetna to establish a 50-50 ownership
joint venture, the Innovation Health
insurance plan.
Providers that are considering forming a
health plan need to carefully weigh the
benets against the risks (see Exhibit 1-3).
The quest for efficiency:
controlling costs in a value-
driven world
Regardless of which payment model
organizations adopt or where they are
in their voyage to value, increasing
efciencies and reducing operating costs
are always worthwhile goals. A survey
from the Health Information Management
Systems Society and AVIA (The 2013
Healthcare Provider Innovation Survey)
reveals that while providers have numerous
priorities — from reducing medical errors
to improving patient satisfaction — cutting
costs is still at the top of the list. As margins
tighten for US hospitals, especially for
Exhibit 1-3. Potential benefits and risks for providers considering health
plan formation
Potential benets Potential risks
Greater nancial rewards. With a
projected drop in inpatient service
utilization, forming a health plan can
help providers hedge against potential
revenue loss.
Improved market share. Incentives
are created to keep patients within the
system, providing the opportunity for
deeper market penetration.
Better population health
management. Critical decisions
around what care to provide and what
to pay for are under the provider’s
control. With more tightly integrated
clinical and nancial performance
data and metrics, health systems
may be better positioned to improve
outcomes and lower costs around
specic patient populations.
High start-up costs. Providers need to
have enough funds to cover start-up
costs and regulatorily required capital
thresholds, and enough potential
covered lives to absorb actuarial and
other risks.
Payer pull-outs. Hospitals that
start their own health plans will be
competing with other plans in their
markets. Commercial payers may
choose to end contracts, posing a new
set of challenges for hospitals.
New responsibilities. Changing from
being a provider to being a provider-
payer will require a different mindset,
skill set and knowledge base with a
corresponding learning curve.
Source: EY analysis, 2014.
17
those with higher levels of Medicaid and
Medicare patients (see Exhibit 1-4), hospital
executives are using a range of strategies
to control costs. Highlighted below are
prevalent approaches.
Readmission reduction
Nearly one in ve Medicare patients
returns to the hospital within a month
of discharge. From the government’s
vantage point, readmissions are a leading
symptom of inadequate quality and a
costly, uncoordinated system. The ACA
charged the Department of Health and
Human Services (HHS) with creating
the Hospital Readmissions Reduction
Program, effective for discharges beginning
October 1, 2012. With an initial penalty
rate of 1% of Medicare payments for
failure to substantially reduce readmission
rates, the penalty continues to rise (see
page 13). CMS reports an estimated 2,225
hospitals were penalized $227 million in
2013 because of excess readmissions.
What are the causes of unnecessary
readmissions? A seminal report from
the Robert Wood Johnson Foundation
highlights a variety of catalysts
(see Exhibit 1-5 on page 20).
A scan of the health care horizon nds a
range of cost-effective solutions to reduce
readmission rates. For example:
In California, Napa’s Queen of the
Valley Medical Center uses the Case
Management, Advocacy, Resource/
Referral, Education (CARE) Network,
through which a social worker and
nurse visit patient homes to make
sure the patient understands post-
discharge care plans. Over a one-year
span, the CARE program yielded a
60% reduction in ED visits and a 40%
reduction in hospitalizations for the
patient population.
In Ohio, Cincinnati’s Mercy Health has
used nurses specially trained to act as
patient guides through the discharge
process. In less than a year, the
program has yielded savings in avoided
readmissions of about $495,000 and
a 15% drop in all-cause readmission
rates for heart failure, acute myocardial
infarction and pneumonia.
In Utah, Salt Lake City’s University of
Utah Health Care hired a hospital-based
transitions navigator to help patients
transition safely from hospital to medical
home. Over three months, the program
yielded a 23% reduction in the hospital’s
30-day readmission rate.
To prevent hospital-acquired infections
(HAIs), a major cause of readmission, many
providers are implementing automated
infection control and patient surveillance
systems. These systems provide real-time
alerts, pushing time-sensitive patient
information directly to the treating
physician to act quickly in reducing adverse
events. Studies have found 10%–70%
of HAIs could be prevented through
systematic surveillance and standard
preventive guidelines.
Exhibit 1-4. Trending of Medicare margins
Source: Medicare Payment Advisory Commission (MedPAC) report, March 2013.
18 New horizons: voyage to value
19
Patient flow improvement
Regardless of how many hospital beds are
available, inefcient processes, inadequate
care transitions and a eet of other
challenges can lead to poor use of capacity.
Patient-ow problems not only create
operational bottlenecks, but they often
set the course for patients’ perceptions of
their entire stays. If the hospital encounter
starts with a long wait to get a bed, the
hospital may already have lost the battle
for delivering a positive patient experience.
Providers nationwide are taking action
to address the patient-ow challenge.
For example:
In Connecticut, Yale-New Haven Hospital
implemented process changes that led
to an 84% improvement in discharges by
11:00 a.m., a decreased length of stay
from 5.23 to 5.05 days and the ability
to accommodate 45 additional patients
each day.
In Ohio, Cincinnati Children’s Hospital
Medical Center improved surgical
scheduling practices, resulting in fewer
delays and cancellations of elective
surgeries because beds were not
available, as well as a more predictable
ow of patients through the intensive
care unit. The changes also saved the
facility $100 million in capital costs by
eliminating the need for 75 new beds.
In Washington, at Seattle-based Virginia
Mason Health System, nurses analyzed
their workows and took steps to
improve efciency. A key change was
reorganizing nurses’ care patterns on
the hospital oor so that they could
care for patients who were in groups of
rooms rather than spread across a unit.
In areas where this change has been
implemented, Virginia Mason reports its
nurses now spend 90% of their time on
direct patient care and attend to patients
needs faster and more effectively.
A key area of focus for improving patient-
ow is the Emergency Department.
Automated patient-ow solutions are
helping relieve ED overcrowding by
speeding up throughput processes.
To reduce heavy patient volumes in the
ED, some health care systems have also
created transfer centers — hubs for patient
referrals between the system and all the
clinics, hospitals and physician ofces in
the region. These centers enable referring
providers to make one phone call to send
their patients directly from their facilities
to the appropriate level of acute care,
bypassing an unnecessary ED visit. Patients
can readily receive the care they need, while
hospitals can decrease the number of patients
entering the hospital through the ED.
Supply chain retooling
On average, the supply chain represents the
second-highest component of a hospital’s
operating costs — eclipsed only by the
cost of labor. More and more hospitals
are recognizing the value that the supply
chain can bring to their organizations and
have moved to add supply chain strategic
initiatives to their overall goals. Approaches
range from rightsizing inventory, to joining
purchasing collaboratives for best-price
negotiation, to building and automating
warehouses and ordering directly from
manufacturers. For example:
In Arizona, Phoenix-based Banner Health
saved $226 million in ve years by
aligning supply chain management with
efforts to improve quality, remove waste
and disseminate best practices.
In Florida, University of Florida and
Shands Teaching Hospital in Gainesville
are collaborating with Orlando Health
in joint supply purchasing decisions —
resulting in millions of dollars in savings
for both organizations.
In Mississippi, Meridian’s Anderson
Regional Medical Center rightsized its
inventory levels and gained savings
of $1.5 million.
Exhibit 1-5. What leads to needless hospital readmissions?
1. Some patients leave the hospital with
a treatment plan for one illness when
other problems of equal importance
are ignored.
2. Many patients are discharged without
understanding their illnesses or
treatment plans or they inadvertently
discontinue the medicines needed to
stay well.
3. Family members who may be the
patient’s central caregivers are often
not included in discharge planning.
4. The physicians caring for the patient
may not communicate with each other
or may not develop a coordinated plan
for care after discharge.
5. Patients may not have the right
prescriptions or cannot ll them.
6. Appointments with primary care
clinicians or with specialists may not
occur soon enough after discharge.
Missed clinician visits lead to missed
opportunities to recognize that the
patient is not improving.
7. Information about a patient’s hospital
stay does not always go to the
appropriate community clinicians.
8. Clarity is lacking on which clinician
is responsible for care after patient
discharge; accountability is spread
among hospital staff, community
physicians and nurses, skilled nursing
facilities and families. Without clear
accountability, problems that could be
prevented are missed, leading to ED
visits and repeat hospitalizations.
Source: The Revolving Door: A Report on U.S. Hospital Readmissions, RWJF, February 2013.
20 New horizons: voyage to value
Many hospitals have found the most
effective way to reduce costs for
those supplies over which physicians
have the greatest inuence, such as
implants, medical devices and high-cost
pharmaceuticals, is to involve them
vigorously in cost-saving initiatives.
“Hospitals have got to start engaging
the right executives and physicians
and share data with them. They’re
scientists by nature. You’ve got
to give doctors input on what is
being used.
Brent Johnson
Vice President of Supply Chain & Support Services
Intermountain Healthcare
Healthcare Finance News, September 2013
Revenue cycle re-engineering
From offering online scheduling to issuing
easy-to-understand bills, the revenue
cycle presents a distinct opportunity to
make the transactional side of health care
more nancially sound for providers — and
more satisfying for patients. The goal is
to transform the process from reactive to
proactive, from one that begins after the
patient receives care to one that starts
with the patient’s rst interaction with the
provider organization.
Forward-thinking providers are unlocking
the value in their revenue cycles by
becoming more patient-centric at all patient
touch points. They are empowering patients
through self-service communication tools
such as patient account portals, scheduling
apps and registration kiosks; using
analytics to improve processes and patient
communications; keeping patients informed
of, and prepared for, their nancial
obligations; and making the billing process
more consumer friendly. For example:
In Nebraska, Omaha’s Bergan Mercy
Medical Center offers “My Cost,” a
customized, online tool. Patients can
obtain out-of-pocket cost information
By the numbers
Without major health care redesign
or intervention, by 2022, health care
costs in the US could make up as much
as 19.9% of GDP — up from 17.2%
in 2012 (source: CMS, 2014).
According to an annual survey of
governance structure and practices
in the nation’s nonprot hospitals and
health systems, 52% of respondents
have added value-based payment
goals to their strategic and nancial
plans (source: Governance Institute,
2013 biennial survey).
The US health care system wastes
30 cents of every dollar spent
(source: IOM, 2012).
The number of physicians accepting
new Medicare patients increased by
3% between 2007 and 2012 and is
higher than the number of physicians
accepting new private insurance
patients (source: HHS Ofce of the
Assistant Secretary for Planning
and Evaluation).
Family premiums increased 4% in
2013, the same as in 2012, and
individual premiums increased 5%
versus 3% in 2012 (source: Kaiser
Family Foundation, “2013 Employer
Health Benets Survey”).
High-deductible plans can reduce
health care costs by 5% to 14%
(source: Robert Wood Johnson
Foundation, 2012 report).
A recent study nds that although
20% of health plans say value-based
payment models support more
than half of their business today,
60% of respondents anticipate they
will support more than half their
business within ve years (source:
Availity, “Health Plan Readiness to
Operationalize New Payment Models,
May 2013).
A recent survey nds that only 14%
of adults understand basic insurance
(source: Carnegie Mellon survey,
July 2013).
Despite increasing health care costs,
less than 15% of internal medicine
residency programs feature curricula
aimed at teaching residents to
be more cost-conscious (source:
Journal of the American Medical
Association (JAMA), research letter,
December 27, 2013).
5% of all inpatients will develop a
hospital-associated infection — at an
average cost of tens of thousands of
dollars (source: Agency for Healthcare
Research and Quality (AHRQ), 2014).
The $2.4 billion hospital revenue cycle
management industry for software
and services is expected to see double-
digit increases in 2014 (source: Black
Book Rankings LLC, 2013).
Patients satised with hospital
billing processes are ve times more
likely to recommend the hospital
to a friend (source: Connance,
December 14, 2011).
A cost analysis of more than
10.2 million patient discharges for
various conditions revealed that,
at 24.2% of costs, supplies and
devices were the leading contributors
to the increase in average cost per
discharge — surpassing intensive
care unit charges, imaging and other
advanced technological services
(source: Jared Lane Maeda, PhD,
et al., “What Hospital Inpatient
Services Contributed the Most to the
2001 to 2006 Growth in the Cost Per
Case?” Health Services Research,
August 29, 2012).
21
Value vignette
An employer view on value: exploring leading practices
The Towers Watson/National Business
Group on Health Employer Survey on
Purchasing Value in Health Care, now
in its 19th year, tracks strategies and
practices employers are using in the quest
for health care value. The 2014 report,
The New Health Care Imperative: Driving
Performance, Connecting to Value,
proles the activities of high-performing
companies, as well as current trends in
the health care benet programs of US
employers with at least 1,000 employees.
The survey was completed by 595
employers between November 2013 and
January 2014. Respondents collectively
employ 11.3 million full-time employees,
have 7.8 million employees enrolled in
their health care programs and represent
all major industry sectors.
The survey found that employers are
committed to providing subsidized health
care benets to active employees —
even in an environment of continued
health care cost increases, uncertainty
about some provisions of health care
reform and a slow-to-recover economy.
Yet 94% of respondents expect employer-
sponsored health care benets to undergo
modest or major changes over ve
years’ time (see chart).
Survey responses indicate that employers
are taking steps to derive the most value
from their health benet programs. In the
view of the report’s authors, employers
who want their health plans to stay
viable over the long term will need to
take a holistic approach that includes
ve key steps:
1. Optimize benet delivery channels.
Improve self-managed programs and
explore alternatives such as private
exchanges or hybrid arrangements.
2. Restructure benets. Consider
offering new plan options, redesigning
benets, recalibrating contribution
strategy and tier structures, and linking
health savings account strategies
with your approach to retiree
health benets.
3. Enhance network and value-
based contracting. Reduce unit
costs, and improve efciency,
quality outcomes, and risk-transfer
arrangements to providers.
4. Focus on population health
management. Improve chronic-
condition management, reduce risk
factors and improve care gaps.
5. Engage employees and improve
their accountability. Use quality and
transparency tools, point-of-care
cost-sharing designs, account-based
strategies and incentive approaches.
Source: Towers Watson, www.towerswatson.com/enUS/Insights/ICTypes/SurveyResearchResults/2014/03/towers‑watsonnbghemployersurveyonpurchasingvalue
inhealthcare
Nearly all employers anticipate signicant or modest changes in health benet
programs by 2018
22 New horizons: voyage to value
for specic medical tests or procedures,
customized to their insurance
plan designs.
In Ohio, Riverside Methodist Hospital in
Columbus has made nancial counseling
a priority in its revenue cycle, including
all patient accounts in one seamless
discussion of patient responsibility and
nancial aid resources, as opposed to
discussions with every visit. Hospital
executives report Riverside has increased
point-of-service collections by an average
of $50,000 per month.
In Oklahoma, Saint Francis Hospital,
the agship facility for Tulsa’s Saint
Francis Health System, has taken steps
to limit how often it asks for patient
information and to integrate registration
systems throughout the organization
so that — regardless of setting — patient
information can be collected in a
unied way.
