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Transcript BCH - University of Texas School of Public Health
Boston Children’s Hospital
Enterprise Costing Workgroup Meeting
April 6, 2013
1
Overview
Issues:
Rising Healthcare Costs
Unprofitable Pricing Methods
Process Inefficiency
Analysis:
Time-Driven Activity-Based Costing (TDABC) Approach
Recommendations:
Bundled Payment
Physician Bonus Model
2
BCH Financial Position
Historically has reported higher costs against
competitors
The largest provider to low-income families, with 30%
patients covered by Medicaid
Treats 90% of the most critical and complex pediatric
cases in Massachusetts
Resulting Key Issue:
Rising Healthcare Costs
Patient Attrition
Lapse in Medicaid contract with New Hampshire
Blue Cross Blue Shield Contract Renegotiation
3
BCBS-MA: Alternative Quality
Contract
Medical Expense Trend Comparison for AQC
Enrollees and Non-AQC Enrollees
4
Payment Methods
Characteristic
Historical
Capitation
Fee for Service
(FFS)
Bundled Payment
Paid post
service
completion
Monthly payments with
occasional budget
reconciliation
Physician, hospital,
and PRN services
related to a specific
person (often
capitated separately)
No Bundling
Physician, hospital, and PRN
services related to a budgeted
payment for a specific
treatment, specific health
event, or chronic condition
Sometimes
No
Yes
No
No
Yes
What is the time period of Prorated payment
the payment?
per month for a year
Which providers and
services are bundled?
Are performance or
outcome
measures present?
Is risk-adjustment
included?
Who accepts the risk?
Provider accepts
financial risk
What drives physician
action?
Volume and Access
Management
Payer primarily
Provider bears short-term risk
accepts
Payor bears long-term risk
financial risk
Volume
Efficiency and quality
(if paired with performance)
5
3-Step Implementation Plan for
Bundled Payment at BCH
Bundled Payment
for Acute Care
Phase
1
Bundled Payment
for Acute Care and
Post Acute Care
Phase
2
Bundled Payment
for Post Acute
Care
Phase
3
• Specific treatments
are bundled
• Specific health events
are bundled
• Chronic conditions
are bundled
• Ex. Clubfoot cast
• Ex. Appendicitis
• Ex. Type 1 Diabetes
6
BCH Cost Analysis
Cost Analysis
Method
Description
Benefits
Drawbacks
Accuracy
Ratio of Cost to Charges
(RCC)
Relative Value Unit
(RVU)
Time Driven Activity
Based Costing (TDABC)
RVU measures the
Bottom-up approach to
RCC approach assume amount of resources
costing that estimates
costs are proportional to consumed to provide a
costs based on time used
charges
service. Then allocates
for services
the RVU weight to labor
Better cost allocation;
Takes into account
Easy to calculate; simple
easily breaks down costs
indirect and direct
proportion
to identify service line
costs; considers
demonstrating
problems; allows charges
complexity of services
relationship
to be more reflective of
provided
costs
Takes tremendous effort
Allocation
RCC measures cost to
to implement and launch
methodologies tend to
charge ratio, not cost to
this costing system;
be imprecise during
reimbursement ratio
requires constant repractice
evaluation
Good
Better
Best
7
Department of Plastic and Oral
Surgery (DPOS) Worksheet
Personnel Process Time (minutes)
Diagnosis
Plagiocephaly
Neoplasm Skin Excision
Craniosynostosis
Determination of Capacity Cost
Annual Cost per person
Clinical minutes available per year
Capacity cost rate ($ per minute)
Surgeon
18
22
40
ASR
8
55.5
10.5
RN
23
20
23
CA
5
5
10
$522,720.00
87120
$6.00
$89,700.00
89700
$1.00
$134,550.00
89700
$1.50
$71,760.00
89700
$0.80
Medical Diagnosis Cost per
patient visit
Surgeon
ASR
RN
Average
Reimbursement
TDABC
PROFIT
Plagiocephaly
$108.00
$8.00
$34.50
$4.00 $154.50 $350.00
$224.00
$69.50
$210.00 $14.00
Neoplasm Skin Excision
$132.00 $55.50
$30.00
$4.00 $221.50 $350.00
$224.00
$2.50
$210.00 $14.00
Craniosynostosis
$240.00 $10.50
$34.50
$8.00 $293.00 $350.00
$224.00
$(69.00)
$210.00 $14.00
CA
Total
Cost
Charge
RCC
COST
RCC
PROFIT
8
Department of Orthopaedic
Surgery: Cast Room Worksheet
Personnel
Orthopedic Surgeon Plaster/ Cast Technician Ambulatory Service Representative
Determination of Capacity Cost
Annual Cost per person
Available minutes per year
Capacity cost rate ($ per minute)
$693,000
$99,000
$83,160
$83,160
$62,370.00
$83,160
$7.00
$1.00
Personnel Process Time (minutes)
Procedure
