Call Girls Bareilly Just Call 9907093804 Top Class Call Girl Service Available
Â
Ben Richardson: How payment innovation can change healthcare
1. How payment
innovation can change
healthcare
Nuffield Summit
Ben Richardson
Discussion Document
8 March 2013
CONFIDENTIAL AND PROPRIETARY
Any use of this material without specific permission of McKinsey & Company is strictly prohibited
2. Changing how we pay for healthcare is key to
unlocking innovation
âȘ Payment innovation is a way to align payors and multiple providers on the
triple aim of improved quality, better experience and reduced cost
âȘ It can do this by helping to 1) making value conscious choices, 2) reduce
needless variation in cost, 3) target resources where it is needed, 4) changing
patient behaviour
âȘ Broadly three different models exist for payment: capitation, episodes, and
pay for performance
âȘ These payment models are being put into place by different types of players
âȘ Note of caution: payment innovation on its own isnât enoughâother enablers
are required
âȘ Putting in place payment innovation can be done at multiple levels
McKinsey & Company | 1
3. 4 levers that payment innovation can support
Lever Payment innovation
Make value-conscious choices âȘ Allow provider to benefit from
1 âȘ Practice (eg. resolve in 1ry care) reducing cost
âȘ Procedure (eg. decisions)
âȘ Products (eg. Gx)
âȘ Providers (eg referrals)
Reduce unwarranted variation âȘ Upside better performance
2 âȘ Understand ânormalâ and/or improvement
âȘ Peer review âabnormalâ âȘ Downside for poor performance
Better management of chronic âȘ Fund additional care
3 conditions âȘ Allow provider to benefit from
âȘ Coordinate care reducing cost
âȘ Faster response
âȘ Proactively manage
Change patient behaviour to support âȘ Incentivise individual behaviour
4 healthier lifestyles âȘ Provide personal budgets
McKinsey & Company | 2
4. Unwarranted variation in practice-level activity and cost
Activity distribution by practice
Activity per 1000 weighted population (normalised
for average IMD score)
Non-elective Elective (R2 = 0.53) OP (R2 = 0.64) A&E (R2 = 0.64)
11-22%
2.7 2.6 2.6 2.6
Weighted median = 136 Weighted median = 126 Weighted median = 1,565 Weighted median = 482
SOURCE: HES 2010/11, McKinsey analysis, ONS, IMD, DH Exposition book
McKinsey & Company | 3
5. 20% of patients drive 80% of costs
2010/11 data, 4 London Average cost per Health spend
Total
CCGs Population capita per annum, ÂŁ Social care spend spend, ÂŁm
Very 4,757 39,600 118
high
risk
High 41,675 8,700 327
risk
Moderate 142,773 2,400 There is a 40X
354
risk variation in spend (and
needs) between
There is a 40X
average and highest
variation in spend (and
cost patients, the
Low risk 322,609 500 needs) between 186
mostly flat, âone size
average and highest
fits allâ payment
risk patients
model doesnât address
Very low this
378,020 300 104
risk
Total / average ~890,000 1,230 1088
1 Includes elective admissions, outpatient, and A&E 2 Includes community health & primary care
SOURCE: McKinsey team analysis, NHS NWL data; HES 2010/11, FIMS, Q research/NHS Information centre, PSSEX;
McKinsey & Company | 4
NHS Reference Costs
6. There are 3 major complementary payment models being deployed in US
Full Population-based payment Most applicable
alignment of âȘ Capitation âȘ Primary prevention for healthy
payment to
âȘ Care for chronically ill
outcomes
(e.g., managing obesity, CHF)
Episode-based payment âȘ Acute procedures
(e.g., CABG, hips, perinatal)
ï§ Retrospective Episode Based
âȘ Most inpatient stays including
Payment (REBP) post-acute care, readmissions
ï§ Bundled payment âȘ Acute outpatient care (e.g.,
broken arm, URI, some
cancers, some behavior health)
âȘ Discrete services provided by
Pay for performance entity with limited influence on
âȘ Bonus payments tied to quality upstream or downstream costs
(e.g., MRI, prescription,
âȘ Bonus payment tied to value medical device, Health Risk
Assessment)
McKinsey & Company | 5
7. International experiments with a wide variety of new reimbursement
and risk-sharing models
Select examples Description
âPayor-ledâ
âȘ Payor-led affiliation or acquisition of health
system seeking full clinical/operational
integrated network integration to reduce costs, improve
Full risk
experience, and manage referrals
âProvider-ledâ
âȘ Provider system that takes full risk either with
own health plan or under contract, using
integrated network integrated clinical system to deliver value
Risk sharing
âȘ Provider organisation accountable for quality,
ACO cost, and overall care; share cost savings if
performance metrics are met
âȘ Covers all aspects of preadmission, inpatient,
Episodes of care and follow-up care, including postoperative
complications within a set time period
Patient centered
âȘ Team of physicians and extenders,
coordinated by a PCP, coordinate provide
medical home high levels of coordinated care; typically tied
sharing
Gain
to P4P contract
âȘ Payment bonus tied to efficiency metrics
Pay for value (e.g., reduction in ER visits, imaging)
SOURCE: McKinsey Analysis McKinsey & Company | 6
8. Payment innovation must meet 8 requirements to drive cost-reducing
innovation in care delivery
Expand use of population-based and episode-based
Setting expectations
payment
Maximize provider revenue and earnings subject to
Significant
outcomes-based reimbursement
at Scale Ensure a critical mass of providers within a local
market transition to outcomes-based reimbursement
Stable Clarify long-term vision and commit to providers
Striving, but practical Design approach to be effective in current
regulatory, legal, industry structure
Sustainable Ensure providers that adapt thrive financially
Supportive Payment innovation necessary but not sufficientâ
needs support for transformation
Supply-demand Align reimbursement with patient engagement,
integration benefits, network design, etc.