In a value-based world, creating a positive
care experience is integral not only to
building lasting patient relationships
but also to maintaining a healthy cash
ow. Putting the patient at the center of
the revenue cycle brings an unparalleled
opportunity to generate loyalty today — and
provide for viability tomorrow.
No turning back: sailing
to tomorrow
US health care is at a pivotal point in its
journey. The realities of rapidly surging
health care costs, attening Medicare
reimbursement and the rising tide of
demand for services from the newly insured
are forcibly coming together, leaving
the industry with no easy route to make
headway toward the new horizon. Most
agree the best course forward is to continue
to pursue value-based approaches — while
looking carefully within to better manage
operating costs. The conditions are often
uncertain. Yet for those whose sails are well
set, the voyage to value can be a perfect
opportunity for creating a stronger, more
efcient and more resilient organization.
Our chapter concludes in a conversation
with Harold Miller, who leads the Center for
Healthcare Quality and Payment Reform.
He offers his viewpoint on which payment
models are the most effective in delivering
long-term value.
Value vignette
Capacity management: reducing bottlenecks for a better patient experience
A recent study from software provider
Central Logic — featuring input from
such health care leaders as UPMC,
Dartmouth-Hitchcock and Memorial
Sloan-Kettering — offers six tips for how
hospitals can better manage capacity to
reduce length of stay and improve the
patient-care experience:
1. Focus on accurate patient placement.
Conrm that patients are in the right
bed, at the right level of care, at the
right time.
2. Conduct daily, multidisciplinary
rounds and bed meetings. Make
sure care teams work cohesively,
appropriate tests are ordered,
procedures are completed promptly,
discharge plans are followed and
capacity is optimized.
3. Discharge patients as soon
as possible, at any time of
the day. Focus on helping patients
reach discharge as quickly as is
clinically feasible.
4. Smooth patient census. Look at peak
census patterns by time of day and
day of week. Consider scheduling
elective surgeries on weekends to
relieve congestion, free up resources
and reduce length of stay.
5. Communicate consistently with
staff and patients. Streamline
communication through case
managers to facilitate communication
across silos. Help patients manage
expectations for length of stay.
6. Measure and distribute the correct
metrics. Evaluate such indicators as
30-day readmission rates, average
daily admits, observation volumes,
case mix index and length of stay by
diagnostic group against the impact
on your organization’s overall capacity
management. Discuss metrics to
ensure hospital administrators
understand data implications for
optimizing capacity.
Source: Central Logic, www.centrallogic.com/check-gate resource?le=/public/uploads/global/2013/10/
CapacityManagementSixThoughts.Final.pdf
23
Accountable payment
models: paying to
support higher-quality,
lower-cost health care
A conversation with Harold D. Miller,
President and CEO, the Center for
Healthcare Quality and Payment
Reform (CHQPR) (www.chqpr.com)
Harold Miller is a nationally recognized
expert on health care payment and
delivery systems and has worked with
the federal government and several
states and regions in designing and
implementing system reforms. Along
with his role in leading CHQPR, he
also serves as adjunct professor of
public policy and management at
Carnegie Mellon University. We talked
with him about how new payment
models can improve the quality of
care for patients, lower costs for
employers and improve the nancial
viability of health care providers.
You have said that the biggest need in
health care today is to change the way
doctors and hospitals are paid, and the
second-biggest need is to change the
benefit designs for patients. Why are
these the greatest concerns? And how
should we address them?
Both the public and private sectors need
to nd a way to control health care
spending — but to do it without harming
patients. The biggest barrier to higher-
quality, lower-cost care is that we don’t pay
physicians and hospitals for many services
that would help patients stay well, and the
fee-for-service payment system penalizes
providers nancially for achieving better
outcomes and avoiding unnecessary tests
and procedures.
Patient benet designs also tend to do just
the opposite of what is needed to support
higher-quality, lower-cost care. High cost-
sharing and high deductibles discourage
people from getting services that will
help them stay healthy, such as seeing a
primary care physician early when they
have a health problem and taking their
medications regularly. On the other hand,
if patients need an expensive procedure,
such as a knee replacement or a cardiac
stent, they will likely pay the same amount
whether they go to a high-cost provider
or a low-cost provider, because the cost
is typically well above their deductible or
out-of-pocket limit. So if they believe that
higher cost means higher quality (even
though evidence shows it doesn’t), they will
have a natural incentive to use the higher-
cost provider.
We need to start paying doctors and
hospitals for keeping patients healthy and
to reward them for delivering high-quality,
affordable care. And we need to change
benet designs so that patients also have
the ability and incentives to use lower-cost,
higher-quality services and providers.
You advocate for accountable payment
models. What are these?
An accountable payment model has
two main characteristics: exibility and
accountability. It gives providers the
exibility to decide what the patient
needs rather than limiting the patient to
narrowly dened procedures that a health
plan is willing to pay for. But in return,
the providers assume accountability for
delivering high-quality care at an equal or
lower cost than under traditional fee-for-
service payment.
Examples of accountable payment
models include:
Bundled payments: making a single
payment to two or more providers
who are now paid separately, such as
physicians and hospitals
Warrantied payments: paying providers
more for high-quality care, with no extra
payment for correcting preventable
errors and complications
Condition-based payments: paying
providers based on the patients
condition, rather than based on how
many procedures were used to treat the
condition, so that providers have the
exibility to use fewer or lower-cost tests
and procedures if they will achieve the
same outcomes
Central to making these accountable
models work are physicians. I’ve found
that physicians in all specialties have ideas
for how to change care in ways that would
be better for patients and save money
for purchasers, but they need to be paid
in ways that support that. A challenge is
that it’s difcult to get physicians more
involved because they’re busy taking
care of patients. We need to support their
leadership in redesigning payment and
delivery systems and make sure they don’t
lose money by devoting time to this effort.
Feature
24 New horizons: voyage to value
An accountable payment model
has two main characteristics:
exibility and accountability.
Are there any payment models in
existence today that illustrate what
you describe?
I’ve seen several examples of how
accountable payment models can
signicantly improve quality and reduce
costs. For example, physicians and
hospitals that are being paid for surgeries
and procedures using bundles and
warranties have been able to redesign
care in ways that dramatically reduce
infections, complications and readmissions.
The patients get better care, the payers
spend less money for the care, and
the physicians and hospitals do better
nancially a win-win-win.
There are other examples around the
country where multiple small physician
practices are working together through
an independent practice association (IPA)
to manage overall costs for a group of
patients. One multi-specialty IPA manages
global payment contracts from several
payers and has even created its own
Medicare Advantage preferred provider
organization (PPO) plan. The IPA pays its
primary care physicians 250% of what
Medicare pays because investing in strong
primary care has meant that patients need
fewer hospitalizations, enabling the group
to reduce total spending. Moreover, even
though patients in the PPO plan are not
restricted to using the physicians in the IPA,
most choose to do so because the different
payment structure for those physicians
has enabled them to provide better, more
coordinated care.
A lot of what is driving consolidation
of hospitals and physicians is the
continuing focus on price discounts
and “shared savings” models. You have
said that those structures are a barrier
to innovative care delivery. Why?
What should matter to payers is spending,
not price alone. If you demand large price
discounts under fee-for-service payment,
ahospital may be forced to try to increase
the number of services it delivers in
order to cover its costs. Conversely,
if we’re successful in reducing avoidable
hospitalizations, it may actually cost more
per patient to take care of the patients who
do still need to be hospitalized, but overall
spending will still be lower.
Discounts and shared savings don’t change
the underlying payment system, and that’s
what’s really broken. For example, we want
our hospitals to always be ready for us:
to have the emergency room open if we
need emergency care; to have a cath lab
that gives us a short door-to-balloon time
if we have a heart attack; to be prepared
if our community experiences a disaster.
But we don’t pay the hospitals for this
readiness we pay only when the hospital
treats someone. So if we demand that
hospitals reduce the prices of individual
services they deliver, they’ll be forced to
look for ways to deliver more and more
services to make up for those discounts
and to cover that standby capacity.
“Shared savings” sounds like a collaborative
approach to payment, but it’s really not
because it doesn’t change the underlying
fee-for-service structure. If a hospital
or physician practice performs fewer
procedures, it will lose 100% of the revenue
for those procedures, but its costs won’t go
down proportionally. Telling providers that
a year from now they may or may not get
back a small portion of that money isn’t an
attractive nancial proposition, particularly
for a provider that is already operating on
thin margins.
How about accountable care
organizations — are they a step
in the right direction?
The concept of the ACO — providers
working together to manage the overall
cost and quality of care — is a good one,
but the problem is that most ACOs are
being paid fee-for-service plus shared
savings, which doesn’t really change
anything. Physicians and hospitals in
these models need to be paid differently
so they can actually redesign the way
they’re delivering care. “Coordination” is
only part of the answer. In a true ACO,
every physician in every specialty would
be looking for ways to redesign care for
higher quality and lower cost. That’s what
I call “building ACOs from the bottom
up” — changing how front-line providers
are delivering care instead of adding yet
another layer of management on top of the
same approach to delivery and payment.
In the marketplace today, we’re seeing
a lot more providers and payers
combining. How do you see that
working or not working in the future?
There are huge advantages if payers and
providers can work more closely together,
and many providers have found that
having their own health plan is a natural
way to achieve that. It’s more problematic,
though, when a large payer acquires one
provider or when a provider creates a
health plan that tries to sell insurance
covering other providers. In those cases,
the organization is trying to be two things
at once: a general health plan and a
general provider. If they’re trying to sell
two different products — health care and
health insurance — to two different sets of
customers, which is the most important?
The real goal should be to try to create a
closer connection between providers and
employers. A growing number of employers
are looking to do direct contracting with
25
provider organizations, and vice versa.
Any time you can take out the middleman,
you have a more efcient structure.
“The real goal should be to try
to create a closer connection
between providers and purchasers.
How far along are we on the
timeline of moving from volume-
to value-based care?
I don’t think we’re very far, unfortunately.
Providers can’t redesign care for higher
quality and lower costs without a payment
model that supports that, but Medicare
and private health plans haven’t made the
payment changes needed to support them.
Too many payers are claiming that pay-for-
performance and shared savings programs
are “payment reforms” when they’re not.
We could go a lot farther a lot faster if we
enabled providers to implement different
payment models more rapidly than is being
done today. If the most innovative providers
can’t make any progress, we won’t have the
diffusion of innovation we need to really
change the system. With the right kind of
support, I think we could see a signicant
fraction of providers using new models
within ve years.
What other obstacles are standing in
the way of payment reform, and how
can they be hurdled?
First, we need a fundamental change in
how we view new payment and delivery
models. Many see them as a win-lose.
But they’re potentially a win-win-win for all
involved. The win for patients is better care;
for purchasers, its reduced spending or a
slower trend in spending; and for providers,
it’s a way for them to be more nancially
viable when they succeed in delivering
quality care.
At the Center for Healthcare Quality and
Payment Reform, we’ve identied 10
barriers to implementing health care
payment reforms, along with potential
solutions (see chart on the next page).
An overriding theme weaving through the
list of barriers is a general lack of trust.
In many cases, physicians don’t trust
hospitals, hospitals don’t trust physicians
and neither physicians nor hospitals trust
payers. And the true purchasers, the
employers, rarely if ever talk to the true
providers, the physicians and hospitals.
When employers actually talk with
providers, however, they typically nd that
their interests are more aligned than they
thought. One employer coalition that has
started talking directly with physicians told
me, “We’ve found that the care we want
to buy is what the physicians want to sell.
That kind of conversation can lead to the
win-win-win we’re all looking for.
Because of the lack of trust, it helps to
have a neutral convener. A growing number
of communities are fortunate enough to
have a multi-stakeholder regional health
improvement collaborative that can
bring purchasers and providers together,
facilitate their discussions and also provide
the trusted data needed to create win-
win-win changes in payment and benet
designs. People who don’t have one in their
community should form one, and those who
do have one should support and use it.
How can executives and board members
in provider and payer organizations
best support accountable payment
models at their organizations?
Providers need to develop a vision of their
future that’s aligned with where the country
needs to go. In the years ahead, a smaller
hospital as opposed to a larger one may
be the mark of success if fewer patients
coming to your hospital means you’re doing
a better job of improving the health of your
community’s residents.
If hospitals and physicians improve their
ability to keep people healthy, affordably,
they can be an essential catalyst in
the economic development of their
communities. A healthier workforce and
lower health insurance premiums will draw
more employers to a community; more
jobs and higher-quality, more affordable
health care will draw more residents. As a
result, hospitals will grow, but in a different
way — not because they’re hospitalizing
a higher proportion of the community’s
residents, but because the population
of the community is growing.
“Unlike other industries, success
in health care means selling less
products and services, not more.
It will be difcult to get health insurers
to implement new payment models unless
they think its good for their business,
too. Payers will need to spend money to
negotiate new contracts with providers and
implement new payment systems, yet most
of the savings will go back to their self-
insured employer customers. There won’t
be a direct return on investment for the
insurer unless employers begin to demand
the use of accountable payment models,
so that health plans that truly commit to
and invest in these models will retain and
gain customers.
Bottom line: unlike other industries, success
in health care means selling less products
and services, not more. It’s a different
mindset, requiring an entirely different
payment system for future sustainability.
26 New horizons: voyage to value
10 barriers to implementing health care payment reforms — and how to overcome them
Barrier Solution
1. Continued use of FFS
payment in payment
reforms
Use episode-of-care payments, condition-based payments, and risk-adjusted global payments
to eliminate undesirable incentives under fee-for-service and to give providers the exibility
and accountability for reducing costs and improving quality
2. Expectation that
providers will be
accountable for costs
they cannot control
Use risk adjustment and risk limits to keep insurance risk with payers but transfer performance
risk to providers
Use risk exclusions to give providers accountability only for the types of costs they can control
Make provisions for contract adjustments to deal with unforeseen events
3. Compensation of
physicians based on
volume, not value
Change physician compensation systems to match incentives under payment reform
Modify federal and state fraud and abuse (F&A) laws to permit gain-sharing between hospitals
and physicians
4. Lack of data to set
payment amounts
Give providers access to timely analyses of utilization and cost data through community multi-payer
claims databases
5. Lack of patient
engagement
Ask patients to designate their primary care physicians rather than using statistical attribution
rules based on FFS claims to assign them retrospectively
Use value-based benet designs to enable and encourage patients to improve health, adhere
to treatment plans and choose high-value providers and services
6. Inadequate measures
of quality of care
Develop quality measures for all of the conditions and procedures that drive signicant amounts of cost
Use outcomes measures instead of process measures to give providers exibility in redesigning care and
supporting effective patient choice
Use regional health improvement collaboratives (RHICs) to collect patient-reported information
on outcomes
7. Lack of alignment
among payers
Ask physicians and other providers to dene lower-cost, higher-quality ways to deliver care and
the payment changes needed to support them
Encourage employers to support regional payment reforms and to choose health plans that will
implement them in a coordinated way
Offer Medicare payment reforms to a broad range of providers on an ongoing basis
Use state government and/or RHICs to facilitate agreement among payers
8. Negative impacts
on hospitals
Reduce xed costs and improve efciencies in hospitals
Change payment levels to hospitals to reect higher costs per admission that may accompany
lower admission rates
Increase transparency about hospital costs to ensure that prices for hospital care are adequate,
but not excessive
9. Policies favoring large
provider organizations
Remove anti-trust barriers to small physician practices joining together to manage new payment models
Combat anti-competitive practices by large providers
Avoid unnecessary standards for structure and processes in payment systems and accreditation systems
that increase costs and favor large organizations
10. Lack of neutral convening
and coordination
mechanisms
Support the creation and operation of multi-stakeholder RHICs in all regions
Source: Center for Healthcare Quality and Payment Reform, “Ten barriers to implementing healthcare payment reforms and how to overcome them,” rst edition,
December 2012.