Long leg cast, cotton padding
Long leg cast, Gore-tex padding
Petrie long leg cast
Clubfoot cast (hospital; initial visit)
Clubfoot cast (hospital; replacement visit)
Clubfoot cast (hospital; final visit)
$0.75
Minutes
0.25
0.25
0.25
13.00
13.00
0.00
60.00
60.00
103.50
17.00
22.00
8.00
0.00
11.00
0.00
0.00
0.00
0.00
Cost per procedure
Surgeon
ASR
RN
Total Cost
Charge
Average
Reimbursement
TDABC
PROFIT
RVU COST
RVU
PROFIT
Long leg cast, cotton padding
$1.75
$60.00
$-
$61.75
$523.00
$366.10
$304.35
$135.67
$230.43
Long leg cast, Gore-tex padding
$1.75
$60.00
$8.25
$70.00
$584.00
$408.80
$338.80
$141.77
$267.03
Petrie long leg cast
$1.75
$103.50
$-
$105.25
$181.00
$126.70
$21.45
$112.98
$13.72
Clubfoot cast (hospital), full cycle
$546.00
$135.00
$-
$681.00
$975.00
$682.50
$1.50
$225.42
$457.08
Clubfoot cast (Foundation), full cycle
$546.00
$135.00
$-
$681.00
$715.00
$500.50
$(180.50)
$393.25
$107.25
9
Impact of the TDABC Approach
With better costing measures, BCH can
determine more accurate and fair prices for
services
Prices reflect acuity
Negotiate better bundled payments
Easily identifies profit margins and losses for
each service lines
10
Recommendations for BCH’s Four Key Issues and the
Resulting Organizational Outcomes
Key Issues
Issue #1
Rising Healthcare Costs
Issue #2
Unprofitable Pricing
Methods
Issue #3
Process Inefficiency
Issue #4
Patient Attrition
Recommendations
1.
2.
Short term: Bundled
payment for acute
Time-Driven Activitycare
Based Costing (TDABC)
Long term: Bundled
Approach
payment for post
acute care
Standardized Clinical
Assessment and
Management Plans
(SCAMPS)
1.
2.
3.
Contain costs
Implement accurate
costing
Streamline processes
BCH Outcomes
1.
1.
2.
3.
4.
Cost containment
Cost avoidance
Enhanced quality
Population health
2.
Identify profit
margin and loss for
each service
line
Accurate and acuity
sensitive cost data
1.
2.
3.
Eliminate waste
Improve process
Improve entire
patient care cycle
1.
2.
3.
Improved revenues
Better utilization of
resources
Increase in number of
patients
11
Physician Bonus Model
Based on the Program for Patient Safety and
Quality (PPSQ)
1
2
Safety
Effectiveness
3
4
5
6
Efficiency
Timeliness
PatientCenteredness
Equitability
Bonus Calculation
Total Bonus
Distribution
Amount
Percentage
of PPSQ
Measures
Achieved
Number of
Physicians for the
specific treatment
12
Evaluation of Aggregate Physician
Bonus Payment
𝝌1 = Bundled Payment
𝝌2 = Fee for Service
𝝌1
𝝌0
13
Number of PPSQ Measures Achieved
Evaluation of Physician
Bonus by Treatment
Quality threshold
(Best Practices)
Global budget line
Bonus adjustment
for unpreventable
adverse event
No bonus earned
Falling Cost
14
Porter’s Value Chain
Pre-Service
Service Delivery
•
•
•
Save time and
money
Attending a
hospital solely
focused on
children and their
families
Medicaid patients
would receive care
they otherwise
would not have
received
Point-of-Service
Increased quality of care
•
•
•
Receive care from
providers
competing on
quality and evidence
based practices
Value Driven
Innovation
More timely and
efficient care
Post-Service
Accessibility to high quality
network of care
Quality of Life
• Increased emotional
well-being
• Less school and work
days missed
Demonstrating Value to the Patient:
Visual Display
Technology
•
•
•
•
Display PPSQ
results within each
department
Communication
Internet
• Explanation of Quality
Web-based Tools
Care
Software Systems
15
Questions
16
Appendix
17
Exhibit A: Program for Patient
Safety and Quality at BCH
Safety:
Adverse events
Central line infections in
Efficiency:
Length of Stay and
Readmission Rate
Intensive Care Units
Timeliness:
Emergency Department
Length of Stay
Effectiveness:
Pain Management
Diabetes Care
Lung Function in Patients
Equitability:
Equitable nursing care
Patient-Centeredness:
Inpatient satisfaction
Outpatient satisfaction
with Cystic Fibrosis
Asthma Care
18
Exhibit B: SCAMPS Example
19
Exhibit B: SCAMPS Example
20
Exhibit B: SCAMPS Example
21
Exhibit B:Standardized Clinical Assessment
and Management Plans (SCAMPS)
Reduces diversity of patient assessment
Systematic approach to clinical assessments and
management algorithm
Allowing better management of care
Improving patient care delivery
Determines how effective current clinical processes and
practices are
Ease transition towards health management interventions
Reduce unnecessary resource utilization
.