McKinsey & Company | 7
9. Significant impact of payment innovation internationally
Country Example Impact achieved
âȘ 25% lower cost per head
âȘ 30% drop in admissions
âȘ 90% patient satisfaction
âȘ 13% reduction in cost per
head
âȘ 7% below median costs
âȘ Top decile outcomes
âȘ 58% fewer amputations
âȘ 18-30% lower admission
âȘ 17-43% lower readmissions
âȘ 92% net promoter score
McKinsey & Company | 8
10. The major success stories that we have studied have all had a major
innovation around reimbursement
Care delivery innovation:
Segmentation of population
by risk ïŒ ïŒ ïŒ ïŒ
Innovative delivery model
matched to needs ïŒ ïŒ ïŒ ïŒ
Innovative payment
mechanism at scale ïŒ ïŒ ïŒ ïŒ
Information flow and IT
platform ïŒ ïŒ ïŒ ïŒ
Accountability and
governance ïŒ ïŒ ïŒ ïŒ
Clinical leadership and
development of culture ïŒ ïŒ ïŒ ïŒ
Patient/user partnership
ïŒ ïŒ ïŒ ïŒ
McKinsey & Company | 9
11. How do you take this forward?
Action Example
System- ï§ Establish and fund innovation model with 5 at ï§ US: CMS State
level scale testing sites and 10 planning sites Innovation Model
ï§ Creates risk adjusted individual-level capitation ï§ GE: mRSA
payments
ï§ Change hospital reimbursement to create capitated ï§ US: Medicare ACOs
ACOs
Local Health ï§ Create multi-payor/multi-provider partnerships ï§ US: Sacramento
Economy with payment innovation, governance structure, ï§ UK: NHS NWL
information tools, clinical change and patient ï§ DE: Bundes-
engagement knappschaft
Commissio- ï§ Change reimbursement mechanisms and ï§ US: Arkanas
ners information flow to transfer some risk to providers ï§ US: BCBSMA AQC
and incentivise management of total medical cost ï§ DE: AOK
ï§ Accountable Providers with at-risk reimbursement ï§ US: Chen Med
Providers
based on quality and performance, creating system ï§ ES: Ribera Salud
with clinical model, people model and information to
drive superior performance
McKinsey & Company | 10
12. Changing how we pay for healthcare is key to
unlocking innovation
âȘ Payment innovation is a way to align payors and multiple providers on the
triple aim of improved quality, better experience and reduced cost
âȘ It can do this by helping to 1) making value conscious choices, 2) reduce
needless variation in cost, 3) target resources where it is needed, 4) changing
patient behaviour
âȘ Broadly three different models exist for payment: capitation, episodes, and
pay for performance
âȘ These payment models are being put into place by different types of players
âȘ Note of caution: payment innovation on its own isnât enoughâother enablers
are required
âȘ Putting in place payment innovation can be done at multiple levels
McKinsey & Company | 11
13. Arkansas Payment Improvement Initiative (APII):
William Golden MD MACP
Medical Director, Arkansas Medicaid
UAMS Professor of Medicine and Public Health
William.Golden@arkansas.gov
12
14. Preliminary working draft; subject to change
STRATEGY
The populations that we serve require care falling into three domains
Patient populations
within scope (examples) Care/payment models
Prevention,
â CHF
âą Healthy, at-risk Population-based:
screening,
â COPD
âą Chronic, e.g., medical homes responsible for
chronic care
â Diabetes
care coordination, rewarded for
quality, utilization, and savings
against total cost of care
â AMI
â CHF
âą Acute medical, e.g., Episode-based:
â Pneumonia
retrospective risk sharing with
Acute and one or more providers, rewarded
â CABG
post-acute for quality and savings relative
â Hip replacement
care âą Acute procedural, e.g., to benchmark cost per episode
Supportive âą Developmental Combination of population-
care disabilities and episode-based models:
âą Long-term care health homes responsible
âą Severe and persistent for care coordination; episode-
mental illness based payment for supportive
care services
13
15. PAPs that meet quality standards and have average costs below the
commendable threshold will share in savings up to a limit
Shared savings
Pay portion of excess
- costs Shared costs
No change
High No change in payment to
providers
Acceptable
Receive additional payment as share as savings
+
Commendable
Gain
sharing limit
Low
Individual providers, in order from highest to lowest average
cost
16. Draft thresholds for General URIs
Provider average costs for General URI episodes
Adjusted average episode cost per principal accountable provider1
Average cost / episode
Dollars ($)
Antibiotics prescription rate
above episode average2
Antibiotics prescription rate
below episode average2
Year 1 acceptable
67
Year 1 commendable
46
Gain sharing limit
15
Principal Accountable Providers
1 Each vertical bar represents the average cost and prescription rate for a group of 10 providers, sorted from highest to lowest average cost
2 Episode average antibiotic rate = 41.9%
SOURCE: Arkansas Medicaid claims paid, SFY10
17.
18. âȘ More information on the Payment Improvement Initiative
can be found at www.paymentinitiative.org
â Further detail on the initiative, PAP and portal
â Printable flyers for bulletin boards, staff offices, etc.
â Specific details on all episodes
â Contact information for each payerâs support staff
â All previous workgroup materials