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Boston Children’s Hospital Enterprise Costing Workgroup Meeting April 6, 2013

Boston Children’s Hospital Enterprise Costing Workgroup Meeting April 6, 2013. Overview. Issues: Rising Healthcare Costs Unprofitable Pricing Methods Process Inefficiency Analysis: Time-Driven Activity-Based Costing (TDABC ) Approach Recommendations: Bundled Payment

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Boston Children’s Hospital Enterprise Costing Workgroup Meeting April 6, 2013

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  1. Boston Children’s HospitalEnterprise Costing Workgroup MeetingApril 6, 2013

  2. Overview • Issues: • Rising Healthcare Costs • Unprofitable Pricing Methods • Process Inefficiency • Analysis: • Time-Driven Activity-Based Costing (TDABC) Approach • Recommendations: • Bundled Payment • Physician Bonus Model

  3. 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

  4. BCBS-MA: Alternative Quality Contract Medical Expense Trend Comparison for AQC Enrollees and Non-AQC Enrollees

  5. Payment Methods

  6. 3-Step Implementation Plan for Bundled Payment at BCH Bundled Payment for Acute Care Bundled Payment for Acute Care and Post Acute Care Bundled Payment for Post Acute Care • Specific treatments are bundled • Ex. Clubfoot cast • Specific health events are bundled • Ex. Appendicitis • Chronic conditions are bundled • Ex. Type 1 Diabetes

  7. BCH Cost Analysis

  8. Department of Plastic and Oral Surgery (DPOS) Worksheet

  9. Department of Orthopaedic Surgery: Cast Room Worksheet

  10. 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

  11. Recommendations for BCH’s Four Key Issues and the Resulting Organizational Outcomes

  12. Physician Bonus Model • Based on the Program for Patient Safety and Quality (PPSQ) Bonus Calculation 1 2 3 4 5 6 Percentage of PPSQ Measures Achieved Total Bonus Distribution Amount Number of Physicians for the specific treatment

  13. Evaluation of Aggregate Physician Bonus Payment 𝝌1= Bundled Payment 𝝌2=Fee for Service 1

  14. Evaluation of Physician Bonus by Treatment Quality threshold (Best Practices) Global budget line Bonus adjustment for unpreventable adverse event No bonus earned Number of PPSQ Measures Achieved Falling Cost

  15. Porter’s Value Chain Pre-Service Point-of-Service Post-Service • 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 • Increased quality of care • Receive care from providers competing on quality and evidence based practices • Value Driven Innovation • More timely and efficient care • Accessibility to high quality network of care • Quality of Life • Increased emotional well-being • Less school and work days missed Service Delivery Demonstrating Value to the Patient: • Visual Display • Display PPSQ results within each department • Technology • Internet • Web-based Tools • Software Systems • Communication • Explanation of Quality Care

  16. Questions

  17. Appendix

  18. Exhibit A: Program for Patient Safety and Quality at BCH • Safety: • Adverse events • Central line infections in Intensive Care Units • Timeliness: • Emergency Department Length of Stay • Effectiveness: • Pain Management • Diabetes Care • Lung Function in Patients with Cystic Fibrosis • Asthma Care • Efficiency: • Length of Stay and Readmission Rate • Equitability: • Equitable nursing care • Patient-Centeredness: • Inpatient satisfaction • Outpatient satisfaction

  19. Exhibit B: SCAMPS Example

  20. Exhibit B: SCAMPS Example

  21. Exhibit B: SCAMPS Example

  22. 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 • .

  23. 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

  24. Exhibit D:DPOS Cost Analysis Breakdown

  25. 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.

  26. 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

  27. Exhibit G: Outcomes of the Value-Based Competition Plan on Patient Value

  28. Exhibit H: Calculation of Bundled Payment for a Specific Treatment Payment Hospital Physician Bonus = + +

  29. 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/press-releases/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/The-Alternative-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-payment-increase-from-blue-cross-this-year/mraRWoC99jqOI5suyQ8IZI/story.html

  30. 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/childrens-hospital-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/massachusetts-to-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-reaches-global-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%2022-3.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-its-health-care-cost.html?pagewanted=all&_r=0

  31. 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-major-lessons-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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