Sunday, July 24, 2011

Studying Payment Ideas

“It is evident that physicians remain unsure of what reform will bring which means that physicians face a time of uncertainty trying to understand the multiple approaches suggested by commercial, state, and federal payers” according to Tim Ferris M.D. Medical Director for the Massachusetts General Physicians Organization. He was speaking at a jointly sponsored briefing by the Commonwealth Fund and by the Alliance for Health Reform held on July 18th on Capitol Hill.

Understanding how the new payment system will work is confusing but there are some clear directional indicators. For one, the focus will change from units to episodes of care and to examining population health outcomes. Secondly, physicians will move forward with what they think will improve outcomes and/or reduce costs, and but at the same time, they want incentives that will reward innovation.

Ferris gave an example of how innovative ideas can be studied by describing how in 2006, CMS selected Massachusetts General Hospital (MGH) to participate in a three year demonstration. The goal was to test strategies to use to coordinate Medicare services for high-cost, fee-for-services beneficiaries. The payment model used is similar to proposed shared savings for ACOs in that monthly payments are based on the number of enrolled patients.

MGH originally enrolled 2,500 highest cost Medicare patients who account for $68 million in annual Medicare spending excluding pharmacy spending. On average, these patients take 12.6 medications, have 3.4 hospitalizations a year, and cost about $24,000 annually.

To help the primary care physicians manage these patients, MGH integrated 12 care managers into their primary care practices. The care managers developed personal relationships with enrolled patients and worked closely with physicians to help identify gaps in patient care, coordinate provider services, and facilitate communication especially during transitions. A health IT system is supporting the entire program which includes EHRs, patient tracking, and home monitoring.

CMS commissioned an independent evaluator, RTI to assess the performance of the demonstration. RTI found MGH’s program to be highly successful in the fact that savings of 12.1 percent were realized in gross savings, 7.1 percent in annual net savings, hospitalization rate among enrolled patients was reduced by 20 percent, and emergency department visits were lower by 25 percent. The end results show that for every dollar spent, $2.65 was saved.

In 2009, CMS renewed the MGH demonstration for another three years and expanded it to Brigham and Women’s Hospital and to the North Shore Medical Center. So far, the total enrollment is 4,582 patients but in the next three years, the program is estimated to grow to about 8,361 total patients across all three sites.