22
Exhibit C: Method for Measuring
SCAMPS Shortfalls
The costs associated with any failure to meet
the standardized care levels determined by
SCAMPS will be calculated based on the
TDABC approach.
Current BCH examples:
No shows within the DPOS
Miscommunications when transferring patients
from the Emergency Department
23
Exhibit D:DPOS Cost Analysis
Breakdown
24
Exhibit E: Severity of Illness Index
Acute and Post-Acute care bundled payments adjust for case-mix severity of illness in
different patient populations
Severity of Illness Index is a generic (not disease-specific) four-level index
(increasing severity from level 1 to level 4) determined from the values of
seven dimensions related to a patient's burden of illness. These dimensions
are:
Stage of the principal diagnosis,
Complications of the principal condition,
Concurrent interacting conditions that affect the hospital course,
Dependency on hospital staff,
Extent of non-operating room life support procedures,
Rate of response to therapy or rate of recovery,
Resolution of acute symptoms/signs.
It is not what is done to the patient that drives the Severity of Illness Index,
but what the patient actually looks like.
The signs and symptoms of the patient's principal and secondary diagnoses,
as well as the rate of response to therapy contribute most heavily to Severity
of Illness coding.
25
Exhibit F: What Constitutes an
Unpreventable, Adverse Event?
According the World Health Organization, an adverse event
is defined as an injury related to medical management and
not due to the complications of a disease.
According to Boston Children’s Hospital, an adverse event
is defined as something that unintended that happens in a
hospital which causes either harm or the risk of harm to
patients.
Examples of unpreventable adverse events:
Drug reaction in a patient with no history of prior drug reaction
Side effect of chemotherapy in a patient who must endure the
chemotherapy in order to be cured of cancer
26
Exhibit G: Outcomes of the Value-Based Competition
Plan on Patient Value
Key Issues
Issue #1
Rising Healthcare Costs
Issue #2
Unprofitable Pricing
Methods
Issue #3
Process Inefficiency
Issue #4
Patient Attrition
Recommendations
1.
2.
Short term: Bundled
payment for specific
treatment
Long term: Bundled
payment for chronic
condition
Time-Driven ActivityBased Costing
(TDABC) Approach
Standardized Clinical
Assessment and
Management Plans
(SCAMPS)
1.
2.
3.
Contain costs
Implement accurate
costing
Streamline
processes
Outcomes on Patient Value
1.
2.
Patient receives more
1. Better quality of care
outcome driven care
2. Improves quality of life
centered around the
for both the child and the
full cycle of care
1. Potential to reduce
parent
charges for services,
• less school and work
Patient saves time and saving the patient
days missed)
money as only the
money
• Improved emotional
necessary medical
well-being along the
services are
continuum of care
performed
1.
2.
Potential to receive
innovative care by
physicians exposed
to a larger case mix
Receive care from
providers competing
on quality and
evidence-based
practices
27
Exhibit H: Calculation of Bundled
Payment for a Specific Treatment
100%
Payment =
30%
60%
Hospital
+
Physician
10%
+
Bonus
28
References
Alternative Quality Contract (AQC)
Blue Cross Blue Shield of Massachusetts. (2010). Blue Cross Blue Shield of Massachusetts
The Alternative QUALITY Contract. Retrieved from:
http://www.massmed.org/AM/Template.cfm?Section=Register&TEMPLATE=/CM/ContentDisplay.cfm&
CONTENTID=28047
Children's Hospital Boston Joins the Alternative Quality Contract (2012). Blue Cross Blue Shield of
Massachusetts. Retrieved from: http://www.bluecrossma.com/visitor/newsroom/pressreleases/2012/2012-01-24.html
Hennrikus. W., Waters. P., Bae. D.,Virk.S., and Shah. A. (2012). Inside the Value Revolution at
Children’s Hospital Boston: Time-Driven Activity-Based Costing in Orthopaedic Surgery. The Harvard
Orthopaedic Journal. Vol.14
Massachusetts Payment Reform Model: Results and Lessons, Massachusetts. Retrieved from:
http://www.bluecrossma.com/visitor/pdf/aqc-results-white-paper.pd
Massachusetts Medical Society (2009) Overview of Alternative Payment Models. Retrieved from:
http://www.massmed.org/AM/Template.cfm?Section=Register&TEMPLATE=/CM/ContentDisplay.cfm&
CONTENTID=28047
Song. Z., Safran. D., Landon.B., Day. M., and Chernew. M. (2012). The 'Alternative Quality Contract,'
Based on a Global Budget, Lowered Medical Spending and Improved Quality. Health Affairs.
