Transcript International Comparison of Spending on Health, 1980–2006

THE
COMMONWEALTH
FUND
Reforming Provider Payment: Essential
Building Block for Health Reform
Stuart Guterman
Assistant Vice President
Director, Program on Medicare’s Future
The Commonwealth Fund
Alliance for Health Reform Briefing on
Payment Reform
Washington, DC
March 20, 2009
Path To High Performance: Key Strategies for
Achieving Access for All, Better Health Care and
Outcomes, and Slower Cost Growth
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• Affordable coverage for all: access and foundation for
payment and system reforms
– Insurance exchange: choice of private and new public plan
– Market reforms, affordability, and shared responsibility
• Align incentives: payment reform to enhance value
– Accessible patient-centered primary care
– Move from fee-for-service to more “bundled” payment, with
accountability
– Align price signals with efficient care and value
• Aim high to improve quality and health outcomes
– Invest in infrastructure: information systems
– Promote health and disease prevention
• Accountable, patient-centered, coordinated care
• Leadership and collaboration
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Trend in the Number of Uninsured, 2009–2020
Under Current Law and Path Proposal
3
Millions
80
Current law
Path proposal
60
48.0
48.9
50.3
51.8
53.3
6.3
4.0
4.1
54.7
56.0
57.2
58.3
4.1
4.1
4.1
4.2
59.2
60.2
61.1
4.2
4.2
4.2
40
19.7
20
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Note: Assumes insurance exchange opens in 2010 and take up by uninsured occurs over two years.
THE
Remaining uninsured are mainly non-tax-filers.
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Data: Estimates by The Lewin Group for The Commonwealth Fund.
Source: The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way, Feb. 2009.
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Potential Gain in Population Health
If the U.S. Reaches Benchmarks
• 37 million more adults and 10 million more children with
accessible primary care
• 68 million more adults receiving recommended
preventive care
• 70,000 fewer children admitted to hospitals for asthma
• 250,000 fewer admissions to hospitals for complications
of diabetes
• 600,000 fewer elderly hospitalized or re-admitted for
preventable conditions
• 100,000 fewer deaths before age 75 from conditions
amendable to health care
• 180,000 more physicians using electronic medical
records and information networks linking teams
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Total National Health Expenditures (NHE), 2009–2020
Current Projection and Alternative Scenarios
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NHE in trillions
$6
Current projection (6.7% annual growth)
$5
Path proposals (5.5% annual growth)
5.2
Constant (2009) proportion of GDP (4.7% annual growth)
4.6
$4
4.2
$3
2.6
$2
Cumulative reduction in NHE through 2020: $3 trillion
$1
2009
2010
2011 2012
2013
2014 2015
2016
2017 2018
2019
2020
THE
Note: GDP = Gross Domestic Product.
COMMONWEALTH
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Data: Estimates by The Lewin Group for The Commonwealth Fund.
Source: The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way, Feb. 2009.
Integrated
system
capitation
Global DRG
fee: hospital,
post- acute,
and physician
inpatient
Outcome
measures;
large % of
total payment
Less
Feasible
Care coordination
and intermediate
outcome
measures;
moderate % of
total payment
Global DRG fee:
hospital only
Global
ambulatory
care fees
More
Feasible
Global primary
care fees
Preventive care;
management of
chronic conditions
measures; small %
of total payment
Blended FFS
and medical
home fees
Continuum of P4P Design
Continuum of Payment Bundling
Interrelation of Organization and Payment
FFS and DRGs
Small MD
practice;
unrelated
hospitals
Primary care
MD group
practice
Multispecialty
MD group
practice
Hospital
system
Integrated
delivery
system
Source: A. Shih, K. Davis, S. Schoenbaum, A. Gauthier, R. Nuzum, and D. McCarthy, Organizing the U.S. Health
Care Delivery System for High Performance (New York: The Commonwealth Fund, Aug. 2008).