27
New horizons: voyage to value28
Viewfinders
Considerations for your board and executive leaders
For providers
How are you managing the transition
from fee-for-service to value-based
payment systems? Are you prepared to
take on more responsibility for containing
costs while demonstrating continuous
improvements in patient outcomes?
Do these plans include educating
physicians and staff on the implications
of value-based payment?
Are you seeking out payers who are open
to value-based contracts? What service
lines best position your organization
for a value-based bundled payment
arrangement?
If you are considering forming a provider-
sponsored plan, have you evaluated risk,
regulatory concerns and market position?
Have you identied opportunities
for reducing waste, determining
which clinical areas can benet from
increased standardization and evidence-
based practices?
Are you building value-creating
partnerships with your physicians? Are
you engaging physicians in developing a
true accounting of all costs and the value
of each step involved in a procedure?
Is physician compensation tied to value,
efciency and quality?
Have you assessed the effectiveness
of your admission, discharge and
transfer protocols?
What measures have you taken to
enhance your organizations ability to
reduce hospital-acquired conditions and
readmissions and improve other key
performance measures?
Have your nancial metrics and
management reporting tools changed
to adapt to new models of care, with
broader metrics that include all aspects
of the care continuum?
For payers
Are you working with providers to
develop new models of care that put
incentives in the right place — and ensure
the care delivery changes providers
would like to see are incorporated
into revised nancial structures? Are
incentives large enough to drive changes
in provider behavior?
Does your value-based payment model
consider your current and future
technology base, including automation
and scalability?
Have you developed scalable payment
models that can be implemented
seamlessly, along with toolkits providers
can use to help them succeed under
these models?
How are you pursuing opportunities
to pool your data and combine it with
data from Medicare and Medicaid, to
facilitate analyses of health cost drivers
and enable a more granular assessment
of provider performance?
Are you developing tools and support
that enable providers to deliver more
cost-effective care and track their
performance — for example, are member-
specic care alerts and care guidelines
integrated into physician workows?
Are you embracing opportunities
to develop a more collaborative
relationship with providers by creating
the infrastructure for coordinated care
models that have more sophisticated
informatics and decision support systems
to assist providers in improving care and
reducing costs?
Are you positioning yourself as a trusted
source for patients’ clinical and lifestyle
information needs, providing better
tools to help your members manage
their health?
29
{ }
“The art of the sailor is to leave nothing to chance.
Annie Van De Wiele, 20thcentury Belgian author and voyager
31
Chapter 2
Value in delivery
Changing tack
Voyage to value
Providers and payers have a clear directive: to maximize health care
value for patients as they journey through the health care system.
For providers, that means planning and delivering the best possible
care, partnering across the care continuum through seamless teams
and making sure effective transitions take place. For payers, it means
collaborating with providers in new ways, and it means empowering
patients with coverage options that focus on high-performing providers
and with incentives for better managing chronic illness and for
maintaining health and wellness.
Just as sailing upwind requires a change in tack — back and forth across
the wind — health care organizations must be nimble in their voyage to
high-value care, ready to adjust their positions and approaches to adapt
to rapidly changing conditions.
Today’s move toward value-based care represents another
step in the evolution from isolated to integrated delivery.
Providers and payers are encouraged to work together at
unprecedented levels of collaboration. The new horizon
of care focuses on communicating fully with patients,
anticipating their needs and treating them before costly
complications occur. The journey forward also demands
developing new programs and services designed to keep
people healthy and help those with chronic conditions
better manage their own care. In this chapter, we provide
an overview of industry initiatives to improve care
coordination, optimize quality and safety, and enhance
the value of the patient experience.
Value in care management:
learning from emerging models
Historically, for US health care consumers,
the care experience has been a fragmented
one. As patients move from clinician
to clinician, they have struggled with
navigating complex waters. They may
be adrift in a sea of information, with
little guidance in making sense of it all.
This lack of coordination has added
unnecessary risks, as test results may not
be communicated accurately, prescriptions
from multiple physicians may conict, and
follow-up after hospital discharge may
be insufcient. Uncoordinated care has
also added costs to the system — through
duplicate or unnecessary testing and
services, overused intensive procedures
and preventable hospital readmissions.
Emerging models of care integration are
demonstrating how health care can be
delivered more seamlessly, accurately
and effectively, particularly for people
with chronic illnesses and complex needs.
Built on a foundation of strong clinical
and organizational support, these models
are designed to provide continuous,
well-coordinated care across health care
services and from acute to long-term
settings. As discussed in Chapter 1,
value-based payment models provide
incentives for coordinating care and
delivering value — and encourage patients
and their support networks to be the center
of care planning and delivery.
Evidence-based care and
standardized practice guidelines
Providing high-value care hinges on having
the best information on what treatment
works best for which patient, and under
what circumstances. Evidence-based
protocols can help providers diagnose
and treat various conditions — enabling
care to be standardized yet tailored to
unique patient needs. Integrated within an
electronic health record, these protocols
automatically provide clinicians with the
best evidence about a particular condition
as well as a pathway for decision-making.
A scan of the health care horizon nds
many initiatives focused on evidence-based
care. For example:
At Boston Childrens Hospital, the
hospital’s cardiovascular department
developed standardized clinical
assessment and management plans
(SCAMPs) in 2009. SCAMPs are
described as practical and exible tools
for “narrowing practice variability” while
still enabling providers to use their
clinical judgment and adapt treatment
pathways to individual patient needs.
Since the programs creation, more
than 12,000 patients have been
enrolled in 49 SCAMPs in pediatric and
adult medicine, and 19 institutions are
currently collecting SCAMPs data.
Kaiser Permanente’s Healthy Bones
Program identies and proactively treats
patients at risk for osteoporosis and hip
fractures, using standardized practice
guidelines for managing osteoporosis.
Patients are treated in accordance with
the latest clinical evidence, provided with
osteoporosis education and supported
through at-home care programs.
According to Kaiser, the program has
reduced hip fracture rates over ve years
by an average of almost 50%.
Virginia Mason Medical Center in Seattle,
WA, incorporated evidence-based
decision rules into provider workows
at the point of ordering an advanced
imaging test to reduce variability. If the
provider cannot cite an appropriate
evidence-based decision rule, the test
cannot be ordered. The medical center
reports this initiative has resulted in
32 New horizons: voyage to value
reduced delays for necessary imaging,
as well as no unnecessary tests and
substantial decreases in imaging use.
The team approach
Just as teamwork is crucial in sailing —
requiring all crew members to skillfully
perform their assigned tasks — a high-
performing team in health care is essential
to achieving a more patient-centered,
coordinated and effective health care
delivery system (see Exhibit 2-1 on
page 34). The concept has been advanced
through the ACA and such initiatives
as the Patient-Centered Primary Care
Collaborative and the Interprofessional
Education Collaborative, as well as
exemplary programs in individual health
systems such as:
Daily huddles: In Ohio, the Cleveland
Clinic’s care enhancement program for
lung transplant patients calls for daily
huddles of caregivers, patients and their
families. The goal is to keep all informed
of each patient’s prognosis and recovery
and enable development of a cohesive
care plan. According to the Clinic, the
program has reduced costs and lengths
of stay, improved survival rates, and
enhanced patient satisfaction with
clinician communication by nearly 30%.
Multidisciplinary rounds: In Texas, at the
MD Anderson Cancer Center, integrated
teams coordinate several specialties to
develop a comprehensive cancer care
plan. Disease-specic centers have
multidisciplinary meetings to discuss
new and complex cases and also conduct
multidisciplinary rounds. Team members
coordinate care through an electronic
health record that the patient can
also access.
“The clinician operating in isolation
is now seen as undesirable in health
care — a lone ranger, a cowboy, an
individual who works long and
hard to provide the care needed,
but whose dependence on solitary
resources and perspective may put
the patient at risk.
IOM
“Core Principles & Values of Effective
Team -Based Health Care”
October 2012
Collaborative care units: In Wisconsin,
community health system ThedaCare
leverages collaborative care units that
organize care delivery around the
patient’s experience. When a patient is
admitted, an interdisciplinary care team
coordinates with him or her to agree on
Value vignette
The VALUE framework: teaching value to future physicians
Teaching hospitals, academic medical
centers and residency programs have a
useful tool for training future physicians
in delivering high-value care: the VALUE
framework. The tool was developed by
Mitesh Patel, MD, a physician and Robert
Wood Johnson Foundation Clinical
Scholar, along with colleagues at the
Perelman School of Medicine at the
University of Pennsylvania.
VALUE is an acronym for 1) validation
and variability, 2) affordability and access,
3) long-term benets and less side effects,
4) utility and usability and 5) effectiveness
and errors. According to the tool’s
developers, this framework can be used
with physicians in training to assess the
benets of medical interventions, from
tests and medications to surgeries.
Patel points to ndings that less than
half of medical students feel they are
appropriately trained in health care
policy topics, such as medical economics.
Residents can use VALUE, he notes, as
they’re seeing patients to select those
options that generate high value and
reduce unnecessary costs.
“Training residents to practice
medicine using concepts of value-
based care is like learning a new
language for both residents
and their teachers. The VALUE
framework can bridge this gap and
become a useful tool for improving
the care of our patients.
Mitesh Patel, MD
Robert Wood Johnson Foundation
Clinical Scholar
Source: University of Pennsylvania news release, http://www.uphs.upenn.edu/news/news_releases/2012/08/value/; Journal of General Internal Medicine,
September 2012; www.amednews.com/article/20120919/profession/309199996/8/
33
a care plan. ThedaCare reports that the
program has reduced hospital lengths of
stay, errors in patient care and inpatient
care costs by 25%, while improving
provider compliance with care protocol
and achieving a patient satisfaction rate
of 5out of 5, 95% of the time.
As discussed in Chapter 3, robust health
information technology (HIT) is essential
to a team-based approach — enabling the
care team to share and act on patient
information among disparate care
providers. Technology also supports team-
based care through advanced analytics to
identify and manage risk, real-time clinical
analytics at the point of care and online and
mobile applications that engage patients
between ofce visits.
From medical homes to medical
neighborhoods
The patient-centered medical home
(PCMH) model continues to show
promise as an anchor for patient care.
The National Committee for Quality
Assurance (NCQA) has recognized more
than 37,000 clinicians at more than
7,500 sites throughout the country in
its PCMH program (see Exhibit 2-2).
Today, the focus on the medical home
model has expanded to include “medical
neighborhoods” dened by the Patient-
Centered Primary Care Collaborative
(PCPCC) as a “clinical community
partnership.
“[A successful medical neighborhood
will] focus on meeting the needs
of the individual patient, but also
incorporate aspects of population
health and overall community
health needs.
AHRQ
“Coordinating Care in the Medical Neighborhood:
Critical Components and Available Mechanisms”
June 2011
Exhibit 2-1. Five principles of team-based health care
Principle The team
1. Shared goals Sets shared goals that reect patient and family priorities and
can be clearly articulated, understood and supported by all
team members
2. Clear roles Has in place clear expectations for each team member that can
optimize team efciency and facilitate division of labor — so
that the team can accomplish more than the sum of its parts
3. Mutual trust Engenders trust, creating strong norms of reciprocity and
greater opportunities for shared achievement
4. Effective
communication
Prioritizes and continuously renes its communication
skills, with consistent channels for candid and complete
communication that are used by all team members across
all settings
5. Measurable
processes and
outcomes
Agrees on and implements reliable and timely feedback on
how the team functions and achieves its goals, and uses this
feedback to track and improve performance immediately and
over time
Source: Adapted from Pamela Mitchell et al., “Core Principles & Values of Effective TeamBased Health
Care” (IOM discussion paper), October 2, 2012.
Exhibit 2-2. NCQA PCMH growth, 2009–14
28 383
1,606
3,302
5,198
6,762
7,525
37,757
34,492
24,544
16,194
7,676
1,976
214
4/1/20144/1/20134/1/20124/1/20114/1/20104/1/2009
Clinicians
Source: NCQA, 2013.
34 New horizons: voyage to value
According to PCPCC, medical neighborhoods
include the medical and social supports
needed to enhance health, with the PCMH
serving as the patients primary hub
and coordinator of health care delivery.
Beyond the medical home, neighbors in
the medical neighborhood range from
hospitals and specialty clinics to health
plans and ancillary service providers that
are part of the continuum of care. All work
together to enable PCMHs to reach their
full potential in improving patient outcomes
and managing population health.
Patient-centricity: enhancing the
customer experience
To transition from FFS to value-based
reimbursement models, health care
organizations are becoming more patient-
centric — at the individual and population
levels. Through providing ongoing
education, proactive prevention measures
and a consistently positive customer
experience, providers and payers can help
patients become better advocates for their
own health.
“We need to ip from focusing on
the medical condition to focusing
on the patient.
Maureen Bisognano
President and CEO
Institute for Healthcare Improvement
Many aspects of health reform effectively
mandate patient centricity. The Hospital
Consumer Assessment of Healthcare
Providers and Systems measures the
quality of caregiver-patient interactions,
and payment is based in part on patients’
perceptions of their hospital care. The
success of the Hospital Readmissions
Reduction Program (see Chapter 1,
page 18) and ACOs also hinges on keeping
patients connected to providers. Patient-
centric initiatives are varied and numerous.
For example:
Bedside communications: In Michigan,
Spectrum Health has installed an
interactive care console with the goal of
enhancing communication at the patient
bedside. The console integrates medical
information with customizable features
through which patients can learn more
about their medical conditions. It also
serves as a tool to help patients adhere
to recommended treatment plans.
Chief experience ofcer: In Ohio,
the Cleveland Clinic has created the
position of chief experience ofcer
to determine what changes would
improve the patient’s physical and
Value vignette
The Joslin Diabetes Center: creating a value-driven model
The Joslin Diabetes Center in Boston,
MA — afliated with Harvard Medical
School since its founding in 1898 — is
the world’s largest diabetes research and
clinical care organization. It is focused on
providing efcient, coordinated care for
24,000 patients with diabetes.