Retrieved from: http://mobile.commonwealthfund.org/Publications/In-the-Literature/2012/Jul/TheAlternative-Quality-Contract.aspx
Weisman. R. (2012). Children’s, Blue Cross deal curbs payments. The Boston Globe. Retrieved from:
http://www.bostonglobe.com/business/2012/01/24/children-hospital-boston-won-get-paymentincrease-from-blue-cross-this-year/mraRWoC99jqOI5suyQ8IZI/story.html
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References
Bundled Payment
Bebinger.M. (January 24, 2012) Children’s Hospital Signs On To Global Payment Strategy Common
Health Reform and Reality. Retrieved from: http://commonhealth.wbur.org/2012/01/childrenshospital-signs-on-to-global-payment-strategy Global Payment Case Study. Retrieved from:
http://www.nbch.org/BCBSMA_Case_Study
Spoerl. B., (May 01, 2012). Massachusetts to Take Up Global Payment Legislation in the Coming
Weeks. Retrieved from:http://www.beckershospitalreview.com/racs-/-icd-9-/-icd-10/massachusettsto-take-up-global-payment-legislation-in-the-coming-weeks.html
Overland. D. (2012). Harvard Pilgrim reaches global payment deal with Partners HealthCare.
FierceHealthPayer. Retrieved from: http://www.fiercehealthpayer.com/story/harvard-pilgrim-reachesglobal-payment-deal-partners-healthcare/2012-10-25
Massachusetts Law Reform
Controlling Health Care Costs in Massachusetts with a Global Spending Target (2012).
The journal of the American medical association. 308, (12). Retrieved from:
http://jama.jamanetwork.com/article.aspx?articleid=1352960 –
Galewitz. P. (2009). Can 'bundled' payments help slash health costs? Kaiser Health News Retrieved
from: http://usatoday30.usatoday.com/news/health/2009-10-25-bundle-payments_N.htm
Glass. K., Pieper. L. , & Berlin. M. (1999). Incentive-Based Physician Compensation Models. J
Ambulatory Care Manage, 22(3), 36–46. Retrieved from:
http://www.aspenpublishers.com/books/KongstvedtOLD/Readings/Chapter%2007/JACM%20223.p36-46.pdf
GOODNOUGH and Sack (2011). Massachusetts Tries to Rein In Its Health Costs. The New York
Times. Retrieved from: http://www.nytimes.com/2011/10/18/us/massachusetts-tries-to-rein-in-itshealth-care-cost.html?pagewanted=all&_r=0
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References
Physician Bonus Model Formulas
Health Affairs Blog (August 13th, 2012) The Release of Massachusetts Health Reform 2.0. Retrieved
from: http://healthaffairs.org/blog/2012/08/13/the-release-of-massachusetts-health-reform-2-0/
Herman. B. (April 03, 2012). Major Lessons from CMS' Bundled Payment ACE Demonstration.
Retrieved from: http://www.beckershospitalreview.com/hospital-physician-relationships/2-majorlessons-from-cms-bundled-payment-ace-demonstration.html
Patel. P., (November 01, 2012) Successfully Implementing Bundled Payment Models. Retrieved
from:http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=1250004871
SCAMPS
Coakley. M., (2011). Examination of Health Care Cost Trends and Cost Drivers. Massachusetts
Attorney. Retrieved from: http://www.mass.gov/ago/docs/healthcare/2011-hcctd.pdf
Rathod. R., Farias. M., Friedman. K., Graham. D., Fulton. D., Newburger. J., Colan. S., & Lock. J.
(2010) A Novel Approach to Gathering and Acting on Relevant Clinical. Congenit Heart Dis. 2010; 5:
343–353
SEVERITY OF ILLNESS
Severity of Illness with DRGs: Impact on Prospective Payment
AHA RESEARCH SYNTHESIS REPORT Retrieved from:
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1646367/pdf/amjph00286-0081.pdf
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