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Net Impact of Path Payment Reforms on Cumulative
National Health Expenditures Compared with
Current Projection, 2010–2020 (in billions)
Total
NHE
Private
Employers
State & Local
Governments
Househol
ds
Federal
Budget
Total Payment Reforms
–$1,010
–$170
–$10
–$82
–$749
Enhanced payment for
primary care
–$71
–$28
–$2
–$11
–$30
Encouraged adoption of
Medical Home model
–$175
–$25
–$13
–$36
–$101
Bundled payment for acute
care episodes
–$301
–$75
–$4
–$11
–$211
• High cost area
updates
–$223
–$64
–$3
–$29
–$127
• Prescription drugs
–$76
+$22
+$12
+$5
–$115
• Medicare Advantage
–$165
$0
$0
$0
–$165
Correcting price signals
Data: Estimates by The Lewin Group for The Commonwealth Fund.
Source: The Lewin Group, The Path to a High Performance U.S. Health System: Technical Documentation
(Washington, D.C.: The Lewin Group, 2009).
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Quality and Cost of Care for Medicare Patients
Hospitalized for Heart Attacks, Colon Cancer, and Hip
Fracture, by Hospital Referral Regions,
2000–2002
Quality of Care*
(1 Year Survival Index, Median = 70%)
1.25
1.00
0.75
0.75
1.00
1.25
Relative Resource Use**
(Median Relative Resource Use = $25,994)
* Indexed to risk-adjusted 1 year survival rate (median = 0.70).
** Risk-adjusted spending on hospital and physician services using standardized national prices, indexed to median.
THE
Data: E. Fisher and D. Staiger, Dartmouth College analysis of data from a 20% national sample of Medicare beneficiaries.COMMONWEALTH
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FUND
Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2006
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What Drives Variation in Spending?
Average risk-adjusted standardized spending for chronic
obstructive pulmonary disease episode
Type of service
Low
Average
Difference between
high and average
High
%
$
Total episode
6372
7871
9748
23.8
1877
Initial hospital stay
4408
4414
4406
-0.2
-8
Physician
547
569
576
1.2
7
Readmissions
671
1543
2550
65.3
1007
Post-acute care
466
998
1780
78.4
782
Other
280
347
436
25.6
89
Source: G. Hackbarth, R. Reischauer, and A. Mutti. “Collective Accountability for Medical Care—Toward Bundled
Medicare Payments” New England Journal of Medicine July 3, 2008 359(1):3-5.
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Total National Health Expenditure Growth for
Hospitals and Physicians, Current Projections and
With Policy Changes, 2009-2020
Hospital Expenditures (trillions)
Physician Expenditures (trillions)
$1.8
$1.8
Current Projection
$1.6
$1.6
$1.6
$1.4
$1.4
Path Policy
$1.4
$1.2
Current Projection
Path Policy
$1.3
$1.2
$1.1
$1.0
$1.0
$0.8
$0.8
$0.8
$0.6
$0.6
$0.4
$0.4
$0.2
$0.2
$0.0
$0.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0.7
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Data: Estimates by The Lewin Group for The Commonwealth Fund.
Source: The Lewin Group, The Path to a High Performance U.S. Health System: Technical Documentation
(Washington, D.C.: The Lewin Group, 2009).
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Conclusions
• Emphasis on primary care can provide better access to
needed care and more patient-centered care
• Bundled payment can encourage more coordinated care
across providers and settings, and more accountability for
outcomes and resource use
• The main objective of payment reform is to provide more
organized, effective, and efficient health care delivery
• Payment reform built on a foundation of coverage for all and
system reforms can be more effective
• These changes will be difficult—they affect how $42 trillion in
projected cumulative spending will be allocated
• But we are not talking about shutting down the health care
system—only reducing cumulative spending from $42 trillion
to $39 trillion, with annual growth slowing from a projected
6.7% to 5.5% (compared with 4.7% for GDP)
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Acknowledgements
Karen Davis, Ph.D.,
President
Stephen
Schoenbaum,
M.D.
Executive Vice
President for
Programs
Cathy Schoen,
Sr. Vice President,
Research & Evaluation
Kristof Stremikis, M.P.P
Research Associate
to the President
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COMMONWEALTH
FUND
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