A value-driven model for helping contain
and manage chronic disease, Joslin
follows dened principles to create a
streamlined treatment system. A full
range of diabetes services are provided
in a single location, with convenient
scheduling and easy access to related
medical services. Adult and pediatric
patients can be seen by a team of
medical experts — an endocrinologist,
ophthalmologist, podiatrist and
diabetes educator — all in the same day.
Electronic medical records keep track
of quality results.
Joslins team care has resulted in
dramatically improved outcomes and
lowered costs. For example:
Early intervention has decreased late-
stage blindness from 60% to about 1%
Patients cared for at Joslin incur on
average $1,465 less in total health
care costs each year
“[Joslin] represents an evolution
from care delivered reactively
at high cost to care delivered
proactively and preventatively,
which reduces longer-term
costly complications.
Ranch C. Kimball
Former CEO
Joslin Diabetes Center
Through its “Joslin Inside” program,
Joslin works with US and worldwide
afliate organizations to provide care,
education and tools for patients to
manage their own diseases. Another
program, “Joslin Everywhere,” leverages
mobile apps and decision-support
algorithms to provide patients with
avirtual care experience. Joslin is also
teaming with American Well™ in a global
telehealth initiative that brings diabetes
care to patients at home.
Sources: Harvard Business School, www.hbs.edu/centennial/businesssummit/healthcare/valuebasedhealth
caredelivery.html; Diabetes Mine, www.diabetesmine.com/2013/04/behindthesceneswiththeceoof
joslindiabetescenter.html
35
emotional experience. One of the rst
actions the ofcer recommended was
redesigning patient gowns to make them
more “dignied.
Care experience working groups:
In Pennsylvania, UPMC has developed
a six-step methodology and practice
to deliver ideal care experiences
and improve clinical outcomes while
decreasing waste and costs. Working
groups and project teams strive to
identify — and close — the gaps between
current and ideal care experiences.
The program has been adopted by
numerous health care organizations
outside of UPMC, nationally
and internationally.
“The most important predictor
of patient loyalty is a patient’s
condence in their provider.
Practices that foster trust between
providers and patients not only
can attract new patients, but
will also optimize the impact of
[patient satisfaction scores] and
value-based payments.
Thomas H. Lee, MD
Chief Medical Ofcer
Press Ganey
Advances in home care
As technology enhances the ability to treat
illness at home, as well as to remotely
monitor and coach patients on health,
home care is coming of age. According
to home care management industry
statistics, 12 million patients are receiving
home health care services, with more
than 428 million patient visits each year.
About 70% of those using these services
By the numbers
Between 2013 and 2025, the
population over 65 years will grow
by close to 45%; the number of
patients with chronic diseases will
increase between 21% and 27%;
and demand for adult primary
care services will increase by
14% (source: Health Affairs,
November 2013).
More than 15% of patients are likely
to leave their current physician and
practice, according to a recent survey
(source: Press Ganey, “Protecting
Market Share in the Era of Reform:
Understanding Patient Loyalty in
the Medical Practice Segment,
December 10, 2013).
The average American is 25 pounds
overweight and does not exercise
(source: Centers for Disease Control
and Prevention, 2014).
In improving population health
management, lifestyle and wellness
coaching is the most popular resource
to invest in, a recent survey nds.
More than 71% of survey respondents
indicated their hospital invested in this
resource (source: Premier, 2013 Fall
Economic Outlook report).
The average American visits the
doctor three times a year but spends
52 hours a year searching for
health information on the internet
(source: Makovsky Health and Kelton,
third annual national consumer
survey, 2013).
About 1 in 25 hospital patients
acquired an infection during his or her
stay in 2011 (source: S. Magill et al.,
“Multistate Point-Prevalence
Survey of Health Care Associated
Infections,New England Journal
of Medicine, March 27, 2014).
Nearly 4 in 10 hospitalists responding
to a survey from Johns Hopkins
University School of Medicine said
they struggle with unsafe workloads
at least once a week. Almost a
quarter believed their workload “likely
contributed” to patient complications
and even deaths. Most of them
dened a safe workload as up to 15
patients per shift (source: Henry J.
Michtalik et al., “Impact of Attending
Physician Workload on Patient Care:
A Survey of Hospitalists,JAMA Intern
Med., 173(5), 2013, pp. 375-377).
According to the American College
of Healthcare Executives (ACHE),
turnover among hospital CEOs rose to
20% in 2013 — the highest it has been
since ACHE began compiling data in
1981 and 3% higher than in 2012
(source: ACHE, 2014).
Two-thirds of hospital CEOs hired in
2014 will come from a non-health
care background, according to a
poll of more than 1,400 human
resources professionals at health care
organizations (source: Black Book
Rankings poll, December 18, 2013).
36 New horizons: voyage to value
are age 65 and older, most being treated
for heart disease, diabetes and cerebral
vascular diseases.
Leading health care providers reect
a range of home care approaches.
For example:
The Hospital at Home® model, developed
by researchers at the Johns Hopkins
Schools of Medicine and Public Health
in Baltimore, MD, provides home care
as a full substitute for acute hospital
care. Patients who meet specic medical
eligibility criteria can receive hospital-
level care — including diagnostic tests
and treatment therapies from physicians
and nurses — at home. Clinicians and
pharmacists visit daily to coordinate
the medical care plan and work with
family caregivers, while teleheath nurses
provide additional support remotely.
The program has been adopted by
numerous health systems, home care
providers and managed care programs
as a tool to cost-effectively treat acutely
ill older adults.
At Partners HealthCare in Massachusetts,
the Connected Cardiac Care Program,
aself-management and telemonitoring
program, helps patients with heart
failure manage their health at home.
Through advanced care coordination,
patient education and technology,
patients can report their weight, blood
pressure, heart rate and symptoms daily
to telemonitoring nurses — reducing
the need for trips to the hospital.
In its 10 years in operation, the program
has yielded an estimated $10 million
in savings and a 51% reduction in
hospital readmissions for patients
with heart failure.
Value vignette
Mobile apps: adding value to wellness programs by engaging consumers
As the industry shifts from volume- to
value-based reimbursement models,
payers have a greater nancial stake
in keeping members healthy. More
health plans are turning to mobile
apps to engage patients in their own
care and offer incentives for adopting
and maintaining healthy habits. Many
are using digital health trackers and
tness apps to create positive customer
experiences and inuence healthy
behavior choices. For example:
Aetna’s What’s Your Healthy?
campaign features a fully integrated
consumer website and mobile
platform, CarePass, through which
consumers can track health and
wellness apps conveniently from one
online hub. CarePass connects apps
on its platform, enabling users to
manage their tness and set health
and wellness goals.
CareFirst Blue Cross Blue Shield’s
Ready, Step, Go! app lets users count
steps, distance traveled and calories
burned for each workout.
Cigna and MyFitnessPal, a free
personal health and tness resource,
have joined forces to combine Cigna’s
health coaching programs with
MyFitnessPal’s nutrition, physical
activity and weight management
resource. Customers can connect
their MyFitnessPal accounts with
their coach to share their diet and
exercise activity. Coaches can view a
participating user’s progress and offer
advice and support.
Humana t for Android uses the
built-in GPS of mobile devices to track
tness activities.
Kaiser Permanente has created
several mobile apps to help its
members better manage their diet
and exercise programs, including
Mix It Up, an online nutrition program;
Thrive Across America, a physical
activity challenge; Everybody Walk!,
a personalized walking program; and
KP Preventive Care, an app offering
personalized health reminders.
UnitedHealthcare’s NOT ME diabetes
prevention program helps customers
at risk for developing type 2 diabetes
to eat healthier, exercise and lose
weight. OptimizeMe, another United-
Healthcare app, lets users track health
and tness goals and share them on
social networks.
Any time you engage a consumer,
you’re not only going to help that
consumer live a healthier life,
you’re going to help the payer
lower their costs as well.
Nick Martin
Vice President of Innovation
UnitedHealthcare
Speaking to FierceHealthIT
Sources: FierceHealthIT, www.ercemobilehealthcare.com/slideshows/payers-invest-mhealth-7-mobile-
health-and-wellness-apps; www.ercehealthit.com/special-reports/unitedhealthcare-reward; HuffPost Healthy
Living, www.hufngtonpost.com/shaan-gandhi/smartphones-health_b_4450403.html
37
At Virginia Commonwealth University
Medical Center in Richmond, the House
Calls program has reduced hospital
costs for patients with multiple chronic
conditions by 60%. Described as a
“doctors ofce on wheels,” it serves those
who can’t easily come to the medical
center for scheduled appointments.
Patient safety: taking action
Preventing harm is fundamental to
delivering high-value care, and the industry
continues to move forward in improving
patient safety. Through system-level
initiatives, such as procedures to guide
the delivery of care, checklists and care
protocols, and tools built into the electronic
health record (EHR) to help reduce errors,
health care organizations are striving to
create an environment that guards against
human mistakes and supports a culture
of consistently reliable care.
An institution could have the best
surgeons in the world, but if the
aftercare is lacking and the patient
develops an infection as a result,
then the hospital has failed to
protect its patient.
Leah Binder
President and CEO
The Leapfrog Group
A May 2014 report from HHS indicates
these efforts are beginning to show results:
a 9% decrease in harms experienced by
patients in hospitals in 2012 compared
with the 2010 baseline and an 8%
decrease in Medicare fee-for-service
30-day readmissions. The report estimates
that national reductions in adverse drug
events, falls, infections and other forms
of harm have prevented nearly 15,000
deaths in hospitals as well as 560,000
patient harms — and saved $4.1 billion
in costs in 2011 and 2012. HHS credits
these improvements to “strong public-
private partnerships, active engagement
by patients and families, and a wide
range of aligned federal programs and
initiatives including new tools provided
by the Affordable Care Act — working in
concert towards shared aims.
Recent improvements in patient safety are
cited also in the Leapfrog Groups spring
2014 update. The report notes nearly
one in three hospitals improved its safety
scores by 10% since 2012, most through
safer practices and processes. Of the
2,522 scored hospitals, 804 received an
A in safety, 668 a B, 878 a C, 150 a D
and 22 an F. States with the highest
percentage of A hospitals were Maine
(74%), Massachusetts (70%), South Dakota
(67%), Illinois (57%) and Hawaii (50%).
The Leapfrog Group notes, however, that
alongside improvement in many hospital
scores, other hospitals — some with national
name recognition — continue to have a poor
safety record.
The approaching implementation of a key
ACA provision is also ramping up safety
initiatives. The law requires that, starting
in 2015, hospitals with more than 50 beds
Value vignette
Four guidelines from the Lucian Leape Institute: helping patients feel valued
A new report from the National Patient
Safety Foundations Lucian Leape
Institute offers four recommendations
for improving patient engagement:
1. Core values: Make engagement a core
goal and value for your organization.
Create standards of dignity and
respect for all. Implement policies
that facilitate patient engagement,
such as providing open access to
clinical records and establishing open
visitation policies.
2. Patient and family participation:
Involve patients and their families in
designing and improving care. Invite
them to serve on safety, quality and
personnel review committees.
3. Staff training: Train all staff in patient
and family engagement. Enable
clinicians to learn from patients and
families about the experience of
illness, as well as the communication
skills needed in patient/family
partnerships, shared decision-making,
and disclosure and apology.
4. Community collaboration: Raise
public awareness by collaborating
with community and patient advocacy
groups. Inspire a strategic alignment
across the communities of health
care consumers and advocates, policy
makers, researchers and health care
leaders and clinicians to commit to
increasing patient engagement and
reducing harm.
Source: Lucian Leape Institute, “Safety Is Personal: Partnering with Patients and Families for the Safest
Care,” 2014.
38 New horizons: voyage to value
that want to contract with a health plan in
the ACA’s insurance exchanges participate
in a patient safety organization (PSO).
They will also be required to establish a
patient safety evaluation system, dened
as “the collection, management, or analysis
of information for reporting to or by a
patient safety organization.” In addition
to complying with the law, participating
in a PSO can increase internal reporting
and knowledge about adverse events and
enable providers to better collaborate in
preventing medical errors.
“We are on the cusp of the golden
age of healthcare delivery.
George C. Halvorson
Former Chairman and CEO
Kaiser Permanente
From silos to synergies: rounding
the cusp
The voyage to value-based care is an effort
that calls for all hands on deck. Health care
providers and payers must continue to
eliminate silos, create synergies and align
strategies, structures and practices for
delivering value to patients through the full
cycle of care. The ultimate destination is a
patient-centric system — one of relentless
collaboration to improve health outcomes,
keep people healthy and enhance the
care experience.
Value vignette
Mobile health clinics: delivering value in serving high-risk populations
Each year, mobile vans and clinics
provide health services to an estimated
7.5 million people, targeting those
who typically do not have a physician
or insurance, or are otherwise outside
the conventional health care system.
According to the Mobile Health Clinics
Association, 2,000 mobile health
clinics are currently operating in the US.
For example:
In California, Napa’s St. Joseph Health
invests $5 million each year in mobile
health clinics, about 11% of which is
offset by reimbursements.
In southeastern Massachusetts and
East Bay, RI, Southcoast Health
System’s mobile health system serves
seniors, teens and families who do not
have access to medical care.
In Virginia, Bon Secours Health Systems
has had mobile clinics since 1984.
The initiative was recently expanded
with a fth mobile clinic — and plans
for a sixth focused on nutrition in areas
lacking access to healthy foods.
The Family Van program based
at Harvard Medical School has
demonstrated a return on investment
of $36 for every $1 spent.
Breathmobile, a group of mobile
asthma clinics, provides free care to
underserved children in different cities
across the nation.
Most mobile units are run by hospitals,
medical centers, public health
departments, community health centers,
private foundations and faith-based
organizations. Many nonprots have
funds set aside for mobile vans as part
of their community benet requirements.
Proponents note that mobile units
can reduce ED visits and keep chronic
conditions from advancing to the degree
where patients need higher-cost care.
Trust for America’s Health, a health
advocacy organization, has shown a
return of $5.60 for every $1 spent
on prevention.
Source: Healthcare Finance News, www.healthcarenancenews.com/news/mobile-health-vans-value-proposition, H&HN Magazine, May 2014
39
Value vignette
Value centers: focusing on solutions
“Think tanks” for health care value serve
as resource hubs for advancing value-
driven health care solutions. Proled
below are ve leading centers.
Colorado Center for Improving
Value in Health Care (CIVHC)
Denver, CO
Created in 2008 by Executive Order
of the Governor, CIVHC is a nonprot
organization designed to advance
statewide initiatives for improving
Colorado’s health care quality and
containing costs. It is funded by some
of the states leading health foundations.
With a 28-member board of directors
and a broad base of support from
more than 60 organizations statewide,
CIVHC convenes diverse constituencies of
consumers, providers, payers, businesses,
policy makers and government
agencies to work together in improving
value across the health care system.
The organization also administers an
all-payer database.
Mayo Clinic Robert D. and Patricia E. Kern
Center for the Science of Health Care
Delivery (CSHCD)
Rochester, MN
Established in 2011, the CSHCD is
focused on the science of care delivery.
Combining data analysis, health care
engineering principles and health care
delivery research, the center tests
theories, models and methods to
determine if they can improve patient
care, outcomes and cost. The center
includes ve major programs: Value
Analysis, Health Care Delivery Research,
Health Care Systems Engineering,
Population Health Science and Surgical
Outcomes. Each program plays a role in
the centers quest to improve patient care
while working to contain costs.
University of California, San Francisco
(UCSF) Center for Healthcare Value (CHV)
Launched in early 2013, the UCSF CHV
is designed to advance rational, science-
driven and clinician-tested health care
solutions that improve health care value.
Its work includes initiatives in delivery
systems, research and policy, and training.
For example, through its Caring Wisely
campaign, CHV is working with delivery
system leaders to inspire and support
front-line proposals that lower health
care costs. Another initiative, the
Action Research Program, partners a
multidisciplinary team of implementation
scientists and medical students with a
clinical practice to help design and test
new system strategies for care delivery.
The UPMC Center for High-Value
Health Care (CHVHC)
Pittsburgh, PA
A nonprot organization owned by UPMC,
CHVHC translates the work of UPMC
into evidence-based practice and policy
change for improving health care quality
and efciency. Many CHVHC activities
are supported through grants and
contracts and conducted in partnership
with community organizations and
government agencies. Representative
projects range from expanding the
patient-centered medical home model
to addressing the unmet medical needs
of adults with mental illness.
Wisconsin’s ThedaCare Center
for Healthcare Value (TCHV)
Appleton, WI
TCHV is focused on improving value for
patients by collaborating with patients
and leaders in the provider, employer,
payer and government communities.
TCHV reports that, combined, its
61 member hospitals have eliminated
millions of dollars of waste and thousands
of defects in medical processes within
their organizations. These lean provider
health care organizations often become
centers of value” sought out by employers
seeking high-quality outcomes and
competitive prices.
Source: Program websites.
40 New horizons: voyage to value
Viewfinders
Considerations for your board and executive leaders
For providers
How is your organization integrating care
to provide value? What technologies and
analytics are you applying to support
integrated care? How are you pursuing
strategies to align physicians and manage
care beyond your walls?
What procedures are in place to
continuously monitor patient ow,
occupancy and stafng levels for each
major service line?
How are you treating your patients like
valued customers? Are you offering
patients decision aids that clearly
outline the risks and benets of
medical interventions — and help them
make choices that are consistent with
their preferences?
How do you dene the patient care team
and ensure that each step in a patient’s
plan of care is delivered by the most
appropriate team member? How are
you assessing which care setting is most
cost-effective and appropriate to the
patient experience and outcome? What
tools are being provided to your clinicians
to aid in communicating complex
medical information to patients and their
families — and to engage patients as
fully informed, active decision makers in
planning and receiving care?
What procedures are in place to ensure
optimal care transitions within hospital
units and between the hospital and
community sites?
Have you considered adding a chief
experience ofcer to your executive
leadership team?
How are you collaborating with post-
acute entities to make sure patients are
compliant with treatment plans? What
steps do you take to transfer discharge
and follow-up instructions, along with
treatment plans, to the appropriate post-
acute community providers?
Do you have evidence-based care
protocols for all your common and
highest-cost conditions and procedures?
If all are not yet in place, what is your
strategy for lling these gaps and
keeping others current?
For payers
What initiatives are in place to let your
members know they are valued? Do you
survey individual members as well as plan
sponsors to determine how well the plan
meets the personal needs of each insured
individual and the sponsor organization’s
overall employee health goals?
How are you providing physicians with
information? Are you participating
in development of evidence-based
care protocols with health systems
or physician groups in your market
area, sharing your information to help
them in identifying best practices for
their population?
How are you supporting members
with information? Do you have a
customer portal where patients can
view their specic claims information
and access generic health education
and disease management information?
Do you provide health coaching as an
option, with coaches able to access a
customer’s specic relevant data (with
the customer’s consent) in order to make
personalized recommendations?
Are you advancing value in delivery
by empowering members with
coverage options that focus on high-
performing providers?
What incentives are you offering
customers for managing chronic
conditions and for maintaining health
and wellness?
Does your organization track
developments in telemonitoring and
eHealth initiatives and participate in
demonstrations of these products
to determine whether they are a
cost-effective strategy for reducing
readmissions or otherwise lowering
the cost of care? When such initiatives
are proven benecial to the delivery
of quality care and cost-effectiveness,
how do you incorporate them as part
of your plans’ benets and inform your
customers of their availability?
41
{ }
“The winds and the waves are always on the side
of the ablest navigators.
Edward Gibbon, 18th‑century British historian
43
Chapter 3
Value in information technology
Supporting the journey
Voyage to value
In the voyage to value, HIT — and the data it yields — serves as ballast,
holding the ship steady in its journey forward. HIT supports a full range
of value-based goals, from improving quality and outcomes to assisting in
clinical decision-making, developing evidence, tracking costs, enhancing
coordination and facilitating patient engagement. New systems and
capabilities have proliferated, making it possible to collect outcomes
data, analyze and convert it into useful information and share the
information broadly with industry stakeholders.
To maximize the value of HIT, health care information technology (IT)
staff are moving far beyond installing, supporting and repairing
computer hardware and software. They are aggregating and reporting
health data, delivering information needed by various clinical areas of
their organizations and educating clinicians in how to make the most
meaningful use of the data available to them. The ultimate goals are to
buoy improvements in care delivery and to optimize patient engagement.
Health care organizations must continue to invest
signicant capital — human resources, time and
money in information systems design, implementation
and training. These investments in EHRs and other
health information technologies are essential to comply
with government mandates. As their implementation
becomes more widespread, and staff more skilled in
their use, many health care organizations are realizing
signicant value from their IT investments. The data
being captured today can yield salient insights into
achieving better care management, more effective and
efcient practices and improved outcomes. In this chapter,
we provide an overview of key HIT initiatives and their role
in value creation.
ICD-10 and EHR meaningful use:
pushing back the deadlines
With the latest delay in the deadline for
changing over to International Classication
of Diseases, 10th Edition (ICD-10), health
care chief information ofcers and IT staff
now face the imperative to complete and
continue readiness for this major transition.
At the same time, they need to balance this
effort with demands for time and resources
to meet upcoming deadlines for achieving
EHR Stage 2 meaningful use (MU).
The transition to value-based health care
strains IT capacity even further because
of the need for billing, management and
point-of-care patient information access to
support ACOs and other collaborative care
initiatives. Provided below is an update on
the status of these two major initiatives,
discussed in further detail in the roundtable
discussion at the end of the chapter.
ICD-10
Despite pleas for further delays from
several trade associations representing
various segments of the health care
provider industry, CMS stood rm on the
October 1, 2014, deadline for ICD-10
implementation — only to see Congress take
an opposing stance and impose a one-year
delay as part of the sustainable growth rate
(physician payment x) legislation in early
2014. CMS estimates that this one-year
delay could cost as much as $6.6 billion,
about 30% of what has already been
invested by providers, payers and vendors.
In March 2014, the American Academy
of Family Physicians released results of a
survey reporting that most major national
commercial health insurers were ready for
the transition to ICD-10 claims processing.
All surveyed payers have set up “ICD-10
preparedness pages” on their websites
dedicated to assisting providers with the
transition. Most reported that they were
currently testing systems coordination
with their larger clients — hospital chains
and large physician practices — and had
plans to move toward readiness testing for
small and individual physician practices
before October 1. The delay will help
those smaller provider organizations
achieve readiness in preparing for the
transition, now scheduled for no sooner
than October 1, 2015. But for those
organizations already well prepared to
transition, the delay will require new
demands, such as providing additional
or refresher training and managing the
requirements of two different coding
systems, to make sure clinicians and
IT staff comply with current ICD-9 system
requirements while still preparing and
training for the eventual switch.
“The delay is going to be disruptive
and costly for healthcare delivery
innovation, payment reform,
public health, and healthcare
spending, and uncertainty on the
implementation date only adds to
the disruption and cost.
Coalition for ICD-10
Letter to CMS Administrator Marilyn Tavenner
April 11, 2014
While most health care providers already
have the IT infrastructure and systems
in place for the ICD-10 conversion,
testing the interaction of these systems
between providers and payers is crucial
before implementation. In February, CMS
announced that it would conduct “end-to-
end” testing for some selected providers,
followed by an announcement in March
that this testing would be scheduled for the
end of July. CMS requested more than 500
provider testing volunteers, but only 32 will
actually be chosen to participate. With the
delay in ICD-10 implementation, it is not
clear now when this testing will take place.
Many payer organizations had also planned
to conduct signicant system testing in
the spring and summer of 2014, leaving
time to work through any problems in time
for the prior October 1, 2014, transition
date. With the delay, payer system testing
schedules may be revised.
44 New horizons: voyage to value
For health care providers, a necessary
investment for efciently transitioning to
ICD-10 is providing training for clinicians
and information management staff, as well
as post-implementation processes to test
the effective use of ICD-10. Effectiveness
testing will identify specic re-training and
optimizing needs to help organizations gain
the most value from the conversion while
minimizing cash ow delays. Since much of
this training has already started, the delay
in the transition deadline requires providers
to assess how best to use the additional
year to achieve a successful transition.
There is no mandate to wait until October
2015 to put into practice the training that
has occurred or is scheduled near term.
Those providers most likely to succeed in
Value vignette
Beacon Community health IT pilot project: shining the light
Over three years, from 2010 to
2013, the HHS Ofce of the National
Coordinator for Health Information
Technology (ONCHIT) provided
$250 million of funding to 17 selected
Beacon Communities nationwide. The
communities selected had already made
progress using HIT as a foundation
for local improvement and innovation.
Funding was to be used to further
leverage the value of their HIT and health
information exchanges (HIEs) in better
coordinating patient care.
At the February 2014 Health Information
Management Systems Society (HIMSS)
conference, leaders from the Beacon
Communities and ONCHIT presented
results of the pilot project, along
with ways these programs could be
implemented in other communities.
The initiatives improved cost, quality
and population health, with measurable
results over the three-year period,
and tested innovative approaches
to performance measurement,
technology integration and care
delivery. The pilot project:
Involved more than 8,500 health care
providers and 8 million patient lives
Covered a variety of federal and state
value-based health care payment
initiatives, including:
State Innovation Model activities in
Minnesota, Maine and Washington
Comprehensive Primary Care
initiatives in Colorado, Ohio
and Oklahoma
Pioneer ACOs in Maine, California
and New York
Medicare Shared Savings
Programs in Indiana, Louisiana
and Pennsylvania
Produced six “Beacon Nation
Learning Guides” covering such
topics as “Capturing High Quality
Electronic Health Records Data to
Support Performance Improvements
and “Driving Clinical Transformation
in a Practice Setting with Health
Information Technology,” all of which
can be downloaded at no cost from
www.healthit.gov
Highlighted below are representative
results achieved by various Beacon
Communities:
Pediatric asthma improvement with
the Cincinnati Childrens Beacon
team. Using a combination of clinical
interventions and alerts, the time
between utilizations increased from
173 days to 311 days for Medicaid high-
risk patients.
Care transition initiative for emergency
services with the San Diego Beacon
team. Various initiatives — connecting
ambulances to EDs, providing patient
event notication to providers and
payers, and developing a Beacon
Community health information
exchange (HIE) that made patient
information available to providers
across systems at the point of care,
whether ED, hospital or clinic —
together resulted in a more than
fourfold drop in calls. Over a two-year
period, for a pre-identied group of
1,171 frequent emergency medical
service users, calls per month to 911
dropped from 3,077 to 690.
Re-admissions reduced for patients
with chronic heart failure and chronic
obstructive pulmonary disease — and
patient and clinician satisfaction
improved — at Keystone Beacon
Communities (ve counties in
Pennsylvania). A web-based HIE was
developed by 24 organizations with
38 unique delivery settings, including
hospitals, long-term care (LTC)
facilities, physician practices, home
health agencies and a pharmacy.
The system has been used to publish
health information, share notications
and direct messages related to care
transitions, and develop a patient
portal. This HIE is now a nationally
available web-based service.
More information about the Beacon
Community Program can be found at
www.beaconcommunityprogram.com/
Source: www.healthit.gov/policyresearchersimplementers/beaconcommunityprogram
45
asmooth transition, with minimal cash ow
delays, will be those that start practicing
ICD-10 documentation and coding skills
sooner rather than later. Physicians can
certainly document in ICD-10 terms, and
coders can dual-code sets of charts under
both ICD-9 and ICD-10 requirements,
to practice what was covered in training
and to minimize the need for extensive
retraining next year. With clinicians and
coders practicing ICD-10 standards, this
strategy will allow time to assess the
effectiveness of training to date, as well as
to identify specic weaknesses that require
retraining or refreshing between now and
October 2015. Practicing ICD-10 coding
and documentation over the next year will
help address major problems before the
transition date.
Health payers and providers can also use
the additional time for end-to-end testing
to conrm that systems are ready to
le and accept claims under the ICD-10
standards and that the exchange of data
through claims clearinghouses will go
smoothly. Efforts made now to test all
affected IT systems will help to minimize
the disruption in cash ow that can be
expected when ICD-10 conversion goes live.
EHR meaningful use
HIT teams were given a bit of breathing
room with CMS’ proposed rule, announced
May 20, 2014, to extend Stage 2 MU
through 2016, with Stage 3 pushed back
to 2017. Also provided is some exibility in
meeting Stage 1 or Stage 2 requirements
in 2014. As a result, the start of Stage 3
will be delayed until at least federal scal
year 2017 for hospitals and calendar year
2017 for physicians and other eligible
professionals. CMS and the Ofce of the
National Coordinator for Health Information
Technology (ONCHIT) decided to push
back the Stage 2 timeframe to allow more
time for Stage 3 preparation. During
the extended time, ONCHIT will focus on
helping health care providers meet Stage 2
requirements for patient engagement,
interoperability and health information
exchange. CMS and ONCHIT will also use
this time to collect and analyze Stage 2
data in order to make more informed policy
decisions for Stage 3.
“The phased approach to program
participation helps providers move
from creating information in Stage 1,
to exchanging health information
in Stage 2, to focusing on improved
outcomes in Stage 3. This approach
has allowed us to support an
aggressive yet smart transition
for providers.
Robert Tagalicod, Director, Ofce of E-Health
Standards and Services, CMS
Jacob Reider, Acting National Coordinator
for Health Information Technology, ONC
Blog post, December 13, 2013
http://www.cms.gov/eHealth/ListServ_
Stage3Implementation.html
The proposed rule would provide additional
exibility by allowing eligible professionals
and hospitals to use the 2011 edition of
certied EHR technology (CEHRT), or a
combination of the 2011 and 2014 editions
of CEHRT, for the 2014 EHR reporting.
Providers would be able to attest to
meaningful use under the 2013 reporting
Value vignette
Connected providers: creating new lines in the “Old Line State
Now in its fth year, Chesapeake Regional
Information System for our Patients
(CRISP) functions as Maryland’s state-
designated HIE. Hospitals and authorized
health care professionals access CRISP
more than 12,000 times a month for
real-time sharing of patient information.
Maryland’s efforts to establish an HIE
began before the federal government’s
efforts to stimulate adoption of EHRs
and HIEs. As Maryland Governor Martin
O’Malley explained, “Even before the
American Recovery and Reinvestment
Act authorized the Medicare and Medicaid
Electronic Health Record incentive
program, we took the lead and funded
our Maryland HIE efforts with $10 million
of state-level programs. The federal law
has continued to backstop our efforts.
To date, 37 of the 46 acute care hospitals
in Maryland are using EHRs and all 46 can
share with other providers in real time.
CRISP has recently adopted an alerting
system aimed at reducing readmissions
by directing the most vulnerable patients
to the most appropriate follow-up care.
The system plans to increase the number
of users as well as clinicians’ ability to
access and use the data. CRISP has also
deployed a prescription drug monitoring
program to integrate prescription drug
use information in real time. As the
access point to Maryland’s Prescription
Drug Monitoring Program for health care
providers, CRISP can help providers track
potential drug abuse habits and connect
patients with treatment that could lower
potential future costs and enhance the
likelihood of recovery.
Source: www.crisphealth.org
46 New horizons: voyage to value
year denition and use the clinical quality
measures from 2013. Also, providers
scheduled to begin attesting to Stage 2 in
2014 could use the 2014 edition of CEHRT
to meet the 2014 Stage 1 objectives if they
attest that they ran into vendor problems.
The proposed rule also formalizes the
agencies’ plans to extend Stage 2 through
2016 and push back the start of Stage 3
until 2017, as previously announced
last December.
The delay primarily impacts those hospitals
that had achieved Stage 1 MU for two or
three years by the start of the Stage 2
phase on October 1, 2013, and physicians
who met Stage 1 for two or three years
by January 1, 2014, the start of their
Stage 2 window. Those providers required
to step up to Stage 2 in 2014 will not be
affected by the delay, as they already faced
the start of Stage 3 in scal or calendar
year 2017. All providers must demonstrate
that they have met Stage 2 MU within their
applicable year, either federal or scal.
In February, CMS also delayed for one
month the reporting deadline for physicians
to attest to meaningful use for the 2013
reporting year, with a new deadline of
March 31, 2014. Hospitals had been
required to submit their attestation data for
scal year 2013 by November 30, 2013,
but CMS allowed a “one-time opportunity”
to submit retroactively if they were
unable to meet the deadline because
they “experienced difculty attesting,” as
long as they contacted CMS for assistance
by March 15, 2014. The 2013 reporting
deadlines are signicant because meeting
them not only allows providers to receive
Medicare incentive payments for 2013 but
will also result in avoiding the 2015 penalty
adjustment to payments.
More details about Stage 3 requirements,
along with more details on the revised
attestation timeline, are expected to be
released in fall 2014. Upcoming important
dates for the EHR incentive programs are:
September 30, 2014: end of 2014 scal
year and end of the 2014 reporting
period for eligible hospitals
November 30, 2014: attestation
deadline for Medicare-eligible hospitals
for the 2014 program year
December 31, 2014: end of 2014
calendar year and end of the 2014
reporting period for eligible professionals
Data analytics: connecting
the community
As health care providers invest signicant
funds into building electronic health
records, they are realizing returns on
investment through more informed health
decisions and better patient outcomes and
satisfaction. The value of HIT investments is
optimized when physicians, other clinicians
and community providers partnering in
medical homes and bundled care demos,
or simply trying to best manage high-risk
patients, can access data in real time, in a
useable format. The health care industry is
also looking to provide realistic insights into
population health, patient management
and best practices, all of which can be
facilitated through optimal use of available
data. The Value vignettes in this chapter
provide several examples of specic
initiatives that have been proven to achieve
real value from HIT.
But connecting to and sharing data
with other providers in the community
is not a simple exercise. Despite the
industry’s movement to a common
messaging standard — Health Level
Seven International — and the standard
requirement that EHRs exchange a
common type of patient summary
document, information sharing is far from
uniform. The messaging standard is more
a framework than a specic, detailed set of
rules. And different IT vendors apply the
standard differently. In another example,
one set of clinician groups may use certain
medical terms differently than the hospital
or other physician groups. Although
this is really a matter of semantics,
these differences can lead to errors and
problems to be addressed before data can
be effectively shared. Another complicating
factor is that many post-acute providers still
have limited information system capability
and limited ability to send or receive data
electronically.
In order to collect data efciently and
accurately for analyzing patterns in care
delivery, the system needs to go beyond
basic data interchange, which simply sends
and receives “snapshots” of information as
of a specic point in time. The value to be
gained through analysis of data to identify
practice patterns and provide decision
support tools can be achieved only through
an interface that builds a well-organized
data warehouse and operates more like
aprivate HIE.
A recent survey conducted by the eHealth
Initiative and College of Healthcare
Information Management Executives
found that while 80% of health care
chief information ofcers believe data
analytics are important to achieving their
organization’s strategic goals, 84% felt
using big data presents a challenge. Only
17% reported that they had staff trained
to collect and analyze data.
Achieving the value of HIT is a time-
consuming and costly process, requiring
input, understanding and agreement from
the hospital, physician practices and other
community providers involved. Several
steps should be considered in this process
(see Exhibit 3-1 on page 48).
Telehealth: optimizing IT value
in health care delivery
With the industry’s move toward a value-
based model, care coordination is a major
driver — one that can be well supported by
47
HIT. Ideally, each patient should receive
the right care, in the right setting, at the
right time from a health care provider who
understands the patients needs. HIT can
facilitate data sharing to make sure each
patient’s history, needs, limitations and
resources are considered by all providers
when making care decisions. Telehealth
provides many benets in supporting this
effort, including:
Ensuring the most appropriate caregivers
are involved, regardless of a patient’s or
physician’s physical location
Providing a new way to share specialty
expertise over a broad geographic area
including getting specialists to places
they couldn’t physically get to in the
crucial timeframe, assisting in covering
shortages in health care personnel and
providing patients more convenient
options for follow-up care, possibly
resulting in better compliance with post-
discharge instructions
Monitoring and tracking specic
symptoms of recently discharged
patients at risk for readmission or those
with chronic conditions
Potentially, in a widespread facility
campus, eliminating the need to move
across the campus by enabling physicians
to participate in an examination or
emergency consult simply by using their
laptops for a much quicker response time
Although telehealth is growing, with more
than half of all US hospitals using some
form of it, according to the American
Telemedicine Association, many regulatory
and legal hurdles need to be managed.
Measures to facilitate telehealth have
been gaining bipartisan support in
Congress. In February 2014, several
former US senators launched the Alliance
for Connected Care to advocate for federal
and state regulatory changes to support
telehealth, especially extending these
programs to rural providers.
“Telehealth services are rapidly
becoming a very important part of
healthcare delivery under the new
paradigm, but we unfortunately
don’t have a regulatory environment
or policy environment that
accommodates the new technology.
Former Senator Tom Daschle
Cofounder, Alliance for Connected Care
Along with the investment in technology
to support a telehealth initiative,
telehealth faces other nancial — and
regulatory challenges. Even though
20 states have parity laws requiring that
some primary care telehealth services
be reimbursed on par with face-to-face
services, many payers do not yet cover
remote consultations and other telehealth
services. Currently, 43 states and the
District of Columbia provide at least some
Medicaid coverage for telehealth services.
Medicare generally pays only for telehealth
services provided in rural areas. As payers
increasingly see the value of telehealth in
reducing ED visits and readmissions,
increasing the quality of care, especially
in remote areas, and providing measurable
cost savings — insurance coverage for
telehealth services is expected to rise.
Other regulatory challenges include
licensure and credentialing requirements.
The Federation of State Medical Boards
is working on an interstate compact and
plans to hold a vote at its 2014 annual
Exhibit 3-1. Steps in achieving HIT value
1. Identify all available sources of
data, whether or not part of the
hospital’s EHR, including items such
as pharmacy records, billing systems,
physician schedules and appointment
logs, and patient health information
from all providers involved.
2. Assess the accuracy of the available
data from these sources.
3. Develop a plan to integrate clinical
data from a patient’s hospital records
with clinical data from outpatient and
clinic visits, claims data, physician
encounters and services of other
community providers.
4. Determine if the project will be done
in-house or whether outside vendors
will be used.
5. If an in-house data analytics
deployment team will be used, involve
representatives from hospitals,
physician practices representing
all major specialties, and other
community providers to create a
system-wide team. Offer sufcient
career opportunities to keep
team members committed to the
analytics effort.
6. Get commitments from leaders of all
participating organizations to make
data-based decisions rather than
relying on past personal experiences.
7. Identify goals and uses of data for
specic end users so they will know
what is expected of them, and can
contribute to the design format
and content to optimize the use of
the data provided. Customize each
analytical project for the specic
department or service involved —
for example, a readmission risk factor
scorecard for discharge planners or
a population-health tracking tool for
primary care physicians to assess
and track those patients with a
specic chronic disease to prevent
nonemergency hospital admissions.
Source: EY analysis, 2014
48 New horizons: voyage to value
meeting on a proposed telehealth policy
codifying standards and principles for
state boards and legislatures to use
in developing telehealth policies and
regulations. The proposed compact claries
that “the practice of medicine occurs where
the patient is located at the time telehealth
technologies are used.” This would
result in physicians being required to
be licensed in each state where their
telehealth patients are located. Other less
controversial items included in the compact
are designed to make sure that patient
privacy is protected, telehealth information
is securely stored and there is no difference
in the standards of care between a digital
and face-to-face patient encounter.
For an in-depth look at telehealth
initiatives, see EY’s Health Care Industry
Post, “Shaping your telehealth strategy”
(www.ey.com/US/en/Industries/United-
States-sectors/Health-Care/EY-shaping-
your-telehealth-strategy).
A view to the future: riding
the momentum
As the industry moves toward value-
driven health care, payer and provider
organizations will nd more ways to mine
the intrinsic value of HIT. Many IT systems
can readily collect vast amounts and types
of data — procedures ordered, costs of care,
volumes of services provided by diagnosis,
post-discharge activity and much more.
By analyzing, sharing and using this data,
health care organizations can determine
best practices, support care management
decisions and continue to work toward
achieving health care values “holy grail”:
improved outcomes at lower costs.
We conclude this chapter with a roundtable
discussion featuring leaders of EY’s HIT
Advisory Services practice. Together, they
offer further insights on the strategic role
of HIT in creating and enabling system
transformation.
By the numbers
Using data analytics helped Kaiser
Permanente’s Southern California
hospitals achieve mortality rates
26% lower than other hospitals in the
system (source: Kaiser’s chief medical
information ofcer John Mattison
presentation to VentureBeat Data
Science Summit, December 2013).
The global health care analytics market
is projected to be worth $21 billion by
2020 (source: MarketsandMarkets
report, December 2013).
In 2013, 170 data breach incidents
affected about 6.4 million individuals,
compared with 2012’s 200 incidents,
which affected about 2.8 million
individuals (source: HHS).
Nearly 80% of family medicine and
internal medicine practitioners
surveyed in April 2013 use
smartphones in their “day-to-day
practice.” In the same survey, 61%
reported using mobile tablets (souce:
Ipsos survey conducted for Wolters
Kluwer Health, 2013).
By 2013, 59% of hospitals had
adopted at least a basic EHR system,
an increase from 34% in 2012 (source:
ONCHIT Data Brief, May 2014).
In 2013, 78% of ofce-based
physicians used an EHR system, an
increase from 18% in 2001 (source:
National Center for Health Statistics,
January 2014).
About 13% of all ofce-based
physicians reported that they intended
to participate in meaningful use
incentives and also had EHR systems
with the capabilities to support 14
of the Stage 2 Core Set objectives
for meaningful use (source: National
Center for Health Statistics,
January 2014).
The estimated costs for small
physician practices to implement
ICD-10 ranges from $56,639 to
$226,105 (source: American Medical
Association, January 2014).
Through April 2014, more than
408,000 health care providers
received more than $23.7 billion
in EHR incentive payments from
Medicare or Medicaid (source:
Medicare and Medicaid Incentive
Programs HIT Policy Committee
presentation, June 2014).
A total of 51,000 health IT
professionals will be needed to
implement EHRs, support the
conversion to ICD-10 and implement
federal health care initiatives such
as patient-centered medical homes
(source: US Bureau of Labor Statistics,
January 2014).
Health information technician
positions are expected to increase
22% from 2012 to 2022 (source:
US Bureau of Labor Statistics,
January 2014).
49
Value vignette
Healtheway: developing strategies for innovative information exchange
A nonprot public-private partnership,
Healtheway is “in the business of
providing cost-effective HIE operational
services.” The partnership supports the
eHealth Exchange, a rapidly growing
community of exchange partners who
securely share health information.
Currently, nearly 50 participants —
including four federal agencies, six state
health information networks, eight
Beacon communities and more than 20
health information organizations and
health systems — collaborate across the
industry to develop implementation
strategies enabling secure and
interoperative, standards-based HIEs.
The eHealth Exchange has a presence
in all 50 states covering more than 800
hospitals, 6,000 medical groups and
more than 1 million patient records.
While Healtheway was formed in
2012, the eHealth Exchange began in
February 2009 with just two participants,
the Social Security Administration and
MedVirginia, exchanging transactions
to expedite processing of benets to the
disabled. By the end of 2014, eHealth
Exchange expects to have nearly 100
participants, connecting 1,600 hospitals,
10,000 medical groups and nearly
100 million patients.
In 2012, Healtheway began a collaboration
with the Care Connectivity Consortium
(CCC) to enhance HIE capabilities and
services. Founded by ve early adopters
of electronic medical records — Geisinger
Healthcare System, Group Health
Cooperative, Intermountain Healthcare,
Kaiser Permanente and Mayo Clinic —
CCC is designed to improve and advance
the technology for comprehensive,
secure, reliable and innovative electronic
exchange of health information across the
country. It has a presence in 18 states
with 18 million members and more than
23,000 physicians.
The collaboration between CCC and
Healtheway is intended to achieve
widespread connectivity, efciently
and effectively at the lowest cost,
while addressing critical challenges to
information exchange. Both organizations
are pursuing innovations to improve HIE
interoperability and efcacy. CCC has
developed advanced patient-centered
care technology that will be supported
by Healtheway’s network services
and shared with eHealth Exchange
participants as part of the collaboration.
This has made available to participants:
Enhanced content management
services
A trait sensitivity study to optimize
demographic traits for patient matching
Patient identity management services
As CCC continues to develop information-
sharing services, these services will be
made available to all eHealth Exchange
participants.
Source: www.healthewayinc.org; www.careconnectivity.org/wpcontent/uploads/2014/02/CCCHealthewayOvercomingChallengesinHIEHIMSS.2014Web.pdf
50 New horizons: voyage to value
Value vignette
HIMSS: quantifying the value of health IT
Unveiled in July 2013, the HIMSS Health
IT Value Suite™ is a knowledge repository
of value-focused, evidence-based data to
guide providers, policy makers and payers
in assessing the value of investments in
health IT. The Suite offers examples to
help stakeholders evaluate the success
of their IT investments, emphasizing
performance improvements by
considering numerous clinical, business
and nancial factors. Because the value
of health IT can be demonstrated in many
different ways, the Suite organizes a
common vocabulary to identify, classify
and discuss the many known examples
of health IT value.
The Suite contains hundreds of provider
case studies that can be researched to
measure value and educate users on the
ndings. Based on these studies, HIMSS
has identied ve kinds of value that
health IT creates to benet patients,
health care providers and communities
(see table below).
Using the Suite, health care organizations
can determine how health IT can
help reduce:
Redundancies in testing, labs and x-rays
Hospital-acquired infections
ED admissions
Costs, while maintaining or improving
the quality and safety of patient care
Source: www.himss.org; table adapted from “HIMSS Introduces Health IT Value Suite to Realize the Value of Health IT,” July 16, 2013,
www.himss.org/News/NewsDetail.aspx?ItemNumber=21536
STEPS Subtypes Documented examples in Health IT Value Suite
Satisfaction Patient, provider, staff Improving patient satisfaction scores
Improving internal communications with providers and staff
Treatment/clinical Safety, quality of care, efciency Reducing medical errors
Reducing readmissions
Improving scheduling
Electronic information/data Evidence-based medicine, data
sharing and reporting
Increasing use of evidence-based guidelines
Increasing population health reporting
Prevention and patient
education
Prevention, patient education Increasing immunizations
Improving patient compliance
Savings Financial/business, efciency
savings, operational savings
Reducing days in accounts receivable
Reducing patient wait times
Improving inventory control
51
The move to
meaningful use
and ICD-10: finding
the bearings
A roundtable discussion
Craig Kappel, Partner
Health Care Advisory Services
Ernst & Young LLP
Rob Wallace, Executive Director
Health Care Advisory Services
Ernst & Young LLP
Practice leaders Craig Kappel and
Rob Wallace offer their perspectives
on today’s most pressing HIT
challenges — and how organizations
can realize the most value from their
meaningful use and ICD10 initiatives.
As we look at the role of health
information technology in delivering
value, how should organizations
view value through the significant
investments in meaningful use
and ICD-10?
Rob Wallace: Meaningful use is a key effort
by the federal government to deliver value
by moving from a fee-for-service health
care system to one that is outcomes-based.
Each stage brings a different level of value.
Stage 1 was all about capturing data
and sharing it by implementing certied
electronic health record systems. Stage 2 is
focused on advanced clinical processes and
patient engagement. Stage 3 is designed to
measurably improve health outcomes.
Meaningful use also brings value in helping
providers deliver safer care. No longer
do they need to deal with handwriting
that can’t be deciphered or medical
chart information that isn’t well dened.
Accepted protocols, built into software
applications, make decisions easier. And
hospitals and physicians — working from
shared information — have incentives to
improve their ability to serve patients.
Craig Kappel: The move to ICD-10
can yield signicant value for health
care organizations. It can be used to
improve not only medical management
and claims processing but other core
business processes. As health care moves
toward outcomes-based payment models,
population health and comparative
effectiveness, the more granular ICD-10
codes — along with more availability of
digital clinical information that meaningful
use is prompting — can be a catalyst
for accelerating adoption of these
evolving models.
In the midst of competing HIT priorities,
how high is the sense of urgency for
both these initiatives?
Rob Wallace: A proposed rule from CMS —
announced May 20, 2014 — would extend
Stage 2 through 2016 and begin Stage 3
in 2017, as well as allow exibility for
meeting 2014 Stage 1 and 2 requirements.
This could provide some much-needed
relief based on the readiness of many EHR
vendors and providers. However, some
key dates are imminent and priorities
should reect these timeframes. Unless
successful with a hardship exception,
eligible hospitals (EHs) must attest by
July 1, 2014, and eligible professionals
(EPs) by October 1, 2014, to avoid
penalties in 2015.
Craig Kappel: Now that we’ve been delayed
twice with ICD-10, the concern is that the
industry will not take the October 1, 2015,
compliance date seriously — and will
approach readiness half-heartedly.
If the 2015 deadline becomes a reality,
although we can’t know for certain that
it will, this lack of full focus could be
detrimental to providers and payers alike.
It’s interesting that the current wording
of the new compliance date includes
the phrase, “at the earliest.” That could
lead to lukewarm efforts to meet the
October 1, 2015, date.
Part of the cause of the most recent delay
is that small physician practices and sole
proprietors were not ready for ICD-10.
Now that the delay has been announced,
we’re seeing varied responses from small
organizations. Some are now dismissing
ICD-10 as a priority — a focus they may
return to next year. Or they may lobby
again to delay it.
Feature
52 New horizons: voyage to value
Although not seeming to be, another
major challenge is that in the IT space,
aplethora of systems are already ICD-10
compliant. If changes are required, the
window between now and the October
2015 deadline isn’t wide enough to make
any other major revisions to IT systems.
No IT function wants to be in the midst of
a major implementation when the ICD-10
compliance date kicks in.
How are the best-performing
organizations maintaining their
ICD-10 readiness?
Craig Kappel: Instead of parking the
project on the side, leading organizations
are continuing a measured march toward
ICD-10 readiness. They are looking at it
less as a compliance exercise and more
as a way to improve their operations — by
getting physicians and coders trained,
implementing computer-assisted coding
and creating stronger systems for
documentation. Improving the quality of
medical information will also likely improve
their payments.
Payers have a different challenge. They
can’t “ip the switch” and start asking for
bills to be rendered in ICD-10 format until
the compliance date is locked and loaded.
In general, they need to continue testing
with as many providers as they can.
Medicare meaningful use timeline
First
payment
year
Stage and reporting period
2011 2012 2013 2014 2015* 2016 2017** 2018 2019 2020 2021
2011
1
90 days
1
365 days
1
365 days
1 or 2
calendar
qtr.
2
365 days
2
365 days
3
90 days
3
365 days
TBD TBD TBD
2012
1
90 days
1
365 days
1 or 2
calendar
qtr.
2
365 days
2
365 days
3
90 days
3
365 days
TBD TBD TBD
2013
1
90 days
1
calendar
qtr.
2
365 days
2
365 days
3
90 days
3
365 days
TBD TBD TBD
2014
1
90 days
1
365 days
2
90 days
2
365 days
3
90 days
3
365 days
TBD TBD
2015
1
90 days
1
365 days
2
90 days
2
365 days
3
90 days
3
365 days
TBD
2016
1
90 days
1
365 days
2
90 days
2
365 days
3
90 days
3
365 days
2017
1
90 days
1
365 days
2
90 days
2
365 days
3
90 days
Notes: In 2014, regardless of stage, if performing subsequent attestation, the reporting period is a calendar quarter. If rst attestation, the reporting period is a
continuous 90 days. For EPs, attestation must be completed by October 1, 2014, to avoid penalties beginning January 1, 2015. EHs must attest by July 1, 2014,
to avoid penalties beginning October 1, 2014.
* According to the proposed rule, the Stage 2 reporting period will be 365 days in 2015.
** Data collection for attestation periods and MU requirements are yet to be dened. Dates shown for 2017 and beyond are subject to change when Stage 2 and Stage 3
MU nal rules are issued.
53
give patients incentives for taking a greater
role in their care. The rst step is educating
them on how they can access their
information. Many organizations are using
portals for this purpose and measuring
patient use.
As more and more providers actively
seek opportunities for consolidation,
what part will meaningful use play?
Rob Wallace: Smaller organizations that
can’t adopt MU criteria may be open
to aligning with larger organizations
that are successfully meeting MU
requirements. If the newly consolidated
entity doesn’t meet MU thresholds, buyers
could be putting their progress at risk.
For example, if the acquiring hospital is
demonstrating MU and the target hospital
isn’t, the buyer may be at risk of losing
incentive payments or may face payment
adjustments. Executive teams should
involve their IT leadership early in the M&A
process to mitigate any nancial risks of
MU misalignment and prepare properly for
IT integration.
CMS’ meaningful use audits are
expected to affect between 5% and
10% of providers. How can providers
best prepare?
Rob Wallace: Two areas of documentation
typically scrutinized are an electronic
snapshot of EHR capabilities and use
and a security risk analysis of the EHR
system during the reporting period. CMS is
using an external rm for many of these
MU audits. Although we’ve found that
the information the external resource is
looking for isn’t always as restrictive as
CMS guidelines, as organizations prepare
for an audit, our advice is to always follow
the frequently asked questions guidance
and other guidelines from CMS. No provider
wants to be surprised in a subsequent audit
that may be more rigorous.
Given the revised timeframes for
both meaningful use and ICD-10,
how should executives and board
members proceed?
Rob Wallace: Know exactly where your
organization is in MU implementation and
have condence in your monitoring and
reporting mechanisms. What gaps need
to be lled and what plans are in place to
mitigate risks? It’s a tremendous risk to
attest that you’ve met MU measures and
then nd out through an external audit
or through your own discovery that you
haven’t. Perform your own internal audit
before attesting.
Craig Kappel: Organizations need to move
forward with as many of the activities as
they can to stay on course for ICD-10.
But they need to approach ICD-10 as an
opportunity to improve their operations
and strengthen their ability to demonstrate
quality in their organization. If we fast-
What metrics are providers and payers
using to gauge how well their HIT
investments are delivering value?
Craig Kappel: In the ICD-10 world,
measures are different than day-to-
day operational metrics of nancial
performance and productivity. ICD-10
measurements gauge whether physicians
and coders are being trained on time,
whether IT systems are being remediated
and tested on time and whether the
revenue cycle is being adjusted as needed.
These macro-operational milestones need
to be monitored along the way.
“Smaller organizations that can’t
adopt MU criteria may be open to
aligning with larger organizations
that are successfully meeting
MU requirements.
Rob Wallace: Meaningful use has clear
thresholds for measurement. Providers
who started Stage 1 in 2011 or 2012 — and
who are transitioning to Stage 2 in 2014
need to assess the costs and benets
of the program and potential incentives
and penalties. Meeting MU requirements
becomes more difcult with Stage 1, 2014
measures and Stage 2. The new measures
include patient engagement requirements.
We’re just beginning to understand how to
54 New horizons: voyage to value
forward a year from now and the deadline
is postponed again, then if I were a board
member, I would be highly distraught if my
organization had spent countless hours and
millions of dollars on a compliance exercise
that has brought no benet. But I would
be delighted if our investment resulted in
improved operations and strengthened our
ability to measure quality.
“Organizations need to approach
ICD-10 as an opportunity to
improve their operations and
strengthen their ability to
demonstrate quality.
How can the board and executives best
support IT strategies and initiatives at
their organizations?
Craig Kappel: For any health care
organization, IT is an important enabler.
If I were a board member I would be less
interested in someone reporting to me
that an application has been successfully
implemented or will be successfully
implemented. I’d be more interested in
knowing that the entire organization — the
business as well as IT — has jointly enabled
this new technology for the overall benet
of the organization.
Each organization is different. In some,
IT is a world unto itself and doesn’t
always involve the business as much as it
should. All too often, we see organizations
implementing 50% to 60% of the
capabilities of any given application, and
the rest are never really used. Focusing
on leveraging all capabilities these
technologies offer is key.
Rob Wallace: The sheer volume of
information health care organizations have
to work with can be daunting. They need
to sift through all of it, decide what matters
most and set priorities. And they can’t
forget about the fundamentals of HIPAA
security and to consider the overall risk
of any data breaches — balancing the
imperative to keep sensitive information
secure while giving clinicians access to
track and share the data needed for more
effective care delivery.
55
New horizons: voyage to value56
Viewfinders
Considerations for your board and executive leaders
For providers
Has your organization assessed the many
signicant issues facing your IT staff over
the next two years, setting priorities for
competing demands?
Have you assessed ICD-10 implementation
plans and adjusted them to address
the delay in conversion? Have you
arranged to test systems with payers
and claims processors?
Are opportunities in place for patient
charts to be coded under ICD-9 and
ICD-10 conventions so that staff
maintain skills learned in training, and
areas of weakness can be identied and
addressed before the conversion date?
Have clinicians been encouraged to
document to ICD-10 standards, with
staff or consultants available to assess
their efforts and provide one-on-one
consultation, making sure that patient
documentation will be adequate to
support ICD-10 coding before the
conversion date?
Do you have processes in place to
conrm you meet Stage 2 MU reporting
requirements? Have you assessed
the value of any remaining incentive
payments you may receive as well as
potential payment penalties if Stage 2
MU is not achieved — and determined that
this value exceeds the cost of compliance
with Stage 2 MU? For example, the
requirement for active use of a patient
portal may be exceedingly expensive,
if not impossible to achieve, for some
medical practices dealing primarily with
elderly patients.
Are IT representatives participating
on implementation teams for all new
payment models, such as ACOs and
medical homes?
Have you implemented data analytics?
Do you have staff trained in collecting
and analyzing data or do you plan to rely
on consultants to set up data collection,
analysis and monitoring processes? Are
end users involved in developing data
reporting and data analytic projects?
Do you need to hire a new breed of IT
staff skilled in decision support, clinical
areas and strategic planning to move
forward with unearthing the value in the
data your HIT systems capture?
Are your patient privacy and data
security guidelines and standards
reviewed and updated regularly
to conrm that new data-sharing
arrangements, remote access and
telehealth initiatives are addressed, and
that staff involved in these arrangements
are well trained in patient privacy and
data security requirements?
Does the team assessing the feasibility
and viability of telehealth services for
your organization include representatives
of all stakeholders involved? Have they
identied safe, high-quality services
when deciding which telehealth services
to support? Are they tasked with
determining the coverage available for
telehealth services by the most likely
payer organizations?
For payers
Have you assessed your ICD-10
implementation plans and adjusted them
to address the delay in conversion?
Have you arranged to test your claims
acceptance and processing systems with
participating providers in adequate time
to address and correct any issues before
the conversion date?
Are you effectively using the claims,
outcomes and cost data processed
to identify opportunities for starting
new payment initiatives with specic
providers, or for use in contract
negotiations and coverage decisions?
Do you have staff trained in collecting
and analyzing data or do you plan to rely
on consultants to set up data collection,
analysis and monitoring processes?
Are participating providers consulted
in your data analytics efforts when
considering causes behind variations
in costs and outcomes and in
developing opportunities for new
payment initiatives?
Do you seek out and support
opportunities for providers in your
market to implement telehealth initiatives
where the expected result is cost savings
or improved outcomes?
Do you share with plan sponsors
information about the telehealth
coverage your plans provide as a
marketing tool, particularly those
telehealth programs that can save
patients travel time and time needed
to be away from work for consultations
with specialists?
Do you conrm that all medical services
your plans cover are appropriately
reimbursed — whether provided face
to face or remotely?
Are your health information privacy
and data security guidelines reviewed
and updated regularly to conrm that
new data-sharing and remote access
arrangements with providers are
properly addressed, and that staff are
well trained in privacy and data security
requirements?
57
{ }
“Never go into strange places on a falling tide
without a pilot.
Thomas Gibson Bowles, 19th‑ and 20th‑century British journalist
Chapter 4
Value in compliance
Heeding the warnings
Voyage to value
As health care organizations sail on their voyage to value, growing
demands — for greater transparency, increased collaboration and
seamless transitions in providing quality services across the care
continuum — require heightened vigilance in complying with a myriad
of rules and regulations, some familiar and some new. An effective
compliance program, like a lighthouse in a storm, helps health care
organizations steer clear of dangerous waters — curtailing risk, reducing
penalties and proactively protecting them from running aground with
the law.
The compliance programs of tomorrow, however, will need to do
more than shield organizations from government investigations.
They will need to move beyond the minimum standards set by
laws and regulations to reect the full value of the compliance
investment supporting efforts to lower costs, deliver better patient
care and enhance employee engagement.
59
Understanding and meeting the expectations of industry
stakeholders is paramount to demonstrating integrity
and delivering value to all who are onboard the health
care voyage. In the rolling seas of high risk, it could
mean the difference between sinking and sailing. In this
chapter, we provide a summary of recent enforcement
activity in the battle against health care F&A and how
organizations are responding by strengthening and
achieving value through — their compliance programs.
Along with provider imperatives, issues unique to payers
are highlighted, including new compliance requirements
mandated by the ACA.
CMS oversight: setting direction
CMS is responsible for overseeing
compliance with an enormous cache
of regulations that govern the Medicare,
Medicaid and Children’s Health Insurance
programs. Also under its purview are
regulations spawned by the ACA that
govern the health insurance exchanges.
In fact, CMS oversees more pages of
regulations for the Medicare program
alone than the Internal Revenue Code.
Over the past decade, new health
care legislation expanded or added
new responsibilities for CMS in
compliance oversight:
The Decit Reduction Act of 2005 created
a Medicaid Integrity Program to address
fraud and abuses in Medicaid.
The Tax Relief and Health Care Act
of 2006 established a physician
quality reporting program and quality
improvement initiatives, and enhanced
CMS’ program integrity efforts through
the Recovery Audit Contractor
(RAC) program.
The American Recovery and Reinvestment
Act of 2009 provided incentives for
investing in technological advances,
prevention and wellness activities, and
a concurrent burden on CMS to monitor
compliance and reporting activities
related to these incentives.
The ACA holds CMS responsible for
implementing its consumer protections
and private health insurance provisions.
Most of these initiatives are directly
attributable to determining whether the
federal government — and the American
population — receives appropriate value for
its large investment in health care.
“[Compliance is] the process of …
helping health care professionals
understand and meet the
expectations of those who grant
us money, pay for our services,
regulate our industry …
The Health Care Compliance Association
2013 enforcement overview
Continuing a trend of the past several years,
well over half of all government recoveries
in 2013 resulted from health care fraud
cases. Most of these settlements were
from lawsuits brought under the qui tam
provisions of the False Claims Act (FCA).
The number of qui tam lawsuits has grown
signicantly, with more than 750 new cases
led in 2013 — about double the annual
number ve years ago.
FCA lawsuits are civil cases, but federal
and state governments also pursue
criminal cases under health care F&A
laws. The Department of Justice (DOJ)
generally pursues such cases, often
involving the cross-agency Medicare Fraud
Strike Force. The HHS Ofce of Inspector
General (OIG) conducts criminal, civil and
administrative investigations of fraud and
misconduct against individuals and health
care organizations, assessing penalties
ranging from exclusion from participating
in Medicare and Medicaid to civil monetary
penalty settlements and administrative
recoveries of overpayments. The OIG also
oversees settlements of provider self-
disclosure matters.
Exhibit 4.1 on page 61 provides a brief
summary of the types of enforcement
activities in 2013 by organization type.
60 New horizons: voyage to value
“We will also produce savings for
taxpayers by continuing to crack
down on waste, fraud and abuse.
Every dollar we invest in the Health
Care Fraud and Abuse Control
initiative, for example, returns
$8.10 in money we recover, which
last year was a record-breaking
$4.3 billion.
Kathleen Sebelius
HHS Secretary
Oral Testimony before the Committee on Ways &
Means, United States House of Representatives
March 12, 2014
Reviewing the types of cases settled in
2013, as well as the enforcement activities
of the DOJ, OIG and CMS over time, can
guide health care organizations as they
steer through regulatory waters. To stay
on course, then, in developing an effective
compliance program, organizations should
devote part of their efforts to consistently
monitoring regulations.
FCA
CMS and other federal ofcials have often
referred to the FCA as the most effective
tool in ghting against fraud because of its
provisions to reward those who go public
with information about allegedly abusive
practices. The FCA allows the government
to recoup up to three times the actual
damages, plus up to $11,000 per violation.
Federal enforcement of the FCA has been
expanding from overbilling or inappropriate
billing to cover such concerns as off-
label drug marketing and cases involving
violations of good manufacturing practices
and other broad applications. We can
expect federal enforcement activities to
continue to encompass new and wide-
ranging applications of the FCA.
Exhibit 4.1. 2013 enforcement activity summary
Hospitals Most settlements in 2013 were related to FCA claims of improper billing for short stays and
misclassication as inpatient/outpatient/observation. Cases involving the Stark Law and Anti-Kickback
Statute (AKS) increased in 2013. Most stemmed from allegations of improper payments to physicians for
consulting, rent or bonuses.
Long-term care (LTC) With a growing number of qui tam lawsuits, LTC cases ranged from allegations of providing medically
unnecessary services to hospice patients who did not meet the required prognosis of six months or less to
live, to cases of inadequate nursing care or unnecessary therapy services. The Medicare Fraud Strike Force
brought several actions involving home health providers for fraudulent claims.
Physician practices In this segment, enforcement actions primarily related to upcoding for higher levels of physician
services than were actually provided, as well as AKS violations in physician relationships with labs and
other ancillary service providers, particularly those in which physicians held an investment interest.
The Medicare Fraud Strike Force takedowns resulted in charges being led against many individual
physicians as well as group practices.
Pharmaceuticals Unlike the previous year, no blockbuster multibillion-dollar settlements were made in 2013. Cases were
primarily related to off-label marketing allegations and AKS violations for inducements to physicians to
prescribe certain drugs through consulting arrangements, free continuing education courses and other
forms of payment.
Medical device
companies
Cases ranged from encouraging physicians and other providers to submit claims with incorrect diagnosis
and procedure codes, lack of medical necessity for devices, and AKS allegations of rebates or free medical
equipment in exchange for prescribing certain medical devices. Increased scrutiny by CMS resulted in
many denials of medical device providers’ initial applications to participate in Medicare and Medicaid.
Health plans Only one notable settlement was reached with a health plan in 2013. It was related to allegations that the
plan articially inated its patient risk adjustment scores to receive higher payments.
Source: Compiled from DOJ statements, www.justice.gov
61
The Stark Law
Growing activity in the Stark Law and
AKS violations also can be expected to
continue, along with increasing focus on
the Stark Law’s application to Medicaid
claims. Historically, enforcement of Stark
was centered on claims submitted to
Medicare, due to specic wording in the
law that prohibits federal payments for
self-referrals. With Medicaid payments
made by the states, there is no direct
federal payment to prohibit. Amendments
to Stark expanded its reach to Medicaid by
prohibiting federal matching fund payments
to the states for Medicaid claims that would
have been prohibited by Stark if made for
Medicare claims.
A proposed rule to implement this
provision stated that each state would
have to establish its own sanctions for such
violations. A nal rule implementing this
provision has not been issued, and CMS has
not provided any further guidance on how
the Stark Law applies to Medicaid claims.
However, in two signicant 2013 cases,
the US District Court in both the Middle and
Southern Districts of Florida upheld the
government’s argument that under the FCA,
certain referral practices prohibited under
Stark can be applied to both Medicare
and Medicaid claims. The government is
expected to rely on these rulings, greatly
expanding the sizes of potential settlements
in Stark Law cases by imposing penalties
on Medicare and Medicaid claims.
Physician activities
With CMS’ focus on physicians as
the “gatekeepers” of the health care
system, and based on increasing numbers
of enforcement activities directed at
individual physicians and physician
group practices, we can anticipate
increasing scrutiny of physician activities,
relationships and actions. In particular,
continuing investigations into payments
by pharmaceutical and medical device
companies to physicians as paid speakers,
consultants and advisory board members
can be expected. CMS has stepped up
activities to increase physicians’ awareness
of their responsibilities in combatting health
care fraud and abuse as part of their role
in providing quality medical care. For an
update, see the Value vignette on page 63.
Along with CMS, other federal agencies
are engaging physicians in identifying
instances of health care fraud or
noncompliance with applicable statutes.
Part of the compliance education effort
involves providing examples of compliance
problems and advising physicians how they
can report such concerns. For example,
the US Food and Drug Administration is
seeking help from physicians in its Bad
Ad program, asking doctors to report
misleading advertisements for drugs,
biologicals or medical equipment as
well as advertisements for off-label use
of drugs. Off-label marketing cases will
continue to be an area of high interest
in enforcement activities.
Health insurance exchanges
As the federal and state insurance
exchanges begin their second national
open enrollment period, CMS is expected
to increase its oversight and enforcement
activities related to adequacy of networks,
minimum loss ratios and other provisions
intended to hold payers responsible
for complying with the ACA’s insurance
plan requirements. Also, all payments
made through, or in connection with,
the exchanges are subject to the FCA.
This signicantly expands enforcement
opportunities over a much broader universe
than Medicare and Medicaid claims.
Health care payers can expect greater
enforcement activity than they have
experienced in the past.
CMS fraud detection initiatives
CMS uses a wide variety of initiatives
to help detect and prevent fraudulent
programs — from low tech, such as
the Senior Medicare Patrol, to high
tech, such as predictive modeling in
the agency’s Fraud Prevention System.
For the Senior Medicare Patrol, the
Administration is expanding its activities
to educate Medicare beneciaries on how
to prevent, detect and report Medicare
fraud, waste and abuse. Government
ofcials have stepped up educational
initiatives and raised nancial incentives
for beneciaries to enlist their help in
battling fraudulent claims. In 2013, more
than 49,000 complaints from Medicare
beneciaries were reported and referred
for further evaluation.
CMS reported that its Fraud Prevention
System helped to stop, prevent or identify
about $115 million in fraudulent payments
in its rst year of operation. The system
uses predictive modeling and data analytics
to review Medicare fee-for-service claims
for indicators of fraud. Highlighted claims
are bumped for review and scrutiny.
In addition to enforcement measures,
CMS can also use its authority to suspend
payments to providers and suppliers
suspected of fraudulent activities, moving
from the effort of collecting overpayments
to preventing inappropriate payments.
Over the past several years, the OIG has
increasingly focused its investigations on
the responsibilities of corporate executives.
Under the “Responsible Corporate Ofcer,
or Park doctrine, a responsible corporate
ofcer’s liability “does not depend on their
62 New horizons: voyage to value
approval or knowledge of wrongdoing, but
hinges instead on whether they had the
responsibility and authority to prevent or
correct the violation and failed to do so.
This doctrine permits the OIG to exclude
individual ofcers or owners of companies
investigated for F&A violations from
participating in Medicare and Medicaid.
Few individuals have been excluded under
this doctrine to date, but the OIG continues
to emphasize that it intends to use
exclusion to hold executives and owners
accountable for their companies’ conduct.
The OIG has also indicated its intent to
actively enforce “corporate integrity
agreements,” seeking exclusion from
Medicare or Medicaid for any breaches.
In March 2014, the OIG issued a notice
of exclusion for numerous breaches of
a national health care organization’s
corporate integrity agreement.
“OIG is committed to driving
positive change through work that
is relevant, innovative, customer-
focused, and high impact. During
this reporting period, we continued
to advance our core mission of
protecting HHS programs and the
people they serve.
Daniel Levinson
HHS Inspector General
Semiannual Report to Congress, Fall 2013
Value vignette
Physician education: enlisting the gatekeepers
CMS has launched a major compliance
education initiative for physicians, who
are described as the health care system’s
“principal gatekeepers.” According to the
agency, formal education on program
integrity will help increase awareness
and compliance. As a result, physicians
will be less likely to submit inappropriate
claims or to become victims of fraud
schemes themselves.
Although physician compliance with
Medicare and Medicaid legislation and
regulation has always been subject to
review and oversight by the HHS OIG and
other agencies, the ACA upped the stakes
by requiring all physicians, as well as all
health care providers who treat Medicare
or Medicaid patients, to establish an
effective compliance program as a
condition of enrollment.
To help physician practices in creating
an effective compliance program, as
well as increase their overall awareness
of compliance matters, the OIG issued
Compliance Program Guidance for
Individual and Small Group Physician
Practices (available at: http://oig.hhs.
gov/authorities/docs/physician.pdf).
The OIG has also compiled a wealth of
compliance education materials on its
website “Compliance 101” (http://oig.
hhs.gov/compliance/101/). This site was
designed to help health care providers
and suppliers understand F&A laws and
the consequences of violating them, as
well as offer ways to cultivate a culture
of compliance. It includes a variety of
webcasts, videos, documents and other
training materials, available at no cost.
To further educate physicians on
compliance and other Medicare
concerns, CMS established the Medicare
Learning Network (MLN). A one-stop
site, it includes ofcial CMS information,
education and resources for Medicare
fee-for-service providers. Information
is also available from other federal
agencies to promote physician awareness
of fraudulent, or otherwise illegal,
activities. The MLN provides a variety
of informational and educational products,
including web-based training courses,
many of which offer continuing medical
education credits.
One of the many educational documents
included on the MLN is “Avoiding
Medicare Fraud & Abuse: A Roadmap
for Physicians” (available at www.cms.
gov/Outreach-and-Education/Medicare-
Learning-Network-MLN/MLNProducts/
Downloads/Avoiding_Medicare_FandA_
Physicians_FactSheet_905645.pdf).
This document aims to help physicians
in complying with federal laws by
outlining “red ags” in relationships
with payers, fellow physicians and
vendors. Summaries are provided of
applicable laws with related enforcement
measures and penalties, along with
recommendations for how physicians
can respond to potential red ags.
The document also includes links to other
sources for further information, including
where to go for help and what to do if a
physician identies a problem in a current
business relationship.
Sources: Websites cited.
63
Summary of benefits and
coverage: complying with
a new mandate
The ACA requires that a summary of
benets and coverage (SBC) be provided to
employees eligible for employer-sponsored
health insurance